Widening the Net
As pharma tries to rebuild from the revenue losses incurred during the patent cliff, it becomes clear that the after-effects will be felt for a long time. Cratering profits have led to layoffs, shuttered facilities, and slashed research and development budgets. Pharmaceutical and biotech executives have pointed to rising costs and diminishing returns as a sign that the old model simply doesn’t apply anymore. The days of a company discovering, developing, and marketing a drug with no outside involvement are, if not gone, at least increasingly rare. In their place is a newfound readiness to share credit, profit, effort, and risk.
No longer content to simply throw money at university and non-profit researchers in hopes of receiving a return on their investment, drugmakers are instead searching for academic partners. These partners are researchers who have “bought in” to the idea that their work may eventually become a medicine that treats an unmet or underserved need in the population. In this vein, Johnson & Johnson, Pfizer, Bayer Healthcare, and Eli Lilly and Co. have opened innovation centers which provide basic medical researchers with assistance, expertise, and resources from the company. This help usually comes with the right to license promising research.
This outsourcing doesn’t stop with basic research. While companies have shed thousands of researchers and billions in R&D funding, the need for new drugs to replace billion-dollar blockbusters has only grown. To keep the pipelines flowing, drug companies have taken several different tacts. One is the tried and true in-licensing of promising compounds. A CMR International study of a dozen large or mid-sized companies showed a greater than 250% increase in the amount of Phase 1 candidates originating outside Big Pharma between 2001 and 2011.
A twist on this practice is for larger pharmaceutical companies to out-license their own compounds. The natural assumption for prospective partners is to assume these are “reject drugs” that companies want off their shelves. The truth, drugmakers say, is that they only have the funds to focus on the most potentially lucrative treatments. Rather than sitting on these other drugs indefinitely, companies are turning these “wait-listed” compounds into profit streams in their own right.
Patient groups like The Michael J. Fox Foundation and Muscular Dystrophy Association are another source of funding for research and trials. While still fulfilling the traditional patient advocacy role of increasing awareness and affecting public policy, these groups are also taking a proactive approach and working with drug companies to speed trial enrollment and, in some cases, fund studies themselves.
Lastly, companies are showing an increased willingness to collaborate with one another as equal, or nearly equal, partners. AstraZeneca and Amgen, for example, recently announced their intention to jointly develop five antibodies targeting inflammation. By combining Amgen’s pipeline with the expertise of Medimmune, an AstraZeneca subsidiary, in the asthma and inflammation space, both companies increased their potential for success.
To be sure, the way ahead is rocky; there is no easy way to replace a blockbuster treatment. But by moving outside their traditional comfort zone and including others in the discovery and development process, pharma has shown a readiness to do what it takes to return to profitability and bring the next generation of drugs to market.