Stratified and Personalized Medicine:                          An overview
Table of contents•   Executive summary                                   p. 3•   Context, definitions and benefits to Stak...
Objectives of Insight Report•   The purpose of this Insight report is to provide a broad overview of stratified medicine c...
Executive Summary•   Stratified and personalized medicine are two related sectors of great immediate and long term    sign...
Executive Summary•   The advent of stratified medicine, which uses only a small fraction the potential available genomic  ...
Executive Summary•   All of these trends are set to intensify as the plummeting cost of sequencing make the widespread    ...
Context, Definitionsand Benefits to Stakeholders
Definitions I•   There is unfortunately no universally agreed definitions in this emergent area with the terms    Personal...
Definitions II•   In this report the following broad terms will be used:     –   Stratified medicine: the process of using...
Stratified & Personalised Medicine is a Continuum   •      Stratified and personalised medicine are positioned on a contin...
Stratified Medicine in Context: Biomarkers•   The general trends described are all towards ever more detailed biological i...
Non-Genomic/ Non-Drug Based Stratified Medicine•   The predictive biomarker could be non DNA/RNA molecule such as a protei...
Stratified Medicine in Context : Translational Research  •   It is important to note that stratified medicine lies central...
The role of Biomarkers &Diagnostics
Stratified Medicine Applies at All Levels and Employs a Wide  Range of Analytical Technologies.                           ...
The Conventional Role of Diagnostics in Medicine•   Diagnostics is the foundation of medicine•   Patient presents to GP wi...
New Drug Diagnostics Test (Dx-RX) Relationships     Multiple Diagnostic                                           High Com...
Diagnostics & Therapeutic Continuum    Diagnosis          Prescription        Outcomes                Clinical      Cost  ...
Implications for Diagnostics and Biomarkers•   There will be much greater demand for biomarkers and companion diagnostics....
Biomarker Discovery and Validation: Business Models•   There are several routes to funding biomarker discovery & validatio...
Integration of Biomarkers•   The key feature of stratified medicine is that the biomarker and CDx development process must...
Summary•   Stratified medicine has and will continue to increase the relative importance of diagnostics in the    discover...
Market Breakdown
Biomarkers and Stratified Medicine•   Biomarkers are the central enabling technology for Stratified & Personalised Medicin...
Stratified Medicine: Relative Sizes of Impacted Markets                                              Drugs on market      ...
Stratified Medicine in Clinical Use – Market Subsector Growth          Category of Product              Typical Examples o...
Companion Diagnostics (CDx) Market Breakdown•   Companion diagnostics (CDx) at CAGR 15% is the fastest growing subsector o...
Biomarkers Market and Stratified Medicine                                        Global Biomarker Markets                 ...
Biomarkers & Stratified Medicine - Oncology•   Oncology is by a wide margin, the disease area    which has lead the applic...
Summary•   Stratified and personalized medicine markets can be thought of as a hierarchy with CDx at the top    which is 1...
Main Market Drivers
Stratified Medicine: Market Drivers & Leverage                        Market pull and investment from the                 ...
Market Drivers for Stratified Medicine: Commercial Need for NewProducts •   The Threat: : By far the major commercial driv...
Market Drivers for Stratified Medicine: Costs Pressure onHealthcare Systems & Poor Drug Effectiveness                     ...
Market Drivers for Stratified Medicine : The Age of AffordableUniversal Genotyping• At long term trend rates of progress t...
Is Stratified and Personalized Medicine Driving the Creation of a      Different Class of Companies: “Life Science Majors”...
Market Drivers for Stratified Medicine : Collaborations•    In this sector most pharma companies with        Selected Coll...
Market Drivers for Stratified Medicine : Continued Grant Funding•   Significant Grant Funding for Stratified Medicine     ...
Market Drivers for Stratified Medicine : Strategic Pharma /Academic R&D Partnerships•   There have been a number of high-p...
Market Drivers for Stratified Medicine : the Future Clinical Evolution Is Clear  • There is a clear consensus in the UK of...
Marker Drivers Summary•   All of the key indicators examined indicate that the use of stratified and personalized medicine...
Key Challenges
Key Challenges to the Future Development of Stratified Medicine•     Science and Technology        – The key problems are ...
Key Challenges : Regulatory Requirements•     The regulatory frameworks needs to adapt to support earlier registration wit...
Key Challenges : Data and Legal Requirements•   Information Technology      – Fully interoperable standardised electronic ...
Key Challenges : ReimbursementThe Stratified Medicine Commercial Paradox•   There are potential technologies and services ...
Key Challenges : Valuation modelling for Stratified Medicine                                                              ...
The Stratified Medicine Commercial Paradox: Genomics•    The commercial Paradox of Stratified Medicine will significantly ...
Pharma Driven Mainstream Stratified Medicine•    At the present time the major pharma and biotech companies dominate and t...
Key Challenges: Summary•   The great variety of the challenges that have been identified as critical to the future develop...
High Level Life SciencesSubsector Overview
Stratified Medicine : Market Fundamentals                                                                                 ...
Scottish Stratified Medicine Overview                                                                                     ...
Research Tools Subsector Overview• Overall global market                               • Scottish landscape      – The glo...
Research Tool Subsector - Scottish Opportunities•   This sector represents one of clearest opportunities for Scotland to b...
In Vitro Diagnostics Subsector Overview• Overall global market                                                 • Scottish ...
In Vitro Diagnostics - Scottish Opportunities•    With the emergence of CDx and the opportunity to charge a premium on mar...
Medical Imaging Subsector Overview• Overall global market                                                             • Sc...
Imaging Companies - Scottish Opportunities•   This sector represents a strong opportunity for the translational research b...
Imaging Companies Sector: Scottish Opportunities•   As Optos has demonstrated, it is possible for a Scottish based company...
Medical Devices Subsector Overview• Overall global market                                             • Scottish landscape...
Medical Devices•   In the absence of imaging technologies and in vitro diagnostics, the near term growth opportunities    ...
CRO Subsector Overview• Overall global market                                                                • Scottish la...
CRO Sector: Scottish Opportunities•   Stratified medicine poses significant and immediate challenges to but also offers gr...
Bioinformatics: Subsector Overview• Overall Global Market                                          • Scottish Landscape   ...
The Bioinformatics Opportunity•   Despite the very small size of the boinformatics company base in Scotland, it is potenti...
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A complete business plan with extended analysis of Stratified Medicine in market base as well in translational research base.

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Stratified Medicine

  1. 1. Stratified and Personalized Medicine: An overview
  2. 2. Table of contents• Executive summary p. 3• Context, definitions and benefits to Stakeholders p. 6• The role of biomarkers & diagnostics p. 13• Market breakdown p. 22• Main marker drivers p. 30• Key challenges p. 41• Commercial subsector overview p. 50• Overview of translational research base p. 72• Summary and conclusions p. 84 1
  3. 3. Objectives of Insight Report• The purpose of this Insight report is to provide a broad overview of stratified medicine covering the main markets, technologies, and clinical and technology market drivers.• It will describe relevant Scottish strengths in both the academic and the company subsectors impacted by stratified & personalized medicine.• This report will focus primarily on the more immediate market opportunities in mainstream based stratified medicine using of specific genomic, proteomic and imaging biomarkers.• It will also anticipate future developments in the transition to fully personalized medicine based on whole genome sequencing of patient genomes. 2
  4. 4. Executive Summary• Stratified and personalized medicine are two related sectors of great immediate and long term significance to the health and competiveness of the Scottish medical and life sciences sector. This applies across the board to the NHS, academic research base and key sectors of the life science company landscape most notably CROs, diagnostics, research tools and IT/bioinformatics.• Stratified medicine describes the current transitional situation where patient populations are now increasingly stratified during drug discovery clinical trials using a range of biomarkers. Some of the diagnostic biomarkers subsequently become “companion diagnostics” mandated and co-marketed with the therapy.• At the moment the bulk of the market of around $20 billion p.a. resides in the provision of biomarkers, with associated products and services, for drug discovery as opposed to post market- launch products co-marketed with the therapy.• The benefits of stratified medicine are reduced time and cost of drug discovery and more targeted efficacious drugs which have fewer side effects.• When the biomarker use is extended to clinical practice, NHS and healthcare providers also benefit from overall reduced costs from better drug treatment and patient disease management.• Personalized medicine anticipates a future where a much greater amount of information is available, in particular patient specific whole genome data, to inform and personally tailor and target the selection of more therapies to the specific needs of the patient. 3
  5. 5. Executive Summary• The advent of stratified medicine, which uses only a small fraction the potential available genomic and other “omic” biomarkers has already been profound.• It has produced a very rapid convergence of diagnostics and therapeutics companies facilitating major pharma and in vitro diagnostics collaborations. There has been hugely increased emphasis on new biomarker discovery and validation in both research and commercial sectors.• The very process of drug discovery itself is now significantly dependent upon response monitoring biomarkers which may evolve into marketed companion diagnostics. These changes have created major new challenges and opportunities for CRO service companies and hugely increased demand for effective IT and bioinformatics services.• The delivery and economics of medicine itself, particularly the integration of genomic and other data to create much more tailored and individualized treatments is having to be reexamined with particular emphasis on data security. 4
  6. 6. Executive Summary• All of these trends are set to intensify as the plummeting cost of sequencing make the widespread availability of affordable whole genome sequencing a technical reality within the medium rather than long term.• The very recent announcement by Life Technologies of the provision of a system which can deliver a whole genome sequencing solution for $1,000 Genome vividly illustrates the very high rate of technical progress which is driving this field.• Scotland’s life science and medical landscape mix of leading translational research, strong in vitro diagnostic, pharma, CRO and research tools companies means that it will be increasingly affected by these trends.• It is clear that the future international competiveness of the translational research base and the long term profitability of major life sciences subsectors will be significantly affected by their response to the major challenges and opportunities presented by Stratified and Personalized Medicine.• It is also clear that given the strength of this research base and the the well established corporate and SME base in multiple key subsectors (notably research tools, IVD, pharma with CROs & imaging), stratified and personalized medicine represents a major strategic opportunity for Scotland. 5
  7. 7. Context, Definitionsand Benefits to Stakeholders
  8. 8. Definitions I• There is unfortunately no universally agreed definitions in this emergent area with the terms Personalised Medicine Theranostics and Stratified Medicine all being to a large extent interchangeably.• “Personalized medicine” : “a tailored approach to patient treatment” Based on the molecular analysis of genes proteins and metabolites” Davis Nature Drug Discovery 2009• “Personalized” “ tailored” or “stratified medicine” : “these therapies combine a drug with a companion diagnostic to select or exclude patients for treatment. ... By targeting patients on the basis of distinctive biological characteristics enriched subpopulations that respond differently to treatment are identified thereby generating more favourable benefit risk profiles” Trusheim et al Nature Reviews 2011• “Personalized medicine” : “the tailoring of medical treatment to the individual characteristics of each patient. It does not literally mean the creation of drugs or medical devices that are unique to a patient, but rather the ability to classify individuals into subpopulations that differ in their susceptibility to a particular disease or their response to a specific treatment. Preventive or therapeutic interventions can then be concentrated on those who will benefit, sparing expense and side effects for those who will not. ... Critically, it also involves the development, validation and use of companion diagnostics to achieve the best outcomes in the management of a patient’s disease or their predisposition” ABPI UK White Paper 2009• “Predicting in advance which groups of patients will respond to a particular therapy and providing treatment accordingly is known as stratified medicine (or personalized medicine) “ Stratified Medicine in the UK Vision and Roadmap TSB 2011 7
  9. 9. Definitions II• In this report the following broad terms will be used: – Stratified medicine: the process of using biomarkers to select groups of patients for clinical trials is called stratification and the science thereof labelled ”stratified medicine” . These biomarkers are used in to monitor response for the purposes of evaluation of a response further upstream and earlier in the drug discovery process. Biomarkers used for such “response evaluation” in clinical trials may progress to become companion diagnostics co-marketed with the drug. – Using this definition stratified medicine includes biomarkers used in the drug discovery process as this constitutes the largest market of relevance to Scottish companies and researchers. It is also in effect a pipeline of new biomarkers platforms and services of which only some will migrate eventually into the clinic. – Companion diagnostics: (CDx) will refer to the diagnostic test that has been developed for a specific therapy and the combination of the specific therapy (Rx) and companion diagnostic. These specific (Rx-Dx) have usually been developed in parallel and have passed through the regulatory process as a package. The clinical use of the therapy requires the use of the specific diagnostic test. At the present time this is most commonly a molecular diagnostic test and drug. However other more physiological based diagnostic modalities (i.e. imaging) and non drug therapies (i.e. radiation, surgery, rehabilitation, nutrition/wellness) in principle fall within this category. – Personalised medicine: is in effect the ultimate destination for stratified medicine enabling a very high level of tailoring of therapeutic intervention to the unique genetic make-up of the patient. It will use many of the techniques and processes developed at a group level in stratified medicine. One of the defining medium term features of personalised medicine will be the availability of full genome sequence data of the individual patient. 8
  10. 10. Stratified & Personalised Medicine is a Continuum • Stratified and personalised medicine are positioned on a continuum rather than discrete processes that can be neatly defined. The diagram below attempts to convey this and the possible future trends. Landmark Exemplar Therapies New Chemical Entities Biologics Monoclonals Stratified Therapies Non-genomic stratified medicine: Zantac Ibuprofen Vioxx Epogen Avasitin Hercetptin .. …? Proteomics & advanced imaging Genomic personalized medicine: Personal and Affordable Genomics becomes a commercial reality and increasingly influences all treatments options. Stratified medicine: Genomic and other biomarkers increasingly used in the drug discovery process and some pioneering companion diagnostics launched. One size fits all blockbuster drugs become rare commercial exception.Conventional medicine: “Blockbuster” or “one size fits” all drugs prescribed to all patients diagnosed with a specificdisease. This is associated with relatively high rates of non-efficacy and adverse effects due to lack or predictive biomarkersduring the discovery process of companion diagnostic post launch. Key genomic advancesPCR SNPs Human genome sequenced under $1000 genome is feasible > deployed > exploited1980 1990 2000 2010 2020 2030 9
  11. 11. Stratified Medicine in Context: Biomarkers• The general trends described are all towards ever more detailed biological information being used in a diagnostic manner to stratify patients into narrower sub groups for both development and prescription of new therapeutics. This allows treatments to be customised (personalized) to the needs of the individual.• Clinical biomarkers, in particular predictive biomarkers, are central to this process.• Predictive biomarkers are measurements which prospectively indicate the probable response to therapeutic drug or intervention within a selected subpopulation of patients. They can be used to select patients for a particular treatment where benefit is likely or to select out patients unlikely to respond favourably to the therapy.• In some cases, a predictive biomarker may subsequently be developed as a “companion diagnostic” with a mandatory regulatory approved linkage to the prescription of a therapeutic. To date predictive biomarkers have been genomic in nature and tied to drugs as the therapy.• The processes underlying stratified medicine apply more widely than genomics and drug combinations. 10
  12. 12. Non-Genomic/ Non-Drug Based Stratified Medicine• The predictive biomarker could be non DNA/RNA molecule such as a protein or a metabolite.• The predictive biomarker could be a cellular phenotypic marker or a physiological biomarker measured by imaging or other analytical techniques.• A predictive biomarker, if identified in advance from preclinical research, can be used as an important element within a prospective clinical trial.• Alternatively a predictive biomarker can be identified through retrospective analysis of “all comers” clinical trials where there is no stratification step within the trial design.• The stratified medicine approach, employing predictive biomarkers, can in principle also be applied to non-drug based therapies such as specialist surgery or radiation.• The technical regulatory and market challenges which have been experienced in developing the current commercial genomic/drug based stratified medicine products are all applicable non-genomic and/or non-drug based stratified medicine.• Thus genomic based stratified medicine is a good model for considering the scope for longer term opportunities emerging from alternate stratified medicine models.• The major difference is that for non-drug based stratified medicine the appropriate and viable business models are even less clear than drug-based stratified medicine. 11
  13. 13. Stratified Medicine in Context : Translational Research • It is important to note that stratified medicine lies centrally within a wider context of translational medicine. Clinical Translational Medicine Pharmacology Advanced Imaging Fundamental Stratified medicine Rx-DX Research Applied In Drug Discovery Linked Genomics Products & Development IVD Diagnostics Proteomics MetabolomicsResearch Products 12
  14. 14. The role of Biomarkers &Diagnostics
  15. 15. Stratified Medicine Applies at All Levels and Employs a Wide Range of Analytical Technologies. Physiological Markers Phenotype Whole Body & Organ measburements & Imaging Cell & Tissue Markers Immunological Markers Genotype Metabolomics (Mass Spec and Chromatography) Proteomic Biomarkers (Mass Spec and Chromatography) Secondary Gene Expression Elements (miRNA piRNA) Primary Gene Expression Analysis Messenger RNA Secondary DNA Markers Epi-geneticsPrimary DNA Gene Markers (Genes & SNPs) (Sequencing and Microarray technologies) 14
  16. 16. The Conventional Role of Diagnostics in Medicine• Diagnostics is the foundation of medicine• Patient presents to GP with symptoms• GP Evaluates symptoms Prescribes treatment on symptoms alone or: Orders diagnostic tests Diagnostic tests are principally in vitro diagnostics, functional testing or imaging or Refers to a specialist – (who orders diagnostic tests) Diagnosis is made• Appropriate therapeutic treatment is prescribed usually from a variety of options and suppliers• Therapies include both drug based, and not drug based treatments, such as surgery, implants, devices, radiotherapy, physiotherapy, cognitive etc.• Patient is monitored• Stratified medicine will significantly alter the role of diagnostics for many more diseases and treatments 15
  17. 17. New Drug Diagnostics Test (Dx-RX) Relationships Multiple Diagnostic High Competition Multiple Therapy Similar Outcomes Test Provider Providers Low Margins Lower Competition Unique OutcomesHighly Specialised Tests with Close or Mandatory Link to Therapy High Margins 16
  18. 18. Diagnostics & Therapeutic Continuum Diagnosis Prescription Outcomes Clinical Cost Outcome effectiveness Correct Effective drug Disease treated Positive High Diagnosis Prescribed Correct Effective drug Adverse effects Mixed Medium Diagnosis Prescribed Correct In-Effective drug Disease untreated Negative Low Diagnosis prescribed & progresses Correct InEffective drug Disease progresses Highly Very Low Diagnosis prescribed and adverse effects negative Wrong In-Effective drug Disease untreated negative Low Diagnosis prescribed May progress Wrong In-Effective drug Disease progresses Highly Very Low Diagnosis prescribed and adverse effects Negative Stratified medicine aims to maximise number of treatments with positive clinical outcomes primarily by increasing the proportion of prescribed therapies and drugs which are clinically effective. It can also reduce prescription of therapies and drugs which cause adverse effects. 17
  19. 19. Implications for Diagnostics and Biomarkers• There will be much greater demand for biomarkers and companion diagnostics.• Better knowledge of therapeutic target yields prospective genomic proteomic or physiological biomarkers which can be incorporated into clinical trials.• This means that the process of biomarker validation must be closely integrated into the overall drug discovery and the companion diagnostic development and clinical trials processes.• This adds a great deal of complexity and increased technical regulatory and market risk: if the biomarker encounters technical problems, regulatory challenge or cannot be commercially viable then the linked therapeutic also fails to progress.• Only a few companies, most notably Roche, have both strong diagnostic and therapeutic divisions now bolstered by the possible acquisition of a major research tools company (Illumina), which have sufficient expertise to successfully develop companion diagnostic tests and new therapies in house.• For the most part new stratified medicines with a companion diagnostic test are an outcome of strategic relationship between therapeutic developers and diagnostic companies each working in a different technical market and regulatory and reimbursement environment.• In the “pre-stratified medicine” era this was not an issue. There was a clear check list of challenges: efficacy ADME-Tox, bio-availability, preclinical and clinical trials required for regulatory submission.• It was also very clear that therapeutic developers ultimately paid either through in house capability or outsourcing to CROs.• This raises the fundamental question in stratified medicine: who takes the risk and pays to discover and more importantly validate the biomarker ? 18
  20. 20. Biomarker Discovery and Validation: Business Models• There are several routes to funding biomarker discovery & validation: 1) Spin off from basic academic. It is less likely that such biomarkers funded by research grants will be fully validated in the absence of a commercial partner. 2) Pre-market funding programs such as Technology Strategy Board Stratified Medicine platform and pharma–academia strategic alliances such as TMRI. 3) Pharma and specialist companies carrying out in-house prospective biomarker discovery in anticipation of future clinical needs from their own discovery program. 4) Pharma companies outsourcing prospective biomarker discovery and validation to speciality providers and CRO’s. 5) Pharma companies retaining retrospective biomarker discovery in house. 6) Pharma companies outsourcing retrospective biomarker discovery in house and validation to speciality providers and CRO’s.• Companies in this sector typically engage in several of these activities for example hybrid business model of having an in-house discovery program and taking on contract research for third parties. 19
  21. 21. Integration of Biomarkers• The key feature of stratified medicine is that the biomarker and CDx development process must be closely integrated into the drug (or other therapeutic) development process. Adapted from Frost & Sullivan - Personalised Medicine Market in Europe 2011 20
  22. 22. Summary• Stratified medicine has and will continue to increase the relative importance of diagnostics in the discovery development and delivery of new drugs and therapies.• It will necessitate greater convergence between diagnostics and pharma companies and major changes to the drug development process, clinical trials and regulatory approval.• New biomarker discovery and in particular validation is becoming the rate limiting step. 21
  23. 23. Market Breakdown
  24. 24. Biomarkers and Stratified Medicine• Biomarkers are the central enabling technology for Stratified & Personalised Medicine.• Presently products used by medical practitioners to determine treatment such as CDx represent the clinical tip of a much a larger biomarker market iceberg.• This market is driven primarily by the pre-clinical needs of the pharma sector for new biomarkers, platforms processes and services in drug discovery.• Their application encompasses: – Safety and toxicity – Dose selection and optimisation – Therapeutic efficacy determination – Markers of clinical outcome and surrogate markers – Early stage clinical trials – Late stage clinical trials – Post marketing applications (CDx) 23
  25. 25. Stratified Medicine: Relative Sizes of Impacted Markets Drugs on market Assumes 15% current sales affected by biomarkers ~ estimated $150 Billion Drug Development R&D ~ estimated $86 billion Stratified Medicine Biomarkers drug discovery & development ~ $20 Billion Stratified Medicine in Clinical use Includes Predisposition Screening Staging & Monitoring & CDx ~ $5.4 Billion Companion Diagnostics Sales of existing Dx-Rx products ~ $0.2 Billion 24
  26. 26. Stratified Medicine in Clinical Use – Market Subsector Growth Category of Product Typical Examples of Tests Market % 2008 2012 Surveillance/Screening HPV test, HIV test, Pap smear, 46 38 thrombophilia Disease Monitoring HIV viral load/AlloMap/HCV viral load 26 26 Diagnostics/Staging Lipid panel, Bacterial typing, Various 18 15 FISH/IHC Predisposition & risk PreDx,BRCA1/2, MLH1/MSH2/ MSH6 5 6 assessment Companion Diagnostics Her2 test/ Oncotype Dx/p450/UGT1A1 5 15 $ Billion p.a. Overall Market Size 3.5 5.4• Stratified medicine which has been applied in clinical practice covers a wide range of assays where the testing is personalised to the patient or the specific strain of the disease infecting the patient for example HIV.• In this regard many of these tests overlap with specialised end of the diagnostics market.• The dividing line between stratifying the disease and stratifying the patient’s likely response to the treatment is somewhat fluid and flexible. This is best illustrated in cancer where stratified medicine encompasses surveillance, staging, risk and CDx. 25
  27. 27. Companion Diagnostics (CDx) Market Breakdown• Companion diagnostics (CDx) at CAGR 15% is the fastest growing subsector of stratified medicine which has reached the clinician. This is likely to remain so as the use of biomarkers becomes routine in drug discovery and as a consequence the “upstream pipeline” of prospective companion diagnostics increases.• It should be noted that not all biomarkers used in the drug discovery and development phase are necessarily suited to become a companion diagnostic test – however a significant proportion are.• The four main subsectors of CDx are listed below: Toxicity/eligibility Prognosis (UGT1A1): when toxicity of the drug is (Oncotype Dx, MammaPrint): when a test monitored by genetic background. predicts the possible risk for disease such as breast cancer recurrence Toxicity/eligibility Therapy selection (VKORC1): when the amount of a drug, (KRAS test, Her2 test): when a specific drug such as Warfarin, is prescribed according will be prescribed according to a specific to specific genetic mutation biomarker 26
  28. 28. Biomarkers Market and Stratified Medicine Global Biomarker Markets (Adpated from BCC Research 2010) 35,000 30,000 Other 25,000 Bioinformatics 20,000 $ Millions Proteomics 15,000 Imaging 10,000 Genomics 5,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015• Genomics is by far the fastest growing subsector in the biomarker market (CAGR >25%) with proteomics providing a significant but secondary market.• Medical imaging will continue to grow steadily from a strong base of provision through major med- tech companies.• Bioinformatics also will grow quickly from a small base serving the rapidly increasing needs for data analysis integration and clinical interpretation generated from all of the above sectors.• Over time more of these biomarker related technologies and services will migrate into frontline clinical use through companion diagnostics, patient data handling and decision support services. 27
  29. 29. Biomarkers & Stratified Medicine - Oncology• Oncology is by a wide margin, the disease area which has lead the application of biomarkers to clinical applications in stratified medicine. Oncology Market by Therapeutic Class *• It will retain that leadership position as fully 40.0 35.0 personalised genomic based medicine becomes a 30.0 reality. $ Billion 25.0 2001 20.0• In Oncology all three key factors were all present : 15.0 2011 10.0 – Technical viability through good predicative 5.0 Biomarkers (Genomic); 0.0 – High Clinical need for improved outcomes; Hormonal Targeted Cytotoxic – Economic Impact - the high cost of the cancer related therapeutics meant that * Adapted from Strategic Analysis of the European Markets for Theranostics 2009 significant cost savings could be realised• The graph above shows how the availability of targeted therapies transformed the market landscape within a decade of the first products launched.• This “therapeutic transition” from “one size fits all” to targeted therapies is still ongoing within Oncology.• It is likely that similar transitions will occur for several other major disease indications. 28
  30. 30. Summary• Stratified and personalized medicine markets can be thought of as a hierarchy with CDx at the top which is 100% defined by stratified medicine and sales of therapeutics, which are impacted more indirectly, forming the base.• At the tip of the hierarchy are CDx and a relatively narrow range of specific therapeutics (around 75) which have an associated and mandatory companion diagnostic test.• At the other extreme there is a much broader base of drugs and other therapeutics impacted by the use of biomarkers in the drug discovery or clinical trial process. Presently this represents around 10% by sales which is somewhat larger than the R&D spend in the overall drug discovery market itself.• Between these are the biomarker market and stratified medicine in clinical use which are wholly within the stratified medicine definition.• There are four take home messages from these markets: − There is significant growth in all sectors; − Some sectors, and disease indications such as oncology are growing much faster than others; − The range and proportion of therapeutics impacted by stratified medicine is rapidly increasing; − These trends are long term and likely to persist. 29
  31. 31. Main Market Drivers
  32. 32. Stratified Medicine: Market Drivers & Leverage Market pull and investment from the major pharma and biotech therapy Market Pull developers and providersAt the moment stratified medicineand personalised medicine islargely driven and financed by thedemand generated from the Majorpharma companies for new Therapeuticstechnology solutions which meettheir needs.Biomarker use is now routine in Biomarkersdrug discovery and CDx is becomingincreasingly important in moredisease areas lead by oncology. CDxUltimately both trends leveragegreater value from the therapeuticthey are aligned with in drugdiscovery or marketing.Biomarkers and CDx companies andacademic researchers providetechnologies: biomarkers, enablingplatform technologies, services and Technology pushinformatics which enable the effectiveuse of biomarkers. 31
  33. 33. Market Drivers for Stratified Medicine: Commercial Need for NewProducts • The Threat: : By far the major commercial driver is “patent cliff” affecting all major pharma. Pharma has traditionally relied on the “blockbuster model” where specific applications directed at mass clinical markets generated huge revenues. • The Opportunity: The commercial success of companies such as Genzyme, which focussed on relatively well protected and defensible albeit significantly smaller markets and has provided both an alternate businesses model and inspiration for other pharma. • The response: There is widespread recognition that this model is no longer viable and in future a much greater degree of segmentation of patient populations and tailoring of drug to the patient will be required - hence the major drive towards Stratified Medicine. Adapted from Frost & Sullivan - Strategic Analysis of the European Market for Theranostics 2009 32
  34. 34. Market Drivers for Stratified Medicine: Costs Pressure onHealthcare Systems & Poor Drug Effectiveness Healthcare Costs UK * Variability of response to drugs ** 140 Oncology +ve Variable +ve -ve response 120 100 Asthma +ve Variable +ve -ve response G B P B illio n 80 Statins +ve Variable +ve -ve response 60 Anti-depressants +ve Variable +ve -ve response 40 +veVariable +ve -ve response CHF (B-Blocker) 20 HBP (ACE) +veVariable +ve -ve response 0 1985 1990 1995 2000 2005 2010 2015 0% 20% 40% 60% 80% 100%• The left hand panel shows the rapid absolute growth of healthcare costs in the last decade now estimated to be just under ₤124 Billion p.a.*• As a proportion of GDP healthcare has risen from 5.2% of GDP in 1895 to a peak of 7.7% in 2012.• Growth is predicted to be less than 3% until 2015 and healthcare will decline to 7.0% of GDP.• Medicine costs account for approximately £12 Billion ** (10%) of the NHS budget.• As the right hand panel indicates, depending on disease a significant proportion of drugs prescribed are ineffective.• There is clearly scope for cost saving and better outcomes by applying stratified medicine to reduce prescription rates of ineffective therapies. * http://www.ukpublicspending.co.uk/ * http://2020selection.wordpress.com/2012/01/06/nhs-england-drug-expenditure-top-10/ 33
  35. 35. Market Drivers for Stratified Medicine : The Age of AffordableUniversal Genotyping• At long term trend rates of progress the $1,000 genome was predicted to be attained within two years in 2014• It actually arrived in Jan 2012 ! with Life Technologies Ion Torrent system providing $1,000 genome cost on a $150K system• The $100 genome will likely be commercially available and reality in before 2020 Implications • One of the major technical challenges to personalised medicine, the sequencing challenge to generate individual sequence data has almost already been solved. The major challenges actually come down stream of this. • Genomic and by extension mass application of stratified medicine will become a technically achievable reality much sooner that most people generally realise and most likely far in advance of the ability of healthcare systems to evaluate and effectively adopt. • In so far as there are fundamental technical challenges and bottlenecks outstanding they relate to much more information technology specifically: − Secure Information Capture and storage. − Biomarker validation − Clinically meaningful interpretation of complex data sets and systems biology information. 34
  36. 36. Is Stratified and Personalized Medicine Driving the Creation of a Different Class of Companies: “Life Science Majors” ? Therapeutics Therapeutics Diagnostics GSK MERCK Partnership ROCHE Life 2012 Tools Tools (Millipore) Technologies (Illumina)• As Genomics is recognised to be strategically important it is already driving consolidation among major Life Sciences companies. Diagnostics Devices Diagnostics• Roche may well become to be recognised as the first of a new class of “Life Science Majors” effectively integrating the 3 key sectors of Rx- J&J ABBOTT Therapeutics DX and Genomics. Therapeutics• The advent of such integrated companies will in turn act as a powerful market driver enabling technical synergies and economies of scale. 35
  37. 37. Market Drivers for Stratified Medicine : Collaborations• In this sector most pharma companies with Selected Collaboration History the notable exception of Roche lack in house diagnostics expertise. 1998 Dako Diagnostics HercepTest immunohistochemistry assay used to identify patients with HER2-positive metastatic breast cancer.• Therefore a clear business model has been established in which pharma collaborate 2007 DxS TheraScreen, the first CE-marked diagnostic for closely with other partners developing detecting mutations inNon-small cell Lung cancer biomarkers platforms or tools. 2007 DxS Launch of K-RAS mutation detection kit colorectal cancer followed by partnership with Amgen 2008 for Vectibix• The partnerships encompassed are wide in (also relevant to Erbitux) terms of scale, nature of partnership and technologies supported. 2008 Merck Celera collaborative deal providing Merck with access to up to ten cancer targets forRNA interference-(RNAi) based therapeutics.• A key challenge is to be able to negotiate and manage complex development projects 2009 Genentech and Dako agreed to submit for FDA approval between disparate partners. both HercepTest and Dakos HER2 FISH pharmDx test for Herceptin in the treatment of advanced HER2-positive stomach cancer.• A key opportunity is that stratified medicine innovation and development is to a large October 2011 GSK & Life Technologies announce partnership extent open and outsourced by pharma. in which Life Technologies will develop qPCR companion diagnostic for MAGE GSK Immunotherapy for lung cancer.• This favours companies and countries used November 2011BioCartis raises $100 Million USD to develop to engaging with and providing services to companion diagnostics platforrm bases upon Philips Compact the pharma sector. molecular diagnostic (MDx) to drive the widespread adoption of personalized medicine. 36
  38. 38. Market Drivers for Stratified Medicine : Continued Grant Funding• Significant Grant Funding for Stratified Medicine Selected Grant Funding Announcements has been available for the last decade at UK EU and international level. Oct 2008 Epi-genomics of Human Health and Disease NIH $8 million allocated• Much of this grant funding, such as TSB and IMI 2009 MARCAT Biomarkers & Molecular Tumour is devoted to promoting applied translational Classification IMI/EFPIA $12.9 Million research in biomarkers or related technologies. 2009 IMIDIA Project Improving diagnostic biomarkers for Diabetes IMI/EFPIA €26 Million• There is a strong trend towards promoting major industry, (Pharma & SME) – academia funding 2009 SUMMIT Surrogate Vascular Biomarkers for collaborations. Innovative Diabetes Treatment IMI/EFPIA €25.8 Million• This has been most notable from the European 2009 U-Biopred Unbiased Biomarkers - Prediction Innovate Medicines Initiative IMI co-funded by the of Respiratory Disease Outcomes IMI/EFPIA $28.5 European Federation of Pharmaceutical Million Associations (EFPIA). 2011 Technology Strategy Board - Stratified Medicine Innovation Platform £200 Million• As evidenced recently by Aridhia’s success in leading a TSB bid this funding stream can Nov 2011 Gates Foundation - $9 Million Biomarker provide a valuable launch pad for new Discovery for Infant Health companies. Dec 2011 BIS Dept of Health UK - £130m for Stratified Medicines and mechanisms of disease in• Significant funding of this nature likely to continue people in the UK given recent UK Govt announcements. 37
  39. 39. Market Drivers for Stratified Medicine : Strategic Pharma /Academic R&D Partnerships• There have been a number of high-profile long-term strategic relationships developed between major pharma companies and clinical research centres or consortia which focused on biomarker discovery and or validation• These have included: − TMRI Wyeth-Scottish Universities 2005-10 (£50 Million) − Quintiles - London Genetics 2010 (no funding disclosed) − Pfizer Centers for Therapeutic Innovations (CTI) New York ,San Francisco, Harvard − Pfizer - Sanford Burnham Medical 2011 (Genomics) − Pfizer - AstraZeneca - Cancer Research UK 2011 (£5.5 Million) 38
  40. 40. Market Drivers for Stratified Medicine : the Future Clinical Evolution Is Clear • There is a clear consensus in the UK of the most likely evolution of Stratified Medicine. This is based on the relative perceived technical needs and on the tractability of different disease areas (below). This is already evident in UK strategy via Technology Strategy Board calls. A clearly defined clinical consensus and a TSB roadmap of this nature acts a an important market driver by substantially reducing the risk of strategic R&D in Stratified Medicine by investors and companies. Short term Medium to long term Long term (< 3 years) (3-10 yrs) (>10 years)• Oncology • Diabetes • Depression• Major solid and blood • Pulmonary Disease (COPD) • Dementia cancers • Alzheimer’s Disease • Neurodegenerative• Autoimmunity/inflammation • Thrombosis/Stroke • Cardiovascular• Rheumatoid Arthritis • Chronic Pain • Metabolic• Acute Asthma 39
  41. 41. Marker Drivers Summary• All of the key indicators examined indicate that the use of stratified and personalized medicine is likely to continue and intensify due to a range of powerful market drivers.• Very recent events (Q1 2012) in the Research Tools sector indicate not only that affordable Genomics based medicine will be technically feasible in the very near future but that this is already profoundly affecting strategy within leading Life Sciences Corporations.• The medium to long term impact of these accelerating trends on the competiveness on major segments of the Scottish life science company base is likely to be significant.• The same applies to both the NHS and Academic research base. 40
  42. 42. Key Challenges
  43. 43. Key Challenges to the Future Development of Stratified Medicine• Science and Technology – The key problems are the provision of high quality molecular sub-phenotyping data to stratify complex diseases and the slow speed of clinical validation of genomic-based molecular biomarkers and diagnostics. Given its novel, high risk and high cost status, industry cannot plan and conduct this key fundamental and translational work alone, especially when considered in conjunction with the other productivity and environmental challenges it faces today.• APBI Recommendations* – Public/private partnerships. Development of a public/private sector “Personalised Medicine R&D Roadmap” for coordinating relevant discovery and translational research activities. – Development of a process to identify and prioritise diseases that could benefit from the application of genomics-based technologies. – Establishment of a capability to share standardised bio-specimen repositories to support personalised medicine research. – Establishment of a joint funding programme for biomarker standardisation and validation study design. – Development of a large population cohorts for long-term follow up of genetic and environmental health effects.* The stratification of disease for personalized medicine, Association of the British Pharmaceutical Industry (ABPI) White Paper April 2009 42
  44. 44. Key Challenges : Regulatory Requirements• The regulatory frameworks needs to adapt to support earlier registration with a with a smaller, restricted patient population.• In particular Regulators and developers will need to work together in order to*: – Agree the criteria for the early/conditional licensing of personalised medical products and their post-approval risk management, on the basis of an anticipated pre-registration data set smaller than suggested by the current regulatory paradigm. – Establish guidelines that define regulatory standards for study design and sensitivity/specificity parameters for diagnostic products. – Establish guidelines for the co-development of diagnostics and therapeutics. – Develop an approach for the incorporation of the use of diagnostics in therapeutic products labelling. – Ensure regular communication to articulate projections of the number and type of products in the development pipeline that are based on personalised medicine technologies.* The stratification of disease for personalized medicine, Association of the British Pharmaceutical Industry (ABPI) White Paper April 2009 43
  45. 45. Key Challenges : Data and Legal Requirements• Information Technology – Fully interoperable standardised electronic medical records and clinical decision support tools.• Intellectual Property – A stable and robust IP environment will be essential for the bioscience sector to have confidence to commit the necessary high-risk investments for the R&D of all novel products.• Privacy – A need to establish and maintain robust database security and controls on data use building upon the procedures in place for confidential patient data. – Develop mandate and deploy key technologies and standards for the encryption, password protection, auditing and access coding of data, their use and control.• Standardisation – Shared standardised bio-specimen repositories and standard operating procedures. – An informed consent process that allows for the testing of anonymous samples for genetic markers not known or anticipated at the time of collection. 44
  46. 46. Key Challenges : ReimbursementThe Stratified Medicine Commercial Paradox• There are potential technologies and services which may well improve stratification of the patient population and potentially lead to better clinical outcomes which will not be supported by pharma due to perceived technical or more commonly market risk.• Fundamentally, stratified medicine presents a commercial paradox, it seeks to create a new increased return by reducing the size of the patient pool eligible for a particular therapy or drug.• Estimating the commercial viability that this trade-off generates is extraordinarily difficult and complex for even large pharma to evaluate.• There are three main considerations on the part of pharma: – Technical and regulatory risk : There must be a reasonable prospect of clinical success, and clear strategy to overcome the additional technical and regulatory barriers involved in incorporating new biomarkers and/or companion diagnostics into the therapy development process. – Market risk: There must be a reasonable prospect of the final product being able to command a premium on margins that healthcare providers will pay for based on improved clinical outcomes.• Significant uncertainly on any of these issues will block investment – at the present time market risk, particularly the lack established business models for new stratified medicines, is the greater barrier. This applies to both major pharma and SME’s. 45
  47. 47. Key Challenges : Valuation modelling for Stratified Medicine Estimated value of Non-stratf ied Oncology Valuation M ode l "all comers" Strategy (=100%) Increase f rom favourable pricing/reimbursement 3000% Increased value f rom longer treatment duration 2000% Market increased share gained from better therapy targeting Re lative 1000% Marker value loss f rom reduced e NPV overall number of patients 0% Shorter development time gained by using biomarker -1000% Low er development costgained by using biomarker -2000% Increased value gained f rom CDx biomarker Adapted from Trusheim et al Nature Reviews 2011 Estimated Value of a Stratified Biomarkers Strategy• A very simplified indication of the types of factors involved and the complexity of the analysis required is given above.• The need for support for the development of new business models and more importantly development of business opportunity valuation models has been recognised by both NIH and TSB.• Enabling access to such expertise to Scottish companies, particularly SME’s and technology transfer offices, will be a very important factor in the development of this sector.• Without being able to at least model value for new biomarkers, commercial investments valuations cannot be estimated and investment decisions will be deferred. 46
  48. 48. The Stratified Medicine Commercial Paradox: Genomics• The commercial Paradox of Stratified Medicine will significantly affect genomics based medicine when it becomes an affordable option for healthcare providers. In the first instance the availability of individualised whole genome data will make a whole series of currents tests for individual DNA markers or sets of markers obsolete. It is likely that the provision of sequencing platforms services will create a large and rapidly growing market, but one which will be quickly commoditised. Commercial efforts to develop higher value products will quickly be driven towards data management and interpretation services and products, mirroring the hardware software content distinctions in the computing sector.Adapted from Strategic Analysis of theEuropean Markets for Theranostics 2009 47
  49. 49. Pharma Driven Mainstream Stratified Medicine• At the present time the major pharma and biotech companies dominate and to a large extent dictate commercial activity within the stratified medicine market place.• They are the ultimate route and the main source of funding and demand to support the development and validation costs of new stratified methods in drug discovery and targeted therapeutic products.• Products and services which meet the pharma companies present perceived needs for better stratification technologies therefore have a route to fund validation of their technology. This creates a significant commercial opportunity for Scottish companies and research partners to participate in the growth of Stratified Medicine through the provision of specialist technology or services.• The opportunities arise in two main areas Cost effectively accelerate or improve the quality of the therapeutic drug discovery and development process. Cost effectively improve the quality and delivery of the final therapeutic through a a companion diagnostic assay or technique.• These opportunities will only be supported if the Pharma company can justify the investment on the grounds that the new product or service will meet these criteria 48
  50. 50. Key Challenges: Summary• The great variety of the challenges that have been identified as critical to the future development of stratified and personalized medicine underlines several important messages.• Effective progress will require effective collaboration among multiple agencies and disciplines.• Specific technical or procedural problems can act as a brake on the whole sector but this also creates commercial opportunities.• Difficulties arising from determining business models and realistic valuation modelling may also act as a brake preventing or delaying what would otherwise be justifiable investment decisions.• Given these uncertainties and the emergent nature of the field there is a big role for pre-competitive intervention.• Thus agencies such as Technology Strategy Board or Scottish Enterprise which can launch calls for targeted funding proposals, or specific interventions such as Health Science Scotland will continue to have a big impact priming collaborations and commercial activity. 49
  51. 51. High Level Life SciencesSubsector Overview
  52. 52. Stratified Medicine : Market Fundamentals • The fundamentals of this market are relatively simple. In most case a provider of a useful biomarker partners closely with a major partner company on product development. This is usually a major pharma company but not Major Partner always. In this model the interests of the biomarker provider and therapy are agreed and Biomarker Therapy Provider relatively aligned. Technology PHARMA • Typically the biomarker is used either in drug development and/or developed as a Rx-DxServices Providers BioTech products. In either case the major partner takes Medtech “C the product through the regulatory and ol la Co marketing process. The primary customer is the bo nv ra en health care provider. te tio clo na • An alternate route exists whereby a new CDx se lS ly tra biomarker can be produced independently of a wi te th gy major partner and marketed to the healthcare Th er provider to save costs. ap yP ro vid e r” Regulatory Healthcare Providers “Alternative” Strategy “develop in house” Patients 51
  53. 53. Scottish Stratified Medicine Overview • Key Issues Scottish Technology Collaborative Principle Partner − Specific subsectors involved and Services Providers Opportunities in stratified & personalized medicine MAJOR Research Tools Companies − The central importance of PHARMA having a major therapy development partner Pharma CRO Companies * − Collaborative opportunities Funding between companies and Drug Discovery SME’s Discovery research base Bio- informatics Companies Development − The strategic role of HSS Market launch MedTech: IVD Companies * of Products Targeted MedTech: Imaging Companies * Therapeutic products MedTech: Devices Companies * Using Regulatory CDx & Biomarkers Authorities Clinical & Life Sciences Healthcare Translational Research Base (Health Science Scotland) ProvidersKey Sectors Life Science Strategy 2010 Patientshttp://www.lifesciencesscotland.com/media/46442/scottish_medtech_landscape_overview_nov_11.pdf 52
  54. 54. Research Tools Subsector Overview• Overall global market • Scottish landscape – The global research tools market was $43 billion in 2011 and is expected to be $81 Corporate presence: Life Technologies, billion in 2016. Millipore, Thermo-Fisher, Agilent – Projected Global CAGR is high around SME base: SAFC, Cyclogenix, Dundee Cell 13.5% Products, Avanticell, Arrayjet, Lab 901. Link – The leading market segment is DNA/RNA Technologies, Cypex, Immunosolv Destina, technologies and reagents over 50% Ubigent, NCIM E&O Labs, Sistemic followed by cell based and protein based technologies. Academic strengths: Broadly based strengths – Cell based reagents and tools will grow in translational medicine to both evaluate and most quickly at CAGR 19%. act as source of new research tools.• Relevance of stratified medicine to the sector Relative importance to Scotland: The – The growth of personalised medicine is a research tools sector is a small (estimated very important driver in this market. around 7-8% of turnover) but highly significant – The increasing emphasis on genomics sub-sector due to the presence of some major proteomics and cell based models in both corporate sites most notably but not exclusively academic research and commercial Life Technologies. There is also a healthy SME research accounts in large part for the base producing a wide range of products often healthy and predicted continued rapid combined with related CRO services. growth in the sector. 53
  55. 55. Research Tool Subsector - Scottish Opportunities• This sector represents one of clearest opportunities for Scotland to benefit from the growth in stratified and personalised medicine. Both major corporate players and a healthy SME base co- exist with a very highly developed and competitive research base.• The corporate presence could be exploited both to gain early access to next generation genomics and other technologies into the research and SME base.• Similarly the corporate presence could act as a route to market for SME technologies over and above an acquisition lead strategy.• There is a clear alignment of interests between large corporations, SMEs and the translational research base, for companies to position themselves to exploit immediate opportunities for growth presented by providing new tools and reagents into the rapidly growing stratified and personalised medicine market.• There is therefore scope for increased collaborative interaction between the company base in general and the translational research base.• The recent collaboration between ArrayJet and Generation Scotland illustrates the potential for effective brokering of collaborations to accelerate market entry by SME’s through effective interaction with the research base. 54
  56. 56. In Vitro Diagnostics Subsector Overview• Overall global market • Scottish landscape – The global In vitro diagnostics market was $46 billion in 2010 and is expected to be $62 billion Corporate presence: LifeScan (J&J), Alere*, in 2015 Genprobe, Biorad, Renishaw, Rhone-Poulenc – Projected Global CAGR is healthy and around SME base: Axis-Shield *, BBI*, Omega, ADL, 6.2 % Avacta, Mode, Alba – The leading market segment is lab based centralised diagnostic testing with point of care Relative importance to Scotland: The in vitro and molecular diagnostics representing the diagnostics sector is similar in scale (~10% of two fastest growing subsectors. turnover) and structure to research tools sub sector. A strong, and now dominating corporate• Relevance of stratified medicine to the sector sector, provides global products serving in – As will be clear from the previous discussion particular diabetes and cardiovascular markets the growth of companion diagnostics is at the with a healthy SME base fed by new technologies moment a relatively small segment of the particularly platform technologies often arising overall diagnostics market. from the from the research base through POC – However companion diagnostics is seen as an funding. important area of new growth within the industry and has prompted a an increasing Academic strengths: There is a very strong number of Pharma and diagnostics tradition of infectious disease, immunology and collaborations and alliances. analytical platform based research within the Scottish academic community. A significant proportion of proof of concept project have been Source: Health Research International, 2011 diagnostics related. Opportunities in Global Medical Devices and Diagnostics 55
  57. 57. In Vitro Diagnostics - Scottish Opportunities• With the emergence of CDx and the opportunity to charge a premium on margins due to the linkage of the diagnostics with therapeutics, significant new commercial opportunities will open up for the significant in vitro diagnostic cluster of companies in Scotland.• That cluster’s bias towards diabetes (Lifescan) and cardiovascular products (Alere) aligns well with the medium term disease roadmap for stratified medicine. Similarly the strengths and focus on point of care platforms of these two major companies and many of the SME’s is a long term strength in the context of stratified medicine.• The newly developed Point of Care diagnostic device to monitor BNP cardiac biomarkers in patients with heart failure at home and thereby direct medication is a classic example of how all of these Scottish strengths can align with the trends towards stratified medicine.• This device was developed by Alere at Stirling and tested in partnership with Cardiologists in Glasgow University and has recently been launched in the Nordic markets. This same project also highlights many of the technical and market risks in the sector and the level of funding required (>$100 Million) in order to develop a globally competitive product.• In the same vein Omega diagnostics has created a highly competitive product monitoring highly individualized responses of patient to food allergies.• A potential weakness is that, with notable exceptions such as Genprobe, most of the Scottish company IVD product range is protein or other non-molecular analyte based. Similarly and with some notable exceptions such as Mode diagnostics there is relatively little emphasis on oncology diagnostics or biomarkers.• However these caveats aside, the IVD sector in Scotland is potentially well positioned to take advantage of opportunities emerging from stratified medicine.• The sector has the scale of operations, depth of R&D and manufacturing capability and marketing experience to do this.• It may, at the moment, lack a deep level of engagement with stratified medicine opportunities as evidenced by lack of participation in the last TSB call for biomarkers and (with the exception of ArrayJet) relatively little interaction with Generation Scotland and other biobanks. These are issues which are being addressed in the IVD action plan. 56
  58. 58. Medical Imaging Subsector Overview• Overall global market • Scottish landscape – The global market for Medical Imaging was $24 billion in 2012 and is expected to be $37 billion in Corporate presence: Toshiba Medical Systems 2015. – Global CAGR is moderate around 6 % SME base: Optos, Expert eye Edinburgh Instruments, – X ray imaging at 24% still retains its long Golden photonics, Diagnostic Sonar BCF established market leadership just from a clutch of major competitors Ultrasound MRI & CT each Relative importance to Scotland: The medical imaging with around 20%. Cardiac imaging and nuclear company base sector in Scotland is relatively small with medicine comprise smaller sectors. There is a long (<2%) and has only one significant corporate site: Toshiba. term trend away from X rays and a more recent one There is localised niche strengths in the SME base notably of combining imaging techniques in particular in ocular related applications (Optos) and spectroscopy. functional modalities such as CT with structural modalities MRI & PET. A further significant Academic strengths: subsidiary market which supports imaging is in the SINAPSE – Imaging consortium of 5 universities across provision of imaging agents and tracers. Scotland Royal Observatory – This market is highly concentrated dominated by Edinburgh Highly sophisticated transferable image analysis top tier major systems providers: GE, Philips, and sensors capabilities. Siemens Hitachi and Toshiba. IMSaT – “Diagnostic & Therapeutic Imaging” –• Relevance of stratified medicine to the sector collaboration between Dundee and St Andrews – Medical imaging is an interesting market with Stanford-Scotland Photonics Innovation Collaboration respect to stratified medicine in that most major medical research centres have an installed base of advanced imaging technologies which can be used for patient stratification given the appropriate biomarker. Source: Health Research International, 2011, Opportunities in Global Medical Devices and Diagnostics 57
  59. 59. Imaging Companies - Scottish Opportunities• This sector represents a strong opportunity for the translational research base to exploit the growth in stratified medicine but a more limited opportunity for the company base.• There is a high degree of collaboration among all of the major centres.• The Innovation opportunities in this sector are principally: − New imaging platforms or combinations such as PET - CT and SPECT -CT − New Imaging reagents tracers or markers particularly real time MRI in preclinical testing. − Advances in photonics and fibre optics are giving rise to novel optical based technologies - such as optical coherence tomography, hyper spectral imaging, near infra red spectroscopy − Data analysis and interpretation algorithms and software. − Specialist imaging services to NHS and for clinical trials• Development of new platforms and reagents faces technical regulatory and market difficulties on scale similar to new drug development.• Major Platform development is highly expensive and dominated by a select group of major companies: GE, Philips & Toshiba.• The cost of developing and proving safety for a new imaging tracer is very expensive and highly regulated. 58
  60. 60. Imaging Companies Sector: Scottish Opportunities• As Optos has demonstrated, it is possible for a Scottish based company with a technology lead in a niche area to be highly successful.• However, for most imaging related opportunities partnering with a significant partner is essential to take the technology through development, validation, regulatory requirement and to gain sufficient marketing exposure.• Against this background the presence of Toshiba in Scotland is highly significant.• There may be scope for identifying opportunities for Scotland at the interface of medical imaging and stratified medicine and UK initiatives, notably the GSK Hammersmith Imperial collaboration (£48 Million) provide a potential model.• Imaging based technologies to stratify patient populations are already used de facto in selecting cancer therapeutics influencing not only drug based therapies but also instrument based therapies most notably radiation treatments.• The opportunities for the life sciences imaging sector will be further investigated in more detail within a separate report. 59
  61. 61. Medical Devices Subsector Overview• Overall global market • Scottish landscape – The medical devices market, which includes Imaging and IVD, is a major global market growing Corporate presence: Johnston & Johnston, Vascutek, Karl Stortz, Siemens steadily driven by the twin major long term trends of ageing and expansions of developing country SME base: Haemonetics (UK), Peri-dent, BDF, Wright markets. For these purposes IVD and Imaging are Health Group, Promedics, Orthopaedics, Oticon, Touch considered separately. Bionics, BioSil, Aircraft Medical, W Munro, Cascade – The market was estimated to be $327 billion and Technologies, Axsys Technology, BioFilm, Buchanan projected to grow to $327 billion (2015) Orthotics Relief Orthotics, Kare Orthopaedics, Lojigma Mobility, Omega Critical Care, Plastech Group, Ocutec, – It is dominated by several major players such as Juzo UK, KLZ Optics, Vascular Flow Technologies, Medtronics, Covidien & GE. Mpathy Medical Keeler, Point to Point, SureSensors, – Global CAGR 5.4% Ohmedics, Biomedical Monitoring, Caledonian Medical Capital HPLC, Carbon Filter Technology CardioPrecision,• Relevance of stratified medicine to the sector Culzean Medical, Dan, Medical, Dental Technology Services, Digitimer, Elcomatic, Emblation Medical, – At the moment the impact of stratified and Funky Moves, GM Instruments, JMW Medical, Lombard personalised medicine on medical devices is very Medical, Optriq, RA Laboratories, Salts Healthcare, limited. This may change in future if for example Second Skin, Sentient Medical Smiths Medical, Viopti. biomarker based stratification methods can be extended from other therapeutic classes to guide Relative importance to Scotland: MedTech is deployment decisions on a specific medical device designated a key sector within the SE Life Sciences or implant. Strategy and contributes approximately 27% to the – This is most likely to be initiated in clinical Scottish turnover of which 10% can be attributed to IVD and 5% to Imaging the balance being primarily devices application areas such as the cardiovascular sector and related services. where high value devices can be linked with accessible predicative biomarkers. Academic strengths: IMSAT Source: Health Research International, 2011 Opportunities in Global Medical Devices and Diagnostics 60
  62. 62. Medical Devices• In the absence of imaging technologies and in vitro diagnostics, the near term growth opportunities generated within the medical devices sector are somewhat limited.• However, given the overall size of the medical devices market and the relatively high costs of many of its therapeutic interventions, even a relatively small influence of stratified or personalised medicine could generate a significant market impact.• The most obvious areas where one would expect to see this begin to happen would be in guiding decisions on high value cardiac, CNS or orthopaedic implants.• Clearly imaging technologies are already used to guide such decision making and to that extent stratified medicine is already applied to medical device therapy.• However, in future it is plausible that genomic or other molecular biomarkers (appropriately validated) may influence device based therapeutic interventions.• At the present time these opportunities may be best supported by pre-competitive basic research and proof of concept mechanisms of support. 61
  63. 63. CRO Subsector Overview• Overall global market • Scottish landscape – The global market for outsourced service to the CRO company base was $26 billion in 2012 and is Corporate Presence: Quintiles, Aptuit, Charles River, expected to be $37 billion in 2015 PPD, Astra-Zeneca – Global CAGR is moderate around 6% – The major market for all of these companies is the Relative Importance to Scotland: The CRO subsector outsourcing of R&D and services both preclinical and in Scotland is highly significant contributing clinical trials related services from the major pharma. approximately 16 % of life Sciences turnover significant – The CRO base is one of Scotland’s critical strategic corporate site. Major corporate presence is is strengths in life sciences with a good representation accompanied by a group of highly innovative and from the main corporate players. adaptive SME’s. This strategically important nature of this sector is explicitly recognised in Scottish Enterprise – There is a healthy SME base which is continually strategy which names Pharma Services alongside renewed through the presence of a deep pool of staff MedTech as its two priority areas. Stratified Medicine is from existing SME and corporate facilities leading to important in its likely significant impact on the ability of prompt new company formation. The fact that new Scotland to anchor build and grow these companies CRO’s can be established and generate early revenue means that they are feasible investments Academic strengths: The truly outstanding quality and for the Business Angel investment community in impact of Scottish academic research in pharmacology Scotland. is evidenced by the Dundee and Aberdeen departments being ranked 1st and 2nd by citation in the world with• Relevance of stratified medicine to the sector Glasgow and Strathclyde ranked 7th and 20th within Although overall in house pharma R&D on drug discovery Europe*. has been declining, the pharma companies continue to outsource their services generating steady growth within the CRO market. As the use of biomarkers in drug discovery, clinical trials and CDx becomes increasingly prevalent the CRO companies have to adapt accordingly http://www.timeshighereducation.co.uk/story.asp?storyCo in order to remain competitive. de=410026&sectioncode=26 62
  64. 64. CRO Sector: Scottish Opportunities• Stratified medicine poses significant and immediate challenges to but also offers great opportunities for CRO companies.• The challenges are that as stratified medicine becomes more embedded into the drug discovery development and clinical trials processes technical and regulatory complexity will increase significantly.• As discussed above new biomarker development validation and testing will become an early phase in drug discovery and development and the design and management of clinical trials significantly more complex.• On balance this should be a highly positive development for the Scottish CRO base.• Scotland’s CRO USP, successfully executed over many years, has been to provide leading edge services and technical solutions at the high end of the outsourced value chain.• Major new trends such as stratified medicine which drive demand for more complex high value products and innovation should play to Scotland’s strengths providing that: – Both corporate sites and SME’s recognize the challenges early and can retain their international competitive edge against other SME’s and internally within the major CROs. – In practice this means that potential bottlenecks, both general and those specific to stratified medicine which may impose a relative disadvantage to Scotland must be identified and mitigating action taken. – These could include, changes in; the cost of operations; Regulatory environment; disruptive technical change driven by genomics and/or bioinformatics, access to NHS etc – Identification and Analysis of these challenges and bottlenecks, incorporating the impact of Stratified and personalized medicine on the CRO base is a central part of a Pharma services strategy. 63
  65. 65. Bioinformatics: Subsector Overview• Overall Global Market • Scottish Landscape – Bioinformatics is a small but very fast growing market sector with revenues in the region of $1.5 billion SME base: Aridhia, Fios Genomics, INPS expected to be $3.0 billion 2015 – Global CAGR is very high around 25% Relative importance to Scotland: At the present time this is a very small sector within Scotland with only a – This market can be divided roughly into three main few companies. However given the rate of growth of the parts: global market and the availability of supplementary 1) Primarily informatics focused companies who have funding from public sources of funding there is a good customized their products too handling biological case to expect and target rapid growth from these information but could in principle handle other types of companies. data. 2) Companies which use specialized algorithms for Academic strengths large specialist biological data sets for example DNA The Division of Pathway Medicine University of microarray data, protein structure or image analysis. Edinburgh and allied associated researchers with other – Bioinformatics companies which utilize proprietary Universities members Scottish Bioinformatics Forum. software and “curated” databanks to allow users to The strong clinical translational research infrastructure place their experimental results in a wider biological and they more integrated level of electronic medical context through advanced pathway analysis. record handling within Scotland are further competitive advantages.• Relevance of Stratified Medicine to the sector – Bioinformatics companies will be one of the primary beneficiaries of the growth in stratified and personalised medicine. Both of these trends massively increase the quantity of data and the relative value of software, analytical algorithms and curated databases which can extract and add value to this data. 64
  66. 66. The Bioinformatics Opportunity• Despite the very small size of the boinformatics company base in Scotland, it is potentially one of the most promising areas of opportunity in stratified and personalized medicine in Scotland as: − The very high rates of growth predicted and the emergent nature of the field mean that prospects for high growth start-up companies are higher than in more established sectors − In principle the combination of the academic excellence in pathway medicine and the acknowledged strengths in medical records management in NHS Scotland are highly significant advantages. − Aridhia’s recent launch and success in TSB funding application provides some evidence for the potential competiveness of Scotland as a base for Bioinformatics companies. − There are clear precedents for attracting interest from the major ICT companies into this sector. For example Google has invested directly in 23andme a Genomics company IBM in DNA sequencing analysis.• The case for crafting initiatives tailored specifically to developing and attracting companies of scale in the Bioinformatics field may be worth consideration. 65

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