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MentLife, Drug Discovery, Development & Trends, nov 6 2013


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MentLife, Drug Discovery, Development & Trends, nov 6 2013

  1. 1. Drug Discovery, Development & Trends Research and Development in the Pharmaceutical Industry From the Present to the Future Richard M. Cook Director, Angus Consulting 1
  2. 2. My Background • >35 years working in Pharmaceutical R&D • Companies: – Beecham Pharmaceuticals (UK) – SmithKline Beecham (UK and US) – Astra; AstraZeneca (US and Sweden) – Independent Consultant in Life Sciences & Healthcare (Sweden) 2
  4. 4. Geographical Location of the World’s 10 Largest Pharmaceutical Companies - 1985 Hoechst 1863 Abbott 1900 Pfizer 1849 Bayer 1863 Lilly 1876 Ciba-Geigy 1971 Warner Lambert 1955 Merck 1891 AHP 1926 Bristol Myers 1887 Market dominated by US and (mainland) European companies; majority founded in 19th century 4
  5. 5. Geographical Location of the World’s 10 Largest Pharmaceutical Companies - 2013 Global Pharmaceutical Markets (by country) 1. USA 2. Japan 3. China Astra Astra Zeneca Zeneca 1999 Abbott GlaxoSmith Kline 2000 Lilly SanofiAventis 2004 Pfizer Merck Novartis 1996 Roche 1982 J&J 1886 Nearly 30 years later US and European companies maintain market dominance; note 5 consequences of extensive M&A activities from 1980’s onwards
  6. 6. A Selective History of the Global Pharmaceutical Industry 1827 1859 - Bulk manufacture and sale of alkaloids in Germany (Merck) Industrial production of medicines, production of patented medicines, 1st factory for producing only medicines (Beecham) 1880’s - Merger of European chemical dye companies with apothecaries (Merck; CibaGeigy) 1885 - Manufacture and distribution of Cocaine by Merck (research collaboration with Sigmund Freud) 1897 - Marketing of Heroin and (less succesfully) Aspirin by Bayer 1906 - Introduction of US Food and Drug Act compelling companies to label products 1948 - Establishment of social heathcare systems in Europe (UK); adopted by Sweden in 1955 1960 1962 - 1964 - Introduction of world’s 1st semi-synthetic penicillin (Beecham) Thalidomide scandal results in strengthening of FDA in the US and of similar bodies in Europe; medicines now need to demonstrate both efficacy and safety 1st ethical strictures imposed on clinical testing in Helsinki Declaration 6
  7. 7. A Selective History of the Global Pharmaceutical Industry 1975 1976 1977 - Technology for making mAbs published (Kohler & Milstein; Cambridge Univ) Emergence of biotechnology industry with foundation of Genentech 1st mega/blockbuster drug (annual sales > $1 bn) launched (Tagamet; SmithKline) 1980’s - Pharma companies switch from rational synthesis to high thruput screening, combinatorial chemistry and automation 1984 - Hatch-Waxman Act regularises production of generic medicines 1985 - Registration of recombinant human insulin - first product made by recombinant DNA technology (Genentech/Eli Lilly) 1986 - 1st therapeutic mAb approved (OKT3; Janssen); since then 22 mAbs have been approved 1989 - 1st mega-merger between Big Pharma companies (Beecham/SmithKline Beckman); mergers averaged 3 per year during 1990’s 7
  8. 8. A Selective History of the Global Pharmaceutical Industry 1990 1993 1994 1995 1998 2000 2001 2002 2006 2009 - 2012 2013 - 1st HIV reverse transcriptase inhibitor approved (Retrovir; GSK/NCI) 1st alliance to use gene sequencing to identify novel targets (SmithKline Beecham/Human Genome Science) 1st humanised mAb approved (Zenapax/Daclizumab; Roche/Genentech) TRIPS agreement enforcing 20-year patent term on Intellectual Property Approval of Herceptin drug-diagnostic combination (Roche/Genentech) Human genome sequenced; merger of Glaxo and SmithKline (GSK) to create world’s largest vaccine business Pharmaceutical Industry ranked No. 1 most profitable industry on Fortune 500 1st fully human mAb approved (Humira; Abbott/AbVie) 1st approval of bio-similars (Omnitrope; Sandoz); Reverse takeover of Roche by Genentech; Pharma industry ranked No.3 most profitable industry on Fortune 500 1st gene therapy approved (Glybera; UniQuire) 1st antibody bio-similar (Inflectra; Celltrion) based on Infliximab (J&J) approved 8
  9. 9. BIG PHARMA* AND BIOTECH COMPANIES * Companies with revenues > $3 billion and/or R&D expenditure > $0.5 billion 9
  10. 10. A Brief Comparison of Pharmaceutical vs Biotechnology Companies I Pharma Biotech (applied knowledge of biology)  Emerged late 19th/early 20th  Emerged in 1970’s as an outgrowth of centuries initially in Europe interdisciplinary research in molecular (Germany) and later established in biology, immunology and biochemistry US. Medicines based on synthetic  Founded to exploit development of universityderived discoveries small molecules produced by  Co-incided with strengthening of patent chemical processes legislation in Europe/US  Limited number of major companies  Large number (>1,000 in US alone) of dominate industry; focus on small companies (circa 100 employees medicines & vaccines to manage and per company) using cellular/ cure disease biomolecular/ genetic processes to  10 largest companies control 33% of develop medicines, diagnostics, biofuels, market agricultural products etc.  Cash rich - funded through profits made by selling approved medicines  Often cash poor – mixture of private and public funding (e.g. Pharma; Venture  Very high overheads Capital)  Lower overheads than Pharma companies 10
  11. 11. A Brief Comparison of Pharmaceutical vs Biotechnology Companies II Pharma  Focus on Research, Development, Manufacturing & Marketing  2x more money spent on Marketing vs R&D, but....  5 x more money spent on R&D compared to average US manufacturing company Biotech (applied knowledge of biology)  Focus on Research  Value driven by Intellectual Property  Employs mainly scientists  Often dependent on Big Pharma for development of leads  Transition to Big Pharma now replaced  Employs both scientists & nonby Partnering with Big Pharma scientists  Biotech model increasingly applied  Increasingly dependent on to Big Pharma R&D but note that universities/biotech companies for indespite $0.5 tr investment over last licensing of potential new therapies 25 years ROI for the industry as a  In 2010 Biotech deals contributed 34% of whole has been negative revenue of majorPharma companies vs 17% in 2001  Historically ROI’s > 18%, now declined to ~8% (cf: Apple Inc has an ROI = 14.2%)  Of >1800 US biotech companies founded since 1980 only 6 are net positive 11
  12. 12. R&D Drug Safety  Genetics  Heath Economics  Imaging  Statistics  Patents/Legal  Regulatory Affairs  Information Technology  Archiving  Pharmacy  Biology • animal technology • DMPK • pharmacology • toxicology • biotherapeutics  Chemistry • analytical chemistry • chemical technology • medicinal chemistry • process chemistry • computational chemistry  Clinical studies • physicians • CRA’s • clinical scientists • clinical project managers • medical writing What kind of people are employed in the Pharma and Biotech Industries? • In Europe: ~700,000 total employees ; ~160,000 in R&D • In 2012 Pharma and biotech sectors amounted to 18% of R&D expenditure worldwide Commercial  Healthcare communications  Medical information  Pharmacovigilence  Sales and Marketing Manufacturing & Supply  Chemical engineer  Production engineer  Plant engineer  Validation engineer  Pharmacy  Quality Control & Assurance 12
  14. 14. What is Pharmaceutical R&D? • Process of discovering, developing and bringing to market new ethical (available via prescription) drug products • Most pharmaceutical R&D is undertaken by private companies and funded through the profits made by selling the products • A largely sequential process divided into preclinical and clinical phases (serial search, filter and selection) 14
  15. 15. Pre-clinical Phases [ 1. Discovery] Target Selection Hit Identification Lead Identification Lead Optimisation • Target Identification - Establishing the link between a given target and a particular disease process. Is there an unmet medical need? • Synthesis and Extraction - Process of identifying new molecules with the potential to produce a desired change in a biological system. Requires: – Understanding the fundamental mechanisms of disease or biological processes – Research on the action of known therapeutic agents – Random or focused selection (chemicals; cDNA’s) and broad biological testing • Biological Screening and Pharmacological Testing - Studies to explore the pharmacological activity and therapeutic potential of compounds. An iterative process using: – Tissues, enzymes and cloned receptors plus computer modeling – Isolated cell cultures – animal and human – Animals and in vivo disease models 15
  16. 16. Pre-clinical Phases [2. Pre-clinical Development] • Conversion of an active compound into a form and strength suitable for human use – – – – Manufacture of drug substance/active pharmaceutical ingredient (API) Pharmaceutical Dosage Formulation, Drug Delivery and Stability Testing Analytical and Bio-analytical method development and validation Metabolism and Pharmacokinetic studies (ADME) to determine how long a drug remains in the body – Good Manufacturing Practice (GMP) manufacture and documentation – Toxicology and Safety Testing • Use of rodents and non-rodent mammalian species to establish maximum tolerated doses, general safety, toxicity patterns and help define safe human doses with a Therapeutic Index • Focus on the relationship between dose level, frequency of administration and duration of exposure in both short (typically up to 1-month) and long (up to 9 –months)-term toxicity studies 16
  17. 17. Pre-clinical Development Pathway from identification of an active drug to initiation of the first clinical trial (Steinmetz & Spack, 2009) Parallel and inter related activities involving manufacturing, analytical, documentation, safety and clinical components 17
  18. 18. Clinical Phases • Phase I - typically 12-month duration – 20-80 healthy volunteers to evaluate drug safety, tolerabilty and drug profile at different doses – defines pharmacologic effects at anticipated therapeutic levels and ADME patterns • Phase II - typically 24-month duration – Controlled clinical trials in 100-300 patients to establish drug efficacy (proof of concept) and short-term risks – May require additional studies involving different ethnicities and/or ’at-risk’ populations • Phase III - typically 3 years duration – Controlled and uncontrolled multi-centre clinical trials in 10003000 patients to determine effectiveness and dose plus identify adverse reactions; – Evaluation in children as appropriate 18
  19. 19. Regulatory Review & Approval plus Post-Marketing Surveillance • Regulatory Submissions – Applications for approval to market the drug – Can take up to 2.5 years and documentation exceeding 100,000 pages – Negotiations with re-imbursement authorities and possible need for additional comparator studies • Phase IV (post-marketing surveillance) – Experimental studies and surveillance activities originally undertaken once a drug is approved but now increasingly a condition of market approval – Additional safety measurements including long-term potential for morbidity/mortality in large and varied populations – Evaluation of different delivery methods or determination if the product may be used to treat another condition 19
  20. 20. Plus..... • Process Development for Manufacturing and Quality Control – Engineering and manufacturing design activities to establish a company’s capacity to produce a product in large volume – Development of procedures to ensure chemical/biological stability, batch-to-batch uniformity and overall product quality 20
  21. 21. Simplified Development of a New Medicine Year 1 2 3 4 5 Applied Research Phase of R&D 6 7 8 9 10 11 Clinical Development 12 13 14 - 15 Post-market surveillance; Registration product maintenance • Pre-nom • Target Selection 1st dose in 1st pivotal • Hit Identification • Pre-clinical patient dose • Lead Identification • Lead Optimisation Phase I Phase IIa/b Phase III 1st launch Phase IV Toxicology and PK studies 1st dose in man Long -term safety Clinical development Pharmaceutical development/formulation Predictive Sciences (PK/PD, biomarkers, chemistry, safety) Proportion of hits, # of cpds Approx. Costs sm mAb 5-10,000 1-5 $376 m (SM) $615 m (mAb) 1-3 1 1 1 1 1 1 1 ~ $1 bn Expensive, closely regulated, sequential process typically taking > 12 years before any 21 $$ returns
  22. 22. Global Biopharmaceutical Industry • Biopharmaceuticals are drugs produced by biotechnology (i.e not extracted from a native source or synthesized by chemical reaction) and include therapeutic proteins, vaccines, allergens, nucleic acids • Current worth: $145 bn, projected to reach $167 bn by 2015 (Global Pharma worth $300 bn, rising to $400 bn by 2015) – 6 of the current top 10 selling drugs are biopharmaceuticals • >300 approved biopharmaceuticals on market vs >1000 for Global Industry – Biopharm approvals growing at 30% per annum versus < 5% for small molecules • Biopharmaceutical success rate in clinic 30% vs 6-8% success rate for pharma industry as a whole • Biopharm Product Cycle Time takes ~14 years and costs between $0.8 – 1.0 bn (comparable time and costs as for small molecules) • Of the pharmaceutical industry’s top 50 growth drivers for 2012-2017 (Pharma Outlook, Q1 2013), 34% are biopharmaceuticals (mAbs and non Ab therapeutic proteins) and 26% of these are products for cancer An expanding market, outperforming traditional small-molecule drugs, benefitting from rich late-stage pipelines and the development of emerging markets 22
  23. 23. A comparison of the Discovery and Development of Biopharmaceuticals and Small Molecules 1st IND submitted (US) Small Molecules (NCE’s) Target Selection Hit/Lead Generation • • • • • Lead Optimisation Pre-clinical development Target Validation • • • • • • Phase II Phase III Launch Generally simple, low mw chemicals Broad target and off-target effects Inexpensive to manufacture and sell Easy to copy and generics positively encouraged Conventional routes of administration (usually oral/inhalation) 1st IND submitted (US) Biopharmaceuticals (NBE’s) Target Evaluation Phase I NDA and review (US) Lead Isolation Lead Optim Candidate profiling Pre-clinical development Phase I BLA and review (US) Phase II Phase III Launch Generally complex, high mw molecules, often blocking protein:protein interactions Highly specific/limited target set and reduced off-target effects vs SM Expensive to manufacture and sell Manufacturing process is critical (low yield, time-consuming mammalian cell cultures) More difficult to copy but biosimilar pathways established although lagging behind generics Non-traditional routes of administration Research phase Development phase 23
  25. 25. How Successful Is This Process? New Molecular Entity (NME)* Approvals over last 10 years Highest number of approvals since 1996 n=53) 45 40 35 From 3,050 compounds in full development 30 to August 2013 25 20 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 * Small molecules (NCE’s) plus biopharmaceuticals (NBE’s) approved by the FDA 25
  26. 26. NMEs per year versus total R&D spend in billions of US dollars between 1970 – 2008 (adapted from Samanen, J, 2012) Figures for 2011 indicate total spend on R&D exceeds $100 bn per annum. Global market size for pharmaceuticals will exceed $1 trillion by 2014 Annual approval of new medicines remains linear while cost of R&D is increasing exponentially This is not sustainable 26
  27. 27. Or Put Another Way...... The number of new FDA-approved drugs per billion US dollars of R&D spending has halved approximately every 9 years since 1950, [inflation-adjusted] (Scannell et al, 2012) 27
  28. 28. Why Pharmaceutical R&D Needs to Change • Current model appears not to be working as evidenced by ever- increasing costs, reduced clinical success and long cycle times.....but this is not all: • Altered Demographics – People living longer with higher proportion of chronic vs acute disease and increased expectations from health-care providers and patients requiring a change in research focus • Big Pharma no longer the only source of health-care provision – WHO estimates 4 billion people, 80% of the world population, presently using herbal medicine for some aspect of primary health care – Sept. 2013 – Google announce entry into healthcare business with formation of Calico • High cost of drugs (and healthcare costs generally) in a shrinking economy and increasing influence of payers (governments, patients, HMO’s in US) – Note: actual cost of drugs makes up ~10% of total healthcare costs in Europe/US, but drug costs are easier to regulate – Increased costs and cycle times in part a reflection of increased Regulatory requirements and increased length and complexity of clinical trials for chronic diseases 28
  29. 29. Why Pharmaceutical R&D Needs to Change • Current model appears not to be working as evidenced by ever- increasing costs, reduced clinical success and long cycle times.....but this is not all: • Lack of harmonisation within a cautious regulatory environment and increased difficulty in getting novel drugs approved when already ’tried and tested’ medicines are available – However a conservative Regulatory Environment also makes entry into pharmaceutical market more difficult and maintains competitiveness of Big Pharma • Only ’innovative drugs’ will now be approved – Between 1995-2004, 66% of new drugs were similar to existing medicines • Newly-emerging markets previously ignored – By 2015 leading emerging markets (inc. BRIC countries) will account for 28% of global spending on pharmaceuticals versus 12% in 2005 • Increased competition from Generics and Bio-similars coupled with ’patent cliff’ – Generic drugs now constitute >50% of pharmaceutical prescriptions and 79% of approved drugs now have generic counterparts – Patent expiration started 2011/12 and will continue through to 2016, with loss of $33.2 bn in US sales alone in 2012 29
  30. 30. Changes in the Provision of Medicines over the last 60 years Research Pre 1960 Universities Development Sales/Marketing Local Pharma Companies Apothecaries Global Pharmaceutical Companies (Big Pharma) 1970 - 2000 Tech transfer via biotech industry Universities Contract research orgs Global Pharmaceutical Companies Biotechnology Tool Companies 2000 - today International Biotechnology Industry Universities Contract research orgs Local Pharma Companies Amgen; Genentech; Genzyme; MedImmune; Millennium; ImClone M&A means that these may often be the same companies Local Pharma Companies 30 Modified from Drews J , 1999
  31. 31. Changes to Drug Discovery & Clinical Development Processes over the last 40 years and Consequences 1970/80’s • Small molecule focus • Iterative, low throughput animal-based screening • Med-Chem optimisation of leads • All activities contained ’in-house’ • Small, focused clinical trials in well-defined patient populations Changes to drug-discovery process initiated via introduction of innovative technologies: inc. automation, systemisation, process measurement 1990/00’s • Target-based HTS of large cmpd libraries yielding small molecule leads with ’measurable developability’. • Structure-based rational drug design replaces trial and error methodology • Increased partnering with universities/biotech companies • Extensive, expensive, multi-centred trials in response to Regulatory/Payer demands • Patient selection driven by Commercial rather than Biological needs  1. 2. 3.  10-fold Increase in # potential drug targets  Increase in # drug-like molecules synthesised  Improvements in overall selection processes Increase in product cycle times (doubled since 1960’s) Failure of cmpds in clinic (Phase 2 success halved in 5 years) Increased costs (R&D cost escalation ~15-20% per annum)  Emergence of Biopharmaceuticals & increasing commercial importance of Abbased therapies 31
  32. 32. THE SEARCH FOR A NEW MODEL A Stimulus For Discussion 32
  33. 33. Current Future Large centralised organisations with all skills/expertise available in-house Virtual monopoly in drug design, development and distribution Good at managing financial and management risk of long-term projects, esp. in a volatile economic environment Good at diversifying risk of uncertain R&D investments Extensive M & A’s with large companies wanting to become larger and thereby increase market share while at the same time reducing competition Large companies: • split into smaller, autonomous R&D units (based on Biotech model) • divest into separate companies (e.g. Abbott/AbVie) • become even larger with superior economies of scale Some specialised internal (development) expertise is retained but companies become increasingly reliant on out-sourcing to low-cost countries or specialist CRO’s • In the US ~80% of R&D costs go on salaries M & A’s smaller but more frequent and much more fluid, often not exclusive 33
  34. 34. Current Future Highly professional S&M teams organised internally Well-defined processes in place for R&D and drug registration Highly succesful business model applied across industry provided external environment doesn’t change S&M increasingly fragmented with needs of multiple customers having to be addressed Changed external environment meaning established processes for R&D/drug registration unlikely to be relevant in new model(s) • Organisational separation of R from D unlikely to be practicable longterm • How to ensure culture of outsourcing doesn’t lead to loss of both quality control and internal ’know-how’ • Active measures to reduce R&D spending that may be indiscriminate and counter-productive over time • Who will fund new capability investments and how? 34
  35. 35. Current Future Broad business-focus covering multiple disease areas and primarily technology-driven Focus on blockbuster drugs to treat largely chronic diseases prevalent in Western industrialised countries (inc. Japan) Dominance of branded drugs Narrow business-focus with emphasis on product differentiation; incremental improvements to existing medicines no longer acceptable Driven by scientific expertise and innovation often by comparison with other industries Niche markets and/or medicines as part of a total health-care package with increasing impact in newlyemerging markets (e.g. Asia, Sth. America, sub-Saharan Africa) Increasing focus on hard-to treat diseases and combination drugdiagnostics. Generics and Bio-similars play an increasingly important role 35 • Increased emphasis on comparative efficacy and safety will result in larger/longer clinical trials driving up drug development costs
  36. 36. Current Future New ideas/approaches generated internally and supplemented by selective acquisition via universities/biotech companies Success dependent on speed of decision-making, execution and luck In-licensing traditionally driven by downstream concerns (marketing, manufacturing, distribution etc.) In-licensing of late-stage (de-risked) compounds New approaches increasingly as part of collaboration with university departments and companies funded by Venture Capital, often with financial input from Big Pharma. Will include new technologies as well as potential medicines. Example: • VC companies will only invest in well-defined leads with high probability of success • Early-stage inlicensing/investments increases risk GSK/Avalon to allocate $0.5 bn to fund up to 10 drug-development start up companies over next 3 years Success dependent on novelty of science underpinning idea In-licensing of potential early-stage medicines (including technologies) becomes an important focus 36
  37. 37. Summary Slide • Highly profitable industry, directly employing ~1.5 million people (US and EU) and with average profit margin in 1970/80’s twice that of median of Fortune 500 companies – Expected return from marketing a new drug is now 10% lower than in mid 80’s – Neverthelss R&D investments in Pharma industry have outpaced govt. investments in biomedical sciences • Cost of developing a new medicine increased dramatically in 21st century; product cycle times increased but now appear to have stabilised Decade 1950’s 6 - 1960’s 8 137 1970’s 11 150 1980s 13 194 1990’s 13 290 2000’s 15 802 2010’s • Approx. Product Cycle Time (years) Cost m$$ per drug (adjusted) 15 1380 Pharmaceutical Industry now entering a third stage of development Serendipitous growth Deterministic growth Stochastic development Which models will succeed and which will fail? 37
  38. 38. End 38