Creating Innovation Nodes to Meet Unmet Medical Needs

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Pharmaceutical Technology, Pharmaceutical Technology-12-02-2011, Volume 35, Issue 12

Pharma companies must balance demand for new drugs while facing reduced R&D spending.

FDA approved 35 new drug applications (NDAs) for new molecular entities in fiscal year (FY) 2011, the second highest approval total in a decade. (Thirty-seven NDAs were approved in FY 2009). The FY 2011 approvals include seven products to treat cancers, two products for hepatitis C, and the first new drug to treat Lupus in more than 50 years. For an industry stressed by patent expirations on many top-selling products, severe reimbursement pressures, increasing regulatory demands, intense market competition, political scrutiny, and the relentless rise in new drug-development costs, the large number of approvals is welcome news for companies and patients alike.

Public demand to treat an expanding array of diseases and conditions is growing. There is an urgent need for newer and better medicines to treat a host of neuropsychiatric disorders, such as depression and schizophrenia, and neurodegenerative diseases, such as Parkinson's disease, Alzheimer's disease, and age-related dementias, a particularly crucial need in light of the aging population in many Western nations. Demand for new medicines is also high in pain management, infection (especially those caused by resistant bacterial strains), Type 2 diabetes, and many cancers. Add to that the host of neglected diseases of the developing world, and it is clear that much work still needs to be done.

The challenge of drug development

Bringing a new medicine to market is time-consuming, risky, and expensive. Research by the Tufts Center for the Study of Drug Development pegs the cost at $1.3 billion for each new drug approved. Meanwhile, attrition rates, a major contributor to these alarming R&D costs, remain stubbornly high. Success rates for compounds entering human studies average a dismal 15% across all therapeutic areas, and drop to a staggering 8.2% for neuropsychiatric drugs.


The result of high-cost, low-success drug development is that R&D spending by many of the large pharmaceutical firms, especially over the last decade, has skyrocketed. In 2010, eight companies exceeded $5 billion in R&D spending, with Pfizer leading the pack at $9.4 billion. These high levels of spending are not sustainable in light of the relatively small number of approvals by each firm annually. As a result, several firms, most notably Pfizer, Sanofi, and GlaxoSmithkline, have announced significant reductions in R&D spending.

New R&D models

How can large pharma's decision to reduce R&D spending be reconciled with its goal of boosting productivity? More importantly, how will the public demand for new drugs to treat unmet medical needs be met? The answer lies in new R&D models that leverage the expertise and capabilities of various stakeholders, and, importantly, spread the enormous risk of drug development.

Open innovation, academic–industry partnerships, and the transformation from FIPCos (fully integrated pharmaceutical companies that take drug candidates from laboratory bench to market) to FIPNets (fully integrated pharmaceutical networks that encompasses all the major stakeholders in drug development, including large and small pharmaceutical firms, academic research centers [ARCs], patient groups, public–private-partnerships, and CROs), represent the new face of pharmaceutical R&D. In the new model, all stakeholders have a place at the table and share in the risks and the rewards of innovation.

The emergence of innovation nodes

Ultimately, industry R&D will align along "innovation nodes," referring to disease-, therapeutic area-, or technology-focused collaboratives that will leverage the collective capabilities of various public and private entities. A current model of an innovation node is the Alzheimer's Disease Neuroimaging Initiative (ADNI). Recognizing the enormous challenge of developing medicines for this disease, 12 companies got together in June 2010 and agreed to pool clinical data to identify new preclinical screens. The goal was to enable companies to make better decisions about which compounds to bring into human testing. Today, ADNI has more than 20 companies involved and has attracted the interest of patient groups, ARCs, and CROs, which provide access to patients and expertise crucial to developing new products.

In time, innovation nodes will be created to address other vexing medical needs, including, Parkinson's disease, rheumatoid arthritis, certain cancers, and various pediatric indications. One might say that the era of solely private sector-based innovation is over. In the new era, the public sector, through ARCs, public–private partnerships, and patient groups will play a crucial and indispensable role.

Kenneth I. Kaitin, PhD, is director and professor at the Tufts Center for the Study of Drug Development at the Tufts University School of Medicine.