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Pharmaceutical companies and contract service providers adapt strategies and capabilities to reduce costs and accelerate drug-development timelines.
Pharmaceutical companies continually grapple with ways to make drug development more cost- and time-effective. The shared goal among companies is to identify and allocate resources to the most promising drug candidates, a process that to be effective, has to begin in early-stage development. Increasingly, the large pharmaceutical companies are seeking to create more flexible R&D organizations tied to more stringent requirements for return on investment (ROI) as a way to foster greater R&D productivity. As the strategies of pharmaceutical companies evolve, including a greater reliance of external partnerships, so do the strategies of contract service providers and other partners to meet this changing paradigm.
ILLUSTRATION BY DAN WARD
Crunching the numbers
The necessity for pharmaceutical companies to evolve their R&D models and improve R&D productivity is evident by the cost and time of drug development. It takes on average 10–15 years to bring a new drug to market at an estimated cost of $1.2 billion, according to data from the Pharmaceutical Research and Manufacturers of America (PhRMA). Only two of 10 marketed drugs return revenues that match or exceed R&D costs, notes the PhRMA data. Although the number of compounds in development has increased significantly during the past decade, the number of approvals of new molecular entities (NMEs) has not increased commensurately. In 2011, there were 3240 compounds in development, a 58.8% increase compared with 2040 compounds in development in 2001, according to PhRMA. In four of the past seven years (2005–2011), fewer than 30 NMEs have launched, according to the IMS Institute for Healthcare Informatics. According to the KMR Group, based on industry success rates from 2006–2010, approximately 95% of the compounds that entered Phase I development failed to achieve regulatory approval. The failure rate for compounds that entered Phase II development was approximately 90%, and for compounds that enter Phase III development, it was approximately 54%. In 2011, research-based pharmaceutical companies (defined as members of PhRMA) collectively spent $49.5 billion on R&D, down slightly from the $50.7 billion spent in 2010.
New R&D models at Big Pharma
Pfizer. Facing a need to improve success rates, Pfizer, like other large pharmaceutical companies, is redirecting its R&D strategy. "...We have sharpened the focus on certain key areas, emphasized strategic externalization, which includes select CRO partners as alliances for the future, additional biotech acquisitions and collaborations, and [are] also building a real strong network with academia," said Mikael Dolsten, president of Worldwide Research & Development at Pfizer at a UBS Global Life Sciences Conference on Sept. 20, 2012.
Part of that focus includes earlier integration of science and finance into R&D decisions, which for Pfizer has resulted in the termination of approximately 90 projects in the pre-proof-of-concept phase, according to Dolsten in his recent presentation. Overall, Pfizer spent $9.1 billion on R&D in 2011, slightly down from $9.4 billion in 2010, according to company information. As of year-end 2011, Pfizer had 262 projects in R&D ranging from discovery through registration, of which 95 programs were in Phase I through registration (including 22 programs in Phase III), with the remainder of the projects in preclinical development. Its research primarily focuses on five high priority areas with a mix of small and large molecules: immunology and inflammation; oncology; cardiovascular, metabolic and endocrine diseases; neuroscience and pain; and vaccines. In addition to reducing the number of disease areas of focus, Pfizer is realigning and reducing its R&D footprint and outsourcing certain functions. On the CRO side, Pfizer has transitioned from 17 functional service providers to two strategic partners for clinical trials, ICON and Parexel.
Pfizer also is stressing partnerships with academia as part of its R&D model. Beginning in 2010, Pfizer established several Centers for Therapeutic Innovation (CTI) as a new entrepreneurial research unit for fostering global partnerships with academic medical centers (AMCs). The CTI is an open-innovation partnering model to facilitate early science and translation into clinical applications for biotherapeutic modalities (antibodies, peptides, and proteins) across all therapeutic areas. CTI laboratory staff include Pfizer employees working with basic and translational science investigators and post-docs from the AMCs. CTI has established partnerships with 21 AMCs in the US and supports collaborative projects from four dedicated laboratories in Boston, New York City, San Francisco, and San Diego. Pfizer also has established disease-focused research units in Cambridge, Massachusetts, and Cambridge, United Kingdom as part of a restructuring of its R&D sites following its acquisition of Wyeth in 2009.
GlaxoSmithKline. In 2010, GlaxoSmithKline (GSK) said it became the first major pharmaceutical company to publish an internal R&D ROI to measure the investment choices within its R&D organization. In early 2010, the company estimated the ROI it made on its recently launched products and late-stage pipeline at 11%. This ROI increased to 12% in 2011, and the company has a long-term goal to improve returns to approximately 14%.
GSK changed its R&D business model in 2008, moving away from industrial-sized therapy groups to smaller, more agile and focused discovery performance units (DPUs) consisting of 5–70 scientists. Each DPU works on a particular disease or pathway and is responsible for potential new medicines through early-stage clinical trials (up to the completion of Phase IIa). As part of this new model, DPUs were given their own budgets and a three-year window to complete specific tasks, which included opportunities for collaboration with external organizations. The three-year mark for most DPUs was reached in 2011, and progress of all 38 DPUs was reviewed by GSK's discovery investment board (DIB), a panel consisting of senior management from R&D and commercial operations and external experts. Based on this review, in 2011, four new DPUs were created, and three were closed. Of the remaining DPUs, six received increased investment, and five had investment decreased. Based on this review, GSK believes that it can progress up to 30 medicines into late-stage development during the next three years.
External partnerships are an important component of GSK's R&D model In 2011, GSK had more than 50 external discovery alliances, compared to 17 in 2007, and it has been active again in 2012. In August 2012, GSK completed its $3.6-billion acquisition of Human Genome Sciences and in September 2012, increased its share to 15.2% in Response Genetics, which performs companion diagnostic tests and other related activities for GSK's immunotherapies and oncology pipeline candidates. Earlier this year, GSK increased its ownership in the biopharmaceutical company Theravance from 18.3% to 26.8%; the companies are developing compounds for respiratory disease.
In academia, in May 2012, GSK and Yale University established a research collaboration that combines GSK's expertise in medicinal chemistry with Yale's work on proteolysis targeting chimeric molecules or PROTACs. Under the agreement, a joint research team will work to show that PROTACs can be turned into future medicines. GSK will have the right to use this technology for multiple disease-causing proteins, and for each protein-degrading drug that is discovered and developed, Yale will be eligible for milestone and royalty payments. GSK also has several collaborations with UK-based universities that also entail such joint working toward common milestones combined with an element of risk sharing by the parties.
Sanofi. Sanofi also is restructuring its R&D activities, and in September 2012, it provided further detail about its plans for its R&D sites in France during the next three years. The development activities in Vitry/Alfortville, Chilly-Mazarin/Longjumeau, and Lyon will continue in their current configuration. The Montpellier site will evolve toward a strategic center focused on development, and the research activities at Vitry/Alfortville and Chilly-Mazarin/Longjumeau will be increased. The Strasbourg site will maintain its collaborative platform open to academic research and biotechnology companies. Sanofi had 64 NMEs and vaccines in its portfolio in development as of July 2012, which included 29 products (four vaccines and 25 NMEs) in Phase I and 17 products (3 vaccines and 14 NMEs) in Phase II.
Sanofi has emphasized several goals in its R&D model: improve R&D cost structure, execute on late-stage projects, use medical value and translational feasibility to guide early-stage portfolio prioritization, establish new models of external innovation, enhance the value of external partnerships, and create open and creative models of pharma/biotechnology partnerships.
One example of such a partnership is Sanofi's collaboration with Warp Drive Bio, which specializes in microbial genomics for natural products research. Warp Drive Bio was founded by venture capitalists and scientists from Harvard Medical School and the University of California, San Francisco. In a deal announced in January 2012, Sanofi and private funders are providing $125 million in initial funding, including a $75-million equity investment in although Warp Drive Bio retains strategic direction, operational management, and full rights to select assets. This approach enables Warp Drive Bio to advance its programs in collaboration with Sanofi while maintaining the ability to secure future partnerships.
Also, earlier this year, Sanofi formed a two-year agreement with Massachusetts General Hospital aimed at furthering translational medicine research to develop new treatments for hematological malignancies and solid tumors. The academic and industry cross-organizational expertise will include preclinical and clinical translational research to elucidate questions on proof-of-concept, tolerability, efficacy, and effectiveness.
Novartis. Novartis, while essentially using the same model as the traditional drug-development process, has tailored it to consist of two parts: exploratory and confirmatory development. Exploratory development consists of clinical proof of concept and involves small clinical trials (typically 5–15 patients) that combine elements of traditional Phase I/II testing. These customized trials are designed to give early insight into safety, efficacy, and toxicity. Once a positive proof of concept has been established, the drug moves to the confirmatory development stage, which has elements of traditional Phase II/III testing aimed at confirming the safety and efficacy of the drug in the given indication.
Novartis is investing $600 million for new laboratory and office space in Cambridge, Massachusetts, close to its research facilities and announced restructuring of some of its R&D sites and staffing. With regard to partnerships, in August 2012, Novartis and the University of Pennsylvania (Penn) formed an exclusive global collaboration to research, develop, and commercialize targeted chimeric antigen-receptor immunotherapies for treating cancers. In addition, the parties will jointly establish a new R&D facility on the Penn campus.
Other companies. Other companies are pursuing a path of R&D restructuring and external partnerships. In June 2012, Roche announced a streamlining of its R&D activities within the pharmaceuticals division, which involves closing its site in Nutley, New Jersey, by the end of 2013, with a reduction in the workforce of approximately 1000 people. The R&D activities at Nutley will be consolidated at existing sites in Switzerland and Germany and at the planned Translational Clinical Research Center in the US. Merck& Co. increased the level of its partnerships with several recent pacts with Ablynx, AiCuris, Chimerix, and Yamasa. Bristol-Myers Squibb formed several academic partnerships this year in drug development with separate pacts with Vanderbilt University and Emory University and formed the Immuno-Oncology Network, a global collaboration between industry and academia with 10 leading cancer-research institutions participating.
AstraZeneca announced further restructuring in its R&D operations earlier this year, including the creation of a new "virtual" neuroscience innovative medicines unit (iMed). The neuroscience iMed is one example of an iMed. iMeds focus on particular disease areas and work across discovery and early development. Eli Lilly established the Center for Cognitive Neuroscience, an industry–academic consortium and post-doctoral fellowship program focused on increasing the probability of clinical success for drugs to treat cognitive impairment. It is also participating in the Innovative Medicines Initiative, a public–private collaboration to speed drug development. Finally, Johnson & Johnson plans to open four innovation centers in California, Boston, London, and China, with the aim of accelerating early innovation.
Aligning contract services
As pharmaceutical companies adjust their development strategies, contract service providers are responding in kind to provide targeted services for early-stage development. For example, in October 2012, Catalent Pharma Solutions formed a global alliance with the CRO Parexel to help streamline the clinical-trial supply process. The formation of this alliance follows Catalent's February 2012 acquisition of the clinical-trial supplies business of Aptuit. In August 2011, Bend Research and Xcelience formed a collaboration to provide oral solid-solubilization formulation solutions for early-phase development. In February 2012, Covance signed a three-year, exclusive integrated drug development agreement with BioPontis Alliance to manage early development of scientific discoveries from academia.
Collaborative models for drug development
Almac's solid-state services group recently created a series of preclinical screening packages for clients to identify their candidate's chances of success much quicker than using traditional mechanisms. Experimental efforts concentrate on establishing the physical, chemical, solubility, stability, and polymorphic characteristics of each drug candidate. Separately, Almac launched a qualified person facilitation program that is designed for clients importing investigational medicinal products into the European Union for clinical trials.
EMD Millipore announced the opening of its advanced GMP bioproduction facility in Martillac, France, which will serve users of EMD Millipore's Provantage biodevelopment and clinical supply solutions, an open-source manufacturing option for upstream and downstream processes. The open-source approach is designed to provide customers with greater control over production. The facility offers GMP production of mammalian proteins for preclinical to Phase II production at 50 L to 1250 L scales. For Phase III and commercial production, customers can transfer manufacturing at any scale.
Companies are augmenting their testing services to support early-drug development. In June 2012, Metanomics Health, part of BASF, launched MetaMap Tox, a service evaluating specific metabolomic patterns in vivo, enabling customers to better and faster identify potential safety risks of test compounds in in vivo studies of rats. SAFC a contract API manufacturer and providers of biosciences services and products, acquired BioReliance, a provider of biopharmaceutical testing services for $350 million. BioReliance provides biologic, specialized toxicology, and animal-health testing.