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The international pharmaceutical industry is changing its approach to R&D and is increasingly relying on outsourcing for drug discovery.
*This article originally appeared in Pharmaceutical Technology Europe*
Medical progress is reliant on discovering and developing new medicines. The pharmaceutical industry remains the dominant force in bringing new medicines to patients due to its high investment in R&D. Furthermore, its position as a high-technology sector means that it is both an important contributor to the economy and an industrial employer.
The European pharmaceutical industry accounts for nearly 40% of the global industry’s R&D investment, with the United Kingdom and Switzerland being major centres for pharmaceutical companies (1). The success of the UK and Switzerland in enabling the pharmaceutical industry to thrive is shown by the fact that, together, these two countries account for more than a third of European R&D investment.
The Changing R&D Landscape
The productivity of the pharmaceutical industry depends on its ability to discover new drugs and advance high-quality candidates into clinical development. At present, companies spend approximately 21% of their total R&D budget on drug discovery (1). The UK sector has a particularly enviable track record in this respect, with approximately seven of the top 100 medicines in use today having originated from research in the UK (2). This wealth of discovery expertise in the UK is not only present in the pharmaceutical industry but also in the CRO sector, which has grown to support companies in their drug-development activities.
The pharmaceutical industry is facing an increasing number of hurdles in bringing its drugs to market, such as higher R&D costs coupled with a high degree of attrition when developing products. In addition, the industry faces commercial pressures such as imminent patent expiries and reimbursement difficulties, not to mention the impact of the global economic downturn. Some of these pressures have persuaded companies to take extreme measures, such as closing down R&D sites. Between 2009 and 2011, for example, 14 R&D sites were closed in the European Union (3). In the UK, the 2009 to 2011 period caused a considerable shift in the industry landscape, with 19% of R&D sites closing down (3).
Although companies are responding to the pressures by closing R&D sites, they still need to support their ongoing drug-development projects to maintain productivity. Consequently, there is increasing reliance on the CRO sector to provide the necessary expertise. As a result, the value of the outsourcing market is growing rapidly. Recently, it was predicted that the value of the global drug-discovery outsourcing market would reach $14.9 billion in 2014 (4). An alternative estimate puts the value of the global drug-discovery outsourcing market at nearly $25 billion by 2018 (5).
Despite the difficult global economy, the drug-discovery CRO sector is expected to prosper. Over the next five years, it is predicted that close to half of the global drug-discovery research in the pharmaceutical industry will likely be carried out by third parties, such as CROs (5). It is, therefore, not surprising that new CROs are entering the market to deal with the increasing demand for drug-discovery services. Many are highly specialised in new, innovative technologies that the pharmaceutical industry has previously been hesitant to invest in or has been unsuccessful in capitalising upon.
Given their existing positions as major centres for pharmaceutical R&D, UK and Switzerland share many common points with respect to drug discovery. In February 2014, UK Trade & Investment (UKTI) held two events in Switzerland entitled “Early stage drug discovery partnering with CROs from the UK” to highlight the available collaboration opportunities with UK companies in innovative drug discovery.
The UKTI events were held in Basel and Geneva to involve all types of drug-development organisations operating in Switzerland, ranging from the major multinationals to small start-ups and non-profit organisations. Representatives from five British CROs (Aurelia Bioscience, Charnwood Molecular, XenoGesis, Reach Separations and Source Bioscience) gave presentations on their companies’ offerings and then participated in a roundtable discussion on the future of outsourcing for drug discovery. As highlighted by UKTI, these companies represented the diversity and dynamism existing within the UK’s life-sciences sector (see Table I).
Table 2: UK CROs that participated in the UKTI events
Areas of discovery focus
Supply of biochemical and cell-based compound screening expertise.
Services include drug discovery services (parallel library synthesis and design, lead identification and optimisation), preparing key intermediates and multi gram scale-up.
Specializes in preclinical drug metabolism and pharmacokinetics (DMPK), quantitative bioanalysis and expert interpretation
Wide range of chromatography based services, from analysis and purification of chiral and achiral compounds to bespoke hardware customization and installation.
International diagnostic, and genetic analysis and stability storage business serving the healthcare, life science research and pharma markets.
The participating CROs are based in Nottingham at BioCity, one of the UK’s leading bioscience incubators. BioCity Nottingham currently hosts more than 70 businesses working in the life-sciences sector, covering all stages of drug development as well as support activities, such as regulatory affairs and legal services. The CROs highlighted their experience of collaborating with international partners, including the Swiss pharmaceutical sector. The CROs also explained how they often collaborated with each other when working with clients to provide a broader range of integrated services covering different stages of drug development.
It is now widely accepted that the rising complexity of pharmaceutical R&D and its associated expense means that it is no longer possible for one organisation to cover all the necessary tasks for drug discovery in-house. Therefore, collaboration between multiple parties, particularly with CROs, has become an accepted option. Large pharmaceutical companies have outsourced many of their activities to CROs to better control their costs and manage resources, but also in the hope of finding innovative solutions to the research problems that they have been unable to resolve in-house. For smaller drug-development companies, outsourcing allows them a means to access specialist expertise that they do not possess and would be too expensive to maintain permanently in-house.
Overall, there is a continuing need for companies to identify poor-quality compounds early in the discovery process to prevent progression to more expensive and advanced stages of testing (3). The European Federation of Pharmaceutical Industries and Associations (EFPIA) states that, on average, only one to two of every 10,000 substances synthesised successfully pass all stages of development to become a marketable medicine (1). In particular, the stage between the completion of preclinical research and the launch of clinical trials is a crucial period. It has even been referred to as “the valley of death” because so many projects fail during this time (6). Therefore, if CROs can show even a minor improvement in early-stage drug failure prediction, this will result in significant time and cost savings for their clients and thereby improve future business opportunities with their clients (3).
As noted by presenters at the UKTI events, while many CROs were considered only as one-off service providers in the past, with cost being the deciding factor, today’s collaborations with the pharmaceutical industry are increasingly taking the form of partnerships. In many cases, CROs have established long-term relationships with their clients. This has meant that the practical lessons from one drug-discovery project can be applied to others, thereby, improving communication and facilitating innovation for the product pipeline. The shift towards greater partnerships between the two sets of parties has been helped by the fact that many personnel in the CRO sector previously worked in the pharmaceutical industry.
There was great interest from those in the Swiss pharmaceutical sector in expanding their collaboration with CROs from the UK’s life-sciences sector. The presenters noted that some within the pharmaceutical sector still need to be convinced that CROs can provide them with value, namely through helping improve productivity, but stated that drug-discovery outsourcing was here to stay as evidenced by the rising market value for the sector.
The UKTI events highlighted how the international pharmaceutical industry is changing its approach to R&D and increasingly relying on outsourcing for drug discovery. Given their historic strengths in drug discovery and continuing investment in this field, the UK and Switzerland are ideal partners for future collaborations in discovering and developing new medicines.
About the Author
Faiz Kermani is a freelance writer based in France.