Deconstructing	  the	  Drug	  Development	  Process	  New	  Paradigms	  for	  Pharmaceutical	  Innovation	                ...
Agenda• Environment	  for	  pharmaceu1cal	  R&D	  • CSDD’s	  current	  drug	  development	  metrics	  • New	  models	  of	...
The Tufts Center for the Study of      Drug Development
Tufts CSDD is an . . .u    Academicu    Independentu    Multidisciplinaryu    Strategy and Policy Research Group
Our Mission . . .To provide strategic information tohelp drug developers, regulators, andpolicy makers improve the quality...
The Tufts Center for the Study of      Drug Development
The	  Current	  Landscape	  for	     Pharma	  Innova6on	  
Current Realities for Pharmaceutical                       Developers   • Patents	  on	  many	  top-­‐selling	  products	 ...
Supermarkets	                                                                                                             ...
Perception is Everything                   1990s:	  	  “FDA	  is	  too	  slow”	                     2000s:	  	  “FDA	  is	...
FDA’s Busy Regulatory Agenda for 2012       • Drug	  shortages	         • Follow-­‐on	  biologics	  review	  path	        ...
Patent Expirations of 10 Top-Selling                          Drugs Each Year                      2010                   ...
Patent Expirations of 10 Top-Selling                         Drugs – By Company                          2010             ...
‘Industry Leaders’ in Lost Revenues Due                to Patent Expirations                Pfizer                        ...
Top Ten R&D Spenders in 2010           Novartis                                                          $13.3            ...
New Drug Approvals Are Not Keeping                        Pace with R&D Spending                   60                     ...
Market Caps for Top-Tier Firms have                                   Dropped $495b in the Last Decade          $320      ...
$644                                                    =	                                                          4/10/1...
Strange Math                       	  	  	  	  	  High	  Profits	                         	  +	  	  SubstanIal	  Cash	  	  ...
“A cheap stock is no argument to buywhen there’s no growth on the horizon.I don’t see pharmaceutical sharesoutperforming.B...
The Changing Pharma Business Model               High Volume    Low Volume               Low Margins    High MarginsSource...
Bringing	  a	  New	  Drug	  to	  Market:	     Current	  Drug	  Development	                    Metrics	  
The Drug Development Pathway                                                            Basic                             ...
Clinical and Approval Times Vary Across           Therapeutic Classes, 2007-11                        CNS                 ...
Why Are There Differences Among                 Therapeutic Classes?                                     Antiinfectives   ...
Overall Clinical Approval Success Rates        for New Drugs has Dropped to 16%        Sys. Antiinfective                 ...
Phase Transition Probabilities by                                          Therapeutic Class           100                ...
Long Development Times and Low                                    Success Rates = High R&D Costs                          ...
“The average drug developed by amajor pharmaceutical company costs atleast $4 billion, and it can be as much as$11 billion...
Drivers of High Development Costs        • Chronic	  and	  complex	  indica1ons	          • Clinical	  trial	  size	      ...
“Business	  as	  Usual”	  is	  no	  longer	   an	  op6on	  for	  the	  R&D-­‐based	  	           biopharm	  industry	  
New R&D Strategies: 2 Approaches     u  R&D      Organization and Management         § Strategic/functional outsourcing:...
The	  Bioinnova6on	  Landscape	  is	               Changing	  
A FIPNet Model for Drug Development:        The Emergence of Innovation Nodes                    Research         Discover...
Trends in AMC-Industry                        Partnership Models                       Commonly Used                      ...
Obstacles and Opportunities in                Academic-Industry Partnerships                  Obstacles	                  ...
How Innovation Nodes Will Work                                         Diabetes                            Oncology       ...
Bottom Line:           The	  InnovaIon	  Landscape	  is	  shi]ing.	  	  In	             the	  new	  environment,	  all	  s...
Conclusions	  
Conclusions       • The	  1me,	  cost,	  and	  risk	  to	  bring	  a	  new	           medicine	  to	  market	  remain	  fo...
“You can be on the right track,               and moving in the right direction,              but if you’re not moving fas...
Tufts Center for the Study ofDrug DevelopmentTufts University, Boston, Massachusetts, USAKenneth I Kaitin, Ph.D.Professor ...
Science Shaping Our World-SHOW: Deconstructing the Drug Development Process: New Paradigms for Pharmaceutical Innovation
Science Shaping Our World-SHOW: Deconstructing the Drug Development Process: New Paradigms for Pharmaceutical Innovation
Science Shaping Our World-SHOW: Deconstructing the Drug Development Process: New Paradigms for Pharmaceutical Innovation
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Science Shaping Our World-SHOW: Deconstructing the Drug Development Process: New Paradigms for Pharmaceutical Innovation

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June’s SHOW will examine the drug development process and highlight new paradigms for pharmaceutical innovation. In the current pharmaceutical research-based drug industry, the source of many of the medications in use today, economic, regulatory, and competitive pressures are forcing companies to re-evaluate and restructure their research and development (R&D) processes. Our special guest speaker Dr. Kenneth Kaitin will discuss major shifts within the pharmaceutical industry. The industry has been undergoing a transformation from fully-integrated pharmaceutical companies (FIPCos) to a network model (FIPNet) that encompasses all the major stakeholders in drug development including: large and small pharmaceutical and biotechnology companies, academic research institutions, patient groups, public-private-partnerships, and contract research organizations.

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Science Shaping Our World-SHOW: Deconstructing the Drug Development Process: New Paradigms for Pharmaceutical Innovation

  1. 1. Deconstructing  the  Drug  Development  Process  New  Paradigms  for  Pharmaceutical  Innovation   Kenneth I Kaitin, Ph.D. Professor and Director Tufts Center for the Study of Drug Development Science Shaping Our World-SHOW Series HMS, Boston, MA, June 7, 2012
  2. 2. Agenda• Environment  for  pharmaceu1cal  R&D  • CSDD’s  current  drug  development  metrics  • New  models  of  bioinnova1on  
  3. 3. The Tufts Center for the Study of Drug Development
  4. 4. Tufts CSDD is an . . .u  Academicu  Independentu  Multidisciplinaryu  Strategy and Policy Research Group
  5. 5. Our Mission . . .To provide strategic information tohelp drug developers, regulators, andpolicy makers improve the quality andefficiency of pharmaceutical andbiopharmaceutical development,review, and utilization.    
  6. 6. The Tufts Center for the Study of Drug Development
  7. 7. The  Current  Landscape  for   Pharma  Innova6on  
  8. 8. Current Realities for Pharmaceutical Developers • Patents  on  many  top-­‐selling  products  are  expiring   • Marketplace  is  highly  compe11ve  and   reimbursement  environment  is  increasingly   restric1ve   • Public  support  for  the  industry  is  low   • Regulatory  hurdles  are  increasing   • Pharmaceu1cal  R&D  remains  a  long,  risky,  and   expensive  process  Source: Tufts CSDD, 2012
  9. 9. Supermarkets   31%   Hospitals   29%   Computer  Hardware   22%   Online  Search  Engines   21%   Computer  SoFware   20%   Electric  and  Gas   16%   Online  Retailers   16%   Packaged  Food   14%   Banks   12%   Automobile   12%   Life  Insurance     11%   Airlines   9%   Pharmaceu<cals   8%   “Which  of  these  industries  do  you   Telephone/Telecom   8%   think  is  generally  honest  and   Health  Insurance   8%   trustworthy  –  so  that  you  normally   Social  Media   8%   believe  a  statement  by  a  company  in   Managed  Care   7%   that  industry?”   Oil   6%   Tobacco   3%  Source: Harris Poll, December 2011
  10. 10. Perception is Everything 1990s:    “FDA  is  too  slow”   2000s:    “FDA  is  too  fast”   2010s:    “FDA  is  s6fling  innova6on”  Source: Tufts CSDD, 2012
  11. 11. FDA’s Busy Regulatory Agenda for 2012 • Drug  shortages   • Follow-­‐on  biologics  review  path   • PDUFA  V  sign-­‐off   • REMS,  PAR  and  other  risk  management  efforts   • Global  development  and  manufacturing   • New  technologies  and  targeted  medicines  Source: Tufts CSDD, 2012
  12. 12. Patent Expirations of 10 Top-Selling Drugs Each Year 2010 2011 2012 2013 2009  Sales   2009  Sales   2009  Sales   2009  Sales   Product Product Product Product ($MM) ($MM) ($MM) ($MM) Aricept   3,991   Lipitor   12,535   Plavix   9,801   Cymbalta   4,660   Cozaar   3,561   Advair   7,794   Enbrel   6,575   AcipHex   2,728    Effexor  XR   3,182   Zyprexa   4,916   Diovan   6,013   Humalog   1,959   Taxotere   3,034   Levaquin   2,648   Seroquel   5,126   Zometa   1,469   Protonix   2,052   Xalatan   1,737   Singulair   4,660   Niaspan*   853   Flomax   1,970   Concerta*   1,326   Lexapro   3,263   Lovaza   705   Arimidex   1,921   Femara   1,292   Avapro   3,088   Xopenex^   357   Gemzar   1,363   Xeloda     1,160   Actos   2,532   Zomig^   166   NovoSeven   1,320   Avelox   1,020   Viagra   1,892   Advicor^   80   Coreg^   253   Caduet   548   Avandia   724   Fuzeon^   26   Total   $22,647     Total   $34,976     Total   $43,674     Total   $13,003     *Year of first available generic; ^US Sales onlySources: Kaitin, Clin Pharmcol Ther, 2010;87:356-361; Medco; FDA Orange Book;(sales data): MedAdNews; www.drugs.com/top200; Medco
  13. 13. Patent Expirations of 10 Top-Selling Drugs – By Company 2010 2011 2012 2013 2009  Sales   2009  Sales   2009  Sales   2009  Sales   Product Product Product Product ($MM) ($MM) ($MM) ($MM) Pfizer   3,991   Pfizer   12,535   BMS   9,801   Lilly   4,660   Merck   3,561   GSK   7,794   Amgen/Pfizer   6,575   Eisai   2,728    Pfizer   3,182   Lilly   4,916   NovarIs   6,013   Lilly   1,959   Sanofi  AvenIs   3,034   J&J   2,648   AstraZeneca   5,126   NovarIs   1,469   Pfizer   2,052   Pfizer   1,737   Merck   4,660   AbboO   853   Boehringer  Ingl   1,970   J&J   1,326   Forest   3,263   GSK   705   AstraZeneca   1,921   NovarIs   1,292   BMS/SAN   3,088   Sunovian   357   Lilly   1,363   Roche/Genentech     1,160   Takeda   2,532   AstraZeneca   166   Novo  Nordisk   1,320   Bayer   1,020   Pfizer   1,892   AbboO   80   GSK   253   Pfizer   548   GSK   724   Roche/Genentech   26   Total   $22,647     Total   $34,976     Total   $43,674     Total   $13,003    Sources: Kaitin, Clin Pharmcol Ther, 2010;87:356-361; Medco; FDA Orange Book;(sales data): MedAdNews; www.drugs.com/top200; Medco
  14. 14. ‘Industry Leaders’ in Lost Revenues Due to Patent Expirations Pfizer $29.2 Lilly $12.9 BMS $11.3 GSK $9.5 Novartis $8.8 AstraZeneca $7.2 Merck $4.7 Sanofi $4.6 J&J $4.0 Forest $3.3 Billions of US$Sources: Kaitin, Clin Pharmcol Ther, 2010;87:356-361; Medco; FDA Orange Book;(sales data): MedAdNews; www.drugs.com/top200; Medco
  15. 15. Top Ten R&D Spenders in 2010 Novartis $13.3 Merck $11.0 Roche $9.6 Pfizer $9.4 GSK $6.9 J&J $6.8 Sanofi $5.8 AstraZeneca $5.3 Lilly $4.8 Abbott $3.7 Billions of US$Sources: Med Ad News, Sep 2011
  16. 16. New Drug Approvals Are Not Keeping Pace with R&D Spending 60 52 R&D Expenditures 45 39 R&D Expenditures NME Approvals (Billions of 2011$) 30 26 New Drug Approvals 15 13 0 0 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 * Trend line is 3-year moving average; R&D expenditure adjusted for inflationSource: Tufts CSDD, 2012
  17. 17. Market Caps for Top-Tier Firms have Dropped $495b in the Last Decade $320 $287 Market Cap on 1-1-01 Market Cap on 5-17-12 $213 Billions of US Dollars $171 $173 $143 $116 $112 $104 $97 $90 $85 $83 $76 $64 $55 $53 $45 $46 $0 PFE MRK GSK BMY LLY AZN WYE SGP ABT * Market caps for WYE and SGP on 9-10-09Source: Kaitin, Clin Pharmacol Ther, 2010;87:356-361; updated May 17, 2012
  18. 18. $644 =   4/10/12“Apple Unveils New iPods”, Roger Cheng and Ben Charny WSJ OnLine, September 5, 2007
  19. 19. Strange Math          High  Profits    +    SubstanIal  Cash      +    Low  Debt                Falling  stock  prices???  Source: Tufts CSDD, 2012
  20. 20. “A cheap stock is no argument to buywhen there’s no growth on the horizon.I don’t see pharmaceutical sharesoutperforming.Buying a drug stock is buying a prettybig risk these days.” Chief Investment Officer of a Major European Investment Firm (Bloomberg.com, 8-16-07)
  21. 21. The Changing Pharma Business Model High Volume Low Volume Low Margins High MarginsSource: Tufts CSDD, 2012
  22. 22. Bringing  a  New  Drug  to  Market:   Current  Drug  Development   Metrics  
  23. 23. The Drug Development Pathway Basic Research Prototype Design or Discovery Preclinical “Valley of Development Death” IND Filing Phase I Phase II Clinical Development Phase III NDA/BLA Submission FDA Review/ Approval & Launch Phase IV, REMS, PMS, Life Cycle ManagementSource: Tufts CSDD, 2012
  24. 24. Clinical and Approval Times Vary Across Therapeutic Classes, 2007-11 CNS 9.2 1.6 Antineoplastic 8.5 0.6 Gastrointestinal 6.9 1.7 Immunologic 6.7 1.2 Cardiovascular 6.1 1.7 Endocrine 6.1 0.9 AIDS Antiviral 5.1 0.8 Anesthetic/Analgesic 4.8 0.9 Antiinfective* 4.2 1.1 0 Years 11 Clinical Phase Approval Phase * excludes AIDS antiviralsSource: Kaitin & DiMasi, Clin Pharmacol Ther, 2011;89:183-188
  25. 25. Why Are There Differences Among Therapeutic Classes? Antiinfectives Specificity of Outcome Cardiovascular Drugs Measure CNS Products Chronicity of TreatmentSource: Tufts CSDD, 2012
  26. 26. Overall Clinical Approval Success Rates for New Drugs has Dropped to 16% Sys. Antiinfective 23.9% Musculoskeletal 20.4% Oncology/Immunology 19.4% GI/Metabolism 9.4% Cardiovascular 8.7% CNS 8.2% 0 27 Clinical Approval Success RateSource: DiMasi et al, Clin Pharmacol Ther, 2010;87:272-277
  27. 27. Phase Transition Probabilities by Therapeutic Class 100 Musculoskeletal Onc/Immunologic GI/Metabolic 80% 79% Cardiovascular 72% 71% CNS 68% Syst Antiinfective Transition Probability 63% 64% 60% 58% 55% 52% 49% 50% 46% 35% 35% 32% 33% 0 Phase 1-2 Phase 2-3 Phase 3-SubmSource: DiMasi et al, Clin Pharmacol Ther, 2010;87:272-277
  28. 28. Long Development Times and Low Success Rates = High R&D Costs 1500 1,318 1,241 Millions of 2005 Dollars 879 615 626 439 0 Non-Clinical Clinical Total Costs Biotech Pharma (Time Adjusted)Source: DiMasi & Grabowski, Managerial Decision Econ, 2007;28:469-479
  29. 29. “The average drug developed by amajor pharmaceutical company costs atleast $4 billion, and it can be as much as$11 billion.” Matthew Herper, 2/10/12
  30. 30. Drivers of High Development Costs • Chronic  and  complex  indica1ons   • Clinical  trial  size   • Increased  protocol  complexity   • Pa1ent  recruitment/reten1on   • Poor  preclinical  screens  and  predic1ve  models   • Regulatory  demands   • Commercial  demands  Source: Tufts CSDD, 2012
  31. 31. “Business  as  Usual”  is  no  longer   an  op6on  for  the  R&D-­‐based     biopharm  industry  
  32. 32. New R&D Strategies: 2 Approaches u  R&D Organization and Management § Strategic/functional outsourcing: e.g., LLY-Chorus; LLY-Covance/ Advion; BMS-Accenture; AZN-(API); MRK-PRXL § Portfolio focus/diversification: e.g., SAN-Genzyme u  Partnerships and Alliances § Academic institutions: (‘upstream focus’) e.g., PFEs-CTIs; LLY-“Lilly Innovation Fellowship Awards”; MRK-“CALIBR”; ADDCs § Pharma/Pharma: e.g., MRK & AZN (onc); GSK & PFE (HIV); BI & LLY (diabetes); ADNI (12 companies); SGC (6 company PPP) § Global partners: e.g., BMS -”String of Pearls” § Patient-Centered Organizations: e.g., VRTX-CFF § Open innovation: e.g., LLY -“Open Innovation Drug Discovery”Source: Tufts CSDD, 2012
  33. 33. The  Bioinnova6on  Landscape  is   Changing  
  34. 34. A FIPNet Model for Drug Development: The Emergence of Innovation Nodes Research Discovery Early Stage Late Stage Phase IV Approval Studies Pre-Discovery Preclinical Development DevelopmentLarge Pharma Coordination, Management Execution, Monitoring, AnalysisAcademia Basic Research Translational Medicine Large Scale Clinical Trials Data AnalysisBiotechs/ Medical WritingSmall Pharma Innovation, Partnerships Regulatory ApprovalCROs/OtherPartners Execution, Monitoring, AnalysisSource: Kaitin, Clin Pharmacol Ther, 2010;87:356-361
  35. 35. Trends in AMC-Industry Partnership Models Commonly Used §  Unrestricted  grants   §  Fee-­‐for-­‐service   Increasingly Popular §  Corporate  venture  capital  funds   §  Academic  drug  discovery  centers   Emerging §  Risk-­‐sharing   §  Compe11ve  grants  Source: Milne & Malins, Tufts CSDD White Paper, April 2012
  36. 36. Obstacles and Opportunities in Academic-Industry Partnerships Obstacles   •  Language  barrier   •  Misaligned  reward  systems   •  Governance/management   •  Unreasonable  expecta1ons   •  IP  rights  and  ownership  of  research   •  COI  over-­‐reac1on   Opportuni6es   •  Access  to  cudng-­‐edge  science  and  R&D  exper1se   •  Financial  benefit  to  both  sectors   •  Crea1on  of  academic  business  offices   •  Fulfillment  of  goals  of  transla1onal  science  Source: Tufts CSDD, 2012
  37. 37. How Innovation Nodes Will Work Diabetes Oncology RA Peds ADSource: Tufts CSDD, 2012
  38. 38. Bottom Line: The  InnovaIon  Landscape  is  shi]ing.    In   the  new  environment,  all  stakeholders   will  have  a  place  at  the  table  .  .  .  and  will   share  in  the  risks  and  rewards  of   bioinnovaIon.  Source: Tufts CSDD, 2012
  39. 39. Conclusions  
  40. 40. Conclusions • The  1me,  cost,  and  risk  to  bring  a  new   medicine  to  market  remain  formidable   challenges  for  drug  developers.   • These  challenges,  along  with  patent   expira1ons,  market  compe11on,  and  new   regulatory  hurdles  are  leading  to  heightened   focus  on  R&D  efficiency  and  new  R&D   models.  Source: Tufts CSDD, 2012
  41. 41. “You can be on the right track, and moving in the right direction, but if you’re not moving fast enough, the train will still run you over.” Will RogersSource: Tufts CSDD, 2012
  42. 42. Tufts Center for the Study ofDrug DevelopmentTufts University, Boston, Massachusetts, USAKenneth I Kaitin, Ph.D.Professor and DirectorTufts University School of Medicine Email Kenneth.Kaitin@tufts.edu Website http://csdd.tufts.edu

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