To mark its 10th anniversary, Drug Discovery & Development magazine invited pharmaceutical and biotechnology companies to reflect on the history and made predictions about future of the industry. Featured here are verbatim comments from this company.

SRI International, Biosciences Division

Headquarters 
Menlo Park, Calif.

Location(s)
More than 20 sites around the world, including Menlo Park, Calif.; Princeton, N.J. (Sarnoff Subsidiary); Arlington, Va.; Harrisonburg, Va.; and Tokyo, Japan

Years in Drug Research 
50 years

Web site 

About the company/organization
SRI International is a leading, independent, nonprofit research institute. Our Biosciences Division is fully integrated "from idea to IND". We conduct basic research on disease mechanisms like an academic institution, perform drug discovery like a biotechnology company, and offer preclinical development services like a pharmaceutical contract research organization (CRO). Our unique business model combines government-funded research and biomedical discovery with commercial partnerships to develop preclinical product candidates at reduced risk and increased value to all stakeholders.

SRI focuses on oncology, infectious disease, neuroscience, and immunology and inflammation. Our pipeline includes several marketed SRI products, several more in clinical trials, and multiple projects in discovery and preclinical development.

In addition to our research and discovery programs, SRI’s CRO capabilities include comprehensive preclinical development, pharmaceutical sciences, and support through regulatory filing to begin human clinical testing. As needed, SRI conducts its work in full compliance with regulatory guidelines.

A 10-year perspective: Advances and roadblocks
SRI has conducted pharmaceutical discovery/development since the 1950s. Over the last ten years, SRI experienced great success building and maintaining a robust drug pipeline: the antimalarial, halofantrine, and antiviral, vidarabine, had already reached the marketplace; tirapazamine had been licensed for clinical development; collaborations with companies and nonprofits had been initiated and would later yield additional clinical candidates; bexarotene was approved for cutaneous T-cell lymphoma in 1999.

Recently, SRI set the goal of nominating at least one product candidate per year for preclinical development, and we’ve been successful doing so. As our R&D efforts rely heavily on grant funding, this was no simple task. Our business development and marketing efforts increased dramatically to keep pace. Finding funding to cross the “valley of death”, that is, translating early research to product development, remains a significant challenge. Successfully marrying basic research with industrial-strength product development requires diverse talents and constant attention.

R&D Challenges in the next 10 years
Some of the challenges include:

Funding: SRI relies on government grants and contracts for more than half of its funding. As funding flattens at NIH, competition for existing funds increases, and winning proposals becomes more difficult. SRI must broaden its funding base to insure suitable financial stability and growth.

Developing countries: Well-educated, highly-skilled workforces in both publicly and privately well-funded environments are emerging in places like China and India. Though not a major problem today, these growing offshore capabilities will represent progressively greater competition for contract R&D.

Investment: Modern biomedical R&D is capital-intensive and requires ongoing investments in high technology equipment and facilities as well as significant investment in human capital. Nonprofit research institutes often struggle to find the necessary capital to support new hires, new equipment, and new facilities.

Business/regulatory challenges for the next 10 years
Business: Winning government funding will become ever more difficult, with competition from every sector. Increasing competition from low-cost regions outside the U.S. is also expected. Reduced interest from investors in earlier stage R&D may lead to empty pipelines. Long timelines and high costs could drive investors away from pharma/biotech altogether. Biomarkers may speed development of new products, but for smaller markets and lower profits, undermining economic strength in pharma/biotech. Industry will be first to suffer from health care payer cutbacks, whether driven by government, insurance companies, employers, or otherwise. U.S. economic instability may undermine prices/profits, sending shockwaves worldwide in the viability of life science organizations large and small.

Regulatory: Costs required to continually upgrade systems/processes, including electronic data capture/transmission, will become prohibitive for some organizations. Renewed focus of regulatory agencies on safety rather than efficacy will reduce rates of new product introduction.

Bold Prediction: Where will the company/organization be in 10 years?
SRI will contribute to the eradication of a major global health challenge, like malaria, which claims a child’s life every 30 seconds, and SRI will help introduce products that control a major disease, such as removing cancer from its position as the leading cause of death up to age 85.

Bold Prediction: Where will the industry will be in 10 years?
Government/academia will organize into three divisions—research, discovery, and development. Research will concentrate on transformational work. Discovery will advance hits/leads to product candidates. Development will translate biomedical opportunities to human efficacy. Pharma/biotech will refocus internally away from basic/applied R&D toward business development, commercialization, and sales/marketing; they will embrace open innovation, with most of their R&D outsourced.