Pharmaceutical industry challenges - part 5

Successfully developing innovative drugs and enhancing research & development productivity

Pharmaceutical, biotech and medical device companies need to move new products into the market quickly to obtain sufficient benefit from a limited patent life and to compensate for development costs. Most major pharmaceutical manufacturers spend an average of 15 percent of sales on research & development. Given this substantial outlay and the long development cycle, companies have struggled to find ways to speed the introduction of new products into the marketplace.

 Strategies typically employed to compress R&D time include developing improved operational and management processes and the use of advanced technology. Technologies such as high throughput screening, combinatorial chemistry and genomics are at the forefront of transformational approaches intended to surmount a fundamental challenge facing the industry.

The issues involved in effectively carrying out research and development are complex and transcend science. The regulatory environment is a key component that essentially affects every stage of the process. For example, clinical development activities not performed in compliance with good clinical practices (GCP) expose a company to risks that include delays in approval, wasted investments, litigation and settlement costs due to product liability, and reputational harm.

 Industry observers consider the area of clinical development to be the next major area of government investigations and urge companies to focus on the design and implementation of processes and controls that will mitigate development risks. This belief is supported by a noticeable increase in the number of intensive and unannounced FDA inspections of clinical sites across the industry.

Sustaining growth in global markets

 Global prescription drug sales grew at just 7% in 2004, the lowest rate since 1998. Sales growth was slowed by government pressure to reduce prices, concerns over drug safety and the impact of patent expiries. Over the next five years, sales are forecast by IMS Health to grow at a meagre 6-9% compared with growth of well over 10% in the last five years. The slowdown in growth reflects continuing generic competition, a dearth of new products, regulatory tightening and pricing pressure. This comes at a time when the product development paradigm is undergoing significant change. Most current blockbuster drugs were developed through traditional biochemistry, but it is generally accepted that opportunities to develop truly innovative breakthrough drugs in this way are now exhausted. The completion of the Human Genome Project has opened up the possibility of developing drugs based on genomics, but these are 5 to 10 years away. In the meantime, Big Pharma is reacting by increasing in-licensing activity, particularly from the biotech sector, targeting Mergers & Acquisitions (M&A) opportunities, expanding into new geographic markets such as China, and searching for cost-reduction opportunities in-house. Pharmaceuticals companies are also taking a fresh look at specialist markets. Historically, a blockbuster $1bn drug had to be a primary care product, but since the spectacular success of Genentech’s breast cancer drug Herceptin, the blockbuster specialist product is now a reality. Specialist niche markets such as cancer, Alzheimer’s and HIV are expected to be major opportunities over the coming years.

In the longer term, for growth to be sustainable drug companies must re-establish their relationship of trust with the patient and physician, which has been severely tested in recent years as fraud investigations, safety issues and perceived high prices have entered public consciousness. Notwithstanding these issues, the healthcare market, and pharmaceuticals as an integral part of it, will continue to grow as the world’s population ages and becomes more affluent. The pharmaceutical company that makes intelligent investment decisions, effectively creates and exploits its intellectual property, and manages its relationship with key stakeholders, will continue to benefit from that growth.

So, if all these challenges are handled in a proper way, the pharmaceutical industry can gain a lot in the future. With this blog I put an end to this topic i.e Pharmaceutical industrial challenges.