Market Report Source

Overview

Introduction
Waves of technological advancements have powered significant evolution in R&D from serendipitous drug discovery, through to rational drug design. However, as the low-hanging fruit has been picked, and recent technological advances have failed to yield high numbers of new therapies, the search is on to identify R&D strategies to improve R&D productivity

Scope

• Overview of the pressures facing drug developers, including an analysis of whether the industry is facing an R&D productivity crisis
• In-depth analysis of R&D deal activity, together with a pipeline snapshot, to identify trends that are shaping the R&D environment
• Identification of strategy optimization recommendations designed to drive up R&D productivity
• Evaluation of case-studies of Big Pharma R&D strategies to determine how these companies are addressing the productivity problem

Highlights
Over the last decade, significant investment in novel technologies has failed to yield a substantial increase in innovative drugs To drive up future productivity, drug developers are making either incremental changes to fine-tune the R&D process or they are implementing paradigm changes to radically alter the way that R&D is carried out R&D productivity depends on accelerating and boosting the output of drug discovery and development, and there are a range of strategies to do this, including optimizing the R&D model and improving the R&D process

Reasons to Purchase

• Gain a clear understanding of the factors driving drug developers to change R&D strategies
• Gain insight into the trends in R&D clinical pipeline deal activity and pipeline focus
• Understand how a wide of strategies can optimize R&D productivity and identify how these can best be implemented

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY

Scope of the report

Methodology for primary and secondary research

Key findings

CHAPTER 2 CONCERNS OVER R&D PRODUCTIVITY HAVE INCREASED THE FOCUS ON R&D STRATEGIES

The fall in innovative drug approvals, coupled with soaring R&S costs, indicates that Big Pharma is suffering from an R&D productivity crisis

The number of innovative drug approvals is falling

The cost of developing each successfully launched drug has soared

But is the drug development industry really facing a fall in R&D productivity?

A range of challenges faces drug developers, increasing the importance of prioritizing enhanced R&D productivity

Factors making it more profitable for drug developers to become more focused on R&D investment and switch away from biasing spending towards sales and marketing

Factors creating less stability or threatening profitability, which are making companies more risk-averse

CHAPTER 3 ANALYSIS OF MEDTRACK CLINICAL PIPELINE DEALS AND DRUG DATABASES

Partner mix in deals: earlier-stage companies are the most active deal makers

Primary deal goal: co-development and licensing deals remain the most popular deal types

Therapeutic focus of the pipeline: oncology remains the dominant target

Approval times are quickest for infectious disease and oncology/IDI drugs

Both probability of progression through development and development speed are optimal for oncology, IDI and infectious disease drugs

Specific characteristics of therapy areas make them attractive to different drug developers

Cost of development is also vital in deciding which therapy area to target

Deal product type focus: biologics are popular, although small molecules remain dominant

CHAPTER 4 A WIDE RANGE OF R&D STRATEGY RECOMMENDATIONS CAN BE IMPLEMENTED TO IMPROVE R&D PRODUCTIVITY

An introduction to R&D: the history of drug development

Many different strategies have been held up as the panacea of the drug development industry

Companies such as Bayer Schering Pharma are leading the pack in development time

Case-study examples of how Big Pharma is changing R&D to enhance productivity

A number of companies are making small refinements to drive incremental improvement; however companies will need to ally these with seismic changes to yield dramatic access to innovation in the future

Merck’s model

Lilly’s model

Novartis’s business model strategy

Wyeth’s business model strategy

Some Big Pharma companies have thrown out the old models and have started again: these are likely to be the big winners in the future from an innovation capture perspective

GSK’s model

Roche’s model

Which model is best?

Datamonitor has identified two groups of strategies to optimize R&D: those that improve the R&D model, and those that optimize R&D pathway progression

CHAPTER 5 RECOMMENDATIONS TO OPTIMIZE THE R&D MODEL

Optimize outsourcing strategies

Drug developers should implement strategies to optimize the way that CMOs are used

Across the drug development industry, there is increased strategic usage of outsourcing and globalization of functions

Introduction to contract research outsourcing

A range of factors are driving the use of CROs

Despite the significant number of benefits, there are some downsides to using CROs

There are a wide variety of CROs

The CRO market is becoming increasingly globalized

Outsourcing R&D: advantages and disadvantages of emerging countries

There are a range of advantages and disadvantages with outsourcing to emerging markets

How can Western CROs survive? The UK situation as a case study for how CROs can be used in Western markets

India and China are the most popular emerging countries for outsourcing CRO activity

Indian CROs-advantages and disadvantages

Chinese CROs-advantages and disadvantages

Strategies that can be used to optimize the CRO experience

Make significant commitments in the relationship with the CRO

Ensure that communication between the CRO and the drug developer is strong, and that the right information is communicated

Ensure that the way that staff are used is optimal

Drug developers should try to remain appropriately cautious and not take unnecessary risks with the CRO relationship

There are also some recommendations that are specific to the Chinese market

Major drug developers need to improve their access to early-stage research

Private equity arms of Big Pharma companies are particularly useful in capturing European early-stage innovation

Incubators are a relatively new strategy designed to improve earlier-stage innovation capture

Despite significant potential in providing access to early-stage pre-commercial data, open-source research remains under-utilized

Drug developers should use licensing and M&A to support in-house R&D

There are a range of advantages and disadvantages with licensing

A range of factors are influencing the licensing environment

There are a range of recommendations that drug developers can use to optimize their licensing strategy

Big is not always best for drug discovery and development: why mega-mergers are not always the solution for improved R&D productivity

Optimize macro drug development strategy

Companies must determine the strategic balance between me-too incremental improvement and first-in-class targeting

Even large multinational drug developers should look to tighten therapeutic focus

Implementing infrastructure improvement-focused strategies including optimizing portfolio management is integral to improving R&D

Broaden the range of targets but maintain the therapeutic focus is another option

Improving specific R&D tools will help improve the R&D model

Biomarkers use patient stratification and market segmentation to drive future market growth

Introduction: the evolution of patient treatment into personalized therapies

The current state of the biomarkers market

Biomarkers are used in a range of functions

Factors driving the evolution of biomarkers

Factors restricting the biomarkers market

Better implementation of IT can also significantly help R&D

CHAPTER 6 OPTIMIZING R&D PROCESSES WILL HELP TO BOOST R&D PRODUCTIVITY

Optimize safety assessment in preclinical tests

The problem: the evolution of effective safety assessment is lagging

The solution: improved safety assessment tools plus the implementation of a rigorous assessment program

Drug developers should look to improve the way that clinical trials are being run in-house

Better use of academic medical centers helps to improve clinical trial progression

Introduce innovative clinical trial designs to get rid of redundancy and identify where parallel operations can be carried out

Develop robust strategies to reduce attrition

What causes attrition?

Why reduce attrition?

How can attrition and risk be reduced?

Taking attrition early helps reduce the financial impact

Optimize use of, and interaction with, regulators

Use regulatory bodies to gain access to huge amounts of data

Use increased interaction to reduce the cost and time-delays associated with regulatory procedures

Build a strong understanding of the global regulatory environment

Focus on developing innovative drugs to capitalize on regulatory rewards

Capitalize on regulatory programs to help develop drugs for niche or serious indications

The launch of the accelerated development program in Europe brought it more in line with the many acceleration programs in the US

Drug developers should make use of the FDA’s fast-track program

Orphan drug regulations aid innovative drug development

Introduce greater P&R involvement in clinical trial design

Improving patient enrollment and retention in clinical trials helps to speed up clinical trials

Close relationships with key opinion leaders bring a number of advantages

CHAPTER 7 BIBLIOGRAPHY

Publications and online articles

Conference resources

CHI Conference, San Francisco, February-March 2007

BioBusiness Network, 2006

Economist: 12th Annual Pharmaceutical Conference, February 2006

Datamonitor resources

APPENDICES

Appendix A: The drug discovery process

Appendix B: Categorization of deals in the MedTRACK deal database

Appendix C: Categorization of therapeutic areas

Appendix D: Glossary of terms

List of Tables

Table 1: Emerging market CROs offer a range of services

Table 2: Advantages and disadvantages of CROs in emerging markets

Table 3: Costs are considerably cheaper in India and China than in the US

List of Figures

Figure 1: NME and BLA approvals are falling, 1990-2004

Figure 2: FDA drug approvals from 1989-2000 were primarily for low-innovation drugs

Figure 3: A variety of different studies have shown that the cost of R&D has increased over time

Figure 4: The number of priority approvals has risen consistently over the last 40 years

Figure 5: The greatest number of deals in 2005-06 involved Phase II drugs, and the greatest number of clinical drugs in development are also in Phase II

Figure 6: Deal activity is relatively constant, but spikes slightly at the end of each year

Figure 7: Earlier-stage companies dominate as both source and partner in deals

Figure 8: Collaborations between earlier-stage companies are the leading deal type

Figure 9: Some partner deal mixes are more prevalent in certain phases of development than others

Figure 10: Co-development and licensing agreements are the most common deal goals, accounting for more than two-thirds of all deals

Figure 11: Single-product deals were the primary focus

Figure 12: Different deal objectives are more common at different stages of development

Figure 13: The deal database indicates cancer is also the dominant therapeutic focus among 2005-2006 R&D deals

Figure 14: The pipeline database snapshot indicates that cancer is the dominant pipeline therapy class

Figure 15: Oncology/immunologic and CNS therapies have dominated the clinical pipeline from 1993-2005

Figure 16: Immune disorders and inflammation dominate R&D focus, based on a snapshot of the current patent situation

Figure 17: Systemic anti-infectives are the most likely drug class to move from entering clinical testing to being approved by the FDA

Figure 18: Antiparasitic drugs have the highest probability of approval and transitioning through from Phase II to approval

Figure 19: HIV drugs are among the quickest therapies to develop

Figure 20: Respiratory drugs are among the most expensive to develop

Figure 21: Antibodies and vaccines dominate the deal focus

Figure 22: Merck redesigned its business model to focus on capturing innovation and carrying out effective lifecycle management

Figure 23: Lilly’s business model aims to improve productivity and reduce waste

Figure 24: Novartis’s model for better integration

Figure 25: Wyeth has revolutionized its approach to R&D

Figure 26: GSK’s CEDD model is designed to mimic smaller-scale biotech companies

Figure 27: Roche’s networked Pharma model provided significant innovation

Figure 28: Optimizing the R&D process and the R&D model are central to improving R&D productivity

Figure 29: High CRO usage projects have faster development times than low CRO usage projects

Figure 30: BRIC countries compare favorably with European countries in terms of places to perform clinical trials outside the US

Figure 31: AstraZeneca’s licensing opportunity evaluation strategy

Figure 32: Factors that restrict licensing deals

Figure 33: There is an inverse correlation between company size (defined by sales) and R&D productivity

Figure 34: A range of safety-focused activities should be carried out to optimize safety assessment

Figure 35: Oncology trials shows multiple opportunities to change clinical trial design

Figure 36: The greatest amount of drug development spending is in Phase III, 2005

Figure 37: Poor pharmacokinetics/ADME and lack of efficacy top the reasons for attrition

Figure 38: Clinical development is still the most expensive and lengthiest section of drug development

Figure 39: Regulatory initiatives designed to help accelerate the development for niche or serious indications