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"Personalized Medicine" Trend Shift Presents Opportunity for Device Manufacturers ($UNIS)

May 20, 2011 11:24 AM ETUNIS, SNY, PFE, MRK, NVS, JNJ, GSK, AMCR
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“A tectonic shift is taking place in medicine…” - Personalized Medicine Coalition
Above is a small sample of the headlines in healthcare today. "Personalized Medicine" is being driven by the changes in the healthcare market.
Traditionally, prescription medications have been developed under a one size fits all philosophy. This approach is very inefficient, with half of all patients not responding to medication. Pharmaceutical and biotechnology companies are now looking to pioneer a new generation of medicines that are personalized to the specific needs of the individual patient. This is increasingly known as personalized medicine.
Personalized medication can make pharma companies more productive and profitable. Traditionally, pharma pipelines have been loaded with countless drug candidates in the hope that one can make its way to blockbuster status, and compensate for the losses of those drugs that don’t make it to approval and/or profitability. Pharma companies are now improving their productivity by investing in more personalized (read smaller patient population) therapies that each have a greater likelihood of success and profitability.
As defined by the President’s Council of Advisors on Science and Technology (PCAST):
“Personalized Medicine” refers to the tailoring of medical treatment to the individual characteristics of each patient…to classify individuals into subpopulations that differ in their susceptibility to a particular disease or their response to a specific treatment. Preventative or therapeutic interventions can then be concentrated on those who will benefit, sparing expense and side effects for those who will not."

PCAST as well as the Personalized Medicine Coalition’s 2009 report create opportunities for pharmaceutical companies developing specialized medicines, such as novel biologics with large molecular compositions. As such drugs cannot be ingested and instead require injection, this also creates opportunities for medical device companies able to design and develop the next generation of drug delivery devices that can safely administer these specialized drugs to the target patient.
A key future emerging trend for drug delivery devices lies with emerging drug delivery device companies that have the right balance between size and agility to collaborate with pharmaceutical companies in the development of next generation drug delivery devices. One such example of an innovative drug delivery device company is Unilife Corporation (NASDAQ: UNIS; Stock Twits: $UNIS), which is at the tail-end of a $40MM industrialization program to commercialize the Unifill syringe. The development of the Unifill syringe serves as a model of how the next wave of drug delivery devices will be brought to market. Sanofi-aventis came to Unilife with a challenge…to integrate safety features into the glass barrel of a prefilled syringe…something that most people thought impossible. After developing early prototypes of the Unifill syringe that proved it was indeed possible, the two parties entered into a collaboration to bring the product to market. The industrialization program was largely funded by sanofi-aventis, with Unilife required to attain stringent project milestones each quarter to receive payment…a model that kept both parties focused on delivery. Unilife has now started production, and will soon begin selling the Unifill syringe to sanofi-aventis, as well as other pharmaceutical companies that are active in non-competitive therapeutic classes.
Having completed the industrialization program for such a complicated device fully on-schedule, Unilife now has the proven track-record that shows it can deliver. Furthermore, it has a new state-of-the-art facility in Pennsylvania that would not have been possible to develop without having a strong collaboration with a major pharmaceutical partner. As a result, Unilife now has the expertise, reputation and capabilities to serve as a a one-stop shop for device innovation. Furthermore, the company is not too large to be bogged down with red-tape and chronic operational overheads. Instead, Unilife is positioned to serve as an agile, highly responsive partner to pharmaceutical companies in developing customized devices from the ground up. The opportunity for Unilife to play a role in collaborating with pharmaceutical companies to develop the next generation of drug delivery devices was recently put forward by CEO Alan Shortall on its third quarter earnings call.
A further aspect of the opportunity facing Unilife is summed up in the phrase, “Not everyone can or should try to do everything.” Drug companies are just that - drug companies. They’re best at research and development of new drugs. Designing and developing devices to deliver a new drug is a distraction from their core competency. It makes far more sense for drug companies to rely on a supplier who is focused in the area of drug delivery systems.
In the grand scheme, personalized medicine should help drug makers improve their productivity and bottom line by investing in more personalized therapies that have a greater likelihood of getting FDA approval. Undeniably, there is still risk involved that a drug will not make it to market, but the personalized medicine business is highly attractive solution for potential partners. For a company such as Unilife, it can provide a valuable revenue stream as the drug company will be reliant on the device manufacturer for the supply of the device during the entire lifecycle of the drug including its original development.
Pfizer, Merck, Novartis, JNJ, GSK, BMS, Sanofi-Aventis and Amgen are among the pharma companies developing new novel drugs such as injectable biologics that can be customized to meet the specifics needs of smaller sub-populations of patients.

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