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News from Europe's pharmaceutical manufacturing industry coupled with upcoming events, and exclusive articles and interviews from industry experts.
Changing Market Dynamics Require New Approaches to Innovation
The pharmaceutical industry is changing and traditional paths to innovation are no longer suitable. A drastically different reimbursement climate, the growing interest in biologic drugs (and biosimilars), the shift from blockbusters to niche medicines, and the differing needs of emerging markets all have affected the cost structure and profitability of drug manufacturers, which is in turn affecting R&D needs and capabilities. Successful pharmaceutical companies have developed innovation networks including varying external groups—from insurance companies to academic medical centers—to support the discovery, development, and commercialization of new therapies.
Biopharmaceutical companies have not followed this model, however. With the discovery of DNA and genetic engineering, biotechnology became a research tool for drug discovery and the development of recombinant protein drugs, with many biotechnology companies founded to commercialize biotechnology developed at universities, according to Sadat. "Lacking capital and organizational capabilities, many of these startups formed collaborations with large pharmaceuticals firms, and thus adopted a ‘collaborative model’ for their innovation," he explains. The large drug companies benefited from this collaborative approach as well, often acquiring smaller biopharmaceutical companies and achieving the development of blockbuster drugs. As a consequence, Sadat notes that they grew into the "Big Pharma" companies we know today.
Need for change
Healthcare reforms and drug price controls are perhaps the most important factors. "Obtaining regulatory approvals for a drug used to be the biggest hurdle to market entry; today it is the reimbursement criteria set by payers combined with pricing challenges, such as Medicare discounts in the US, price caps in India, ‘value-based pricing’ in the UK, reference pricing in Germany, and price-controlled drugs in China," Sadat observes. Complicating the picture is the expected decline in demand in the US and Europe, with a concomitant increase in the global market share for emerging markets, which can be challenging for pharmaceutical companies to navigate. "Weak regulatory controls and intellectual property protection, a lack of health insurance programs, and the much reduced per capita drug spend in emerging markets all affect innovation to some degree," says Sadat. The fact that numerous blockbuster drugs have already or will lose patent protection by 2016 is contributing to the decline in drug spending in mature markets, although low-priced generics will benefit. Sadat also notes that specialty drugs (biologics, orphan drugs) for cancer, HIV, hepatitis C, and rare diseases are the few drug classes for which novel therapies will continue to experience strong growth.
The open innovation model
The rise of the academic medical center
Academic medical centers such as the one at Wake Forest are attractive to industry because they have a large knowledge base and expertise, and often, established contacts already exist between faculty members and industry. What is changing is the extent of support that these centers can provide to a pharmaceutical company in terms of taking fundamental discoveries and converting them into commercial products that can benefit patients. Wake Forest has been investing heavily over the past two years to build on its extensive scholarship base in order to help companies create technologies based on that expertise, including the addition of special capabilities around advanced equipment, technologies, techniques, and innovation modes, according to Tomlinson.
"We are focused on three core areas¾scholarship, innovation, and services¾and are engaging with industry through direct faculty-company connections, through business development efforts, and through web-based interactions. We have also invested effort into developing systems to support not only easy access, but simplified arrangements, such as efficient licensing and partnership terms, so that working with Wake Forest Baptist Medical Center is as seamless as working with an internal R&D group," he adds. Keeping the legal aspects as simple as possible is critical for ensuring the success of these relationships, given the competitive nature of the pharmaceutical industry, he notes.
To date the medical center has helped develop more than 35 companies, commercialized products that bring in $1 billion in sales annually, and signed hundreds of technology licensing agreements and research contracts with industry. Many of the commercialized products are medical devices, but the Wake Forest has been receiving growing interest in its specialized preclinical services, and drug development is a large area of focus. Wake Forest currently has a wide array of novel health care products in the development pipeline and available for licensing to industry, including a series of flagellin-based vaccines, an anti-cancer agent to treat chemoresistant malignancies, and a cytotoxin that selectively kills cancer cells, to name just a few, according to Tomlinson.
Key to success