Radical reform needed in pharmaceutical industry
A research centre funded by the Economic and Social Research Council (ESRC) has shown that radical reform of the drugs industry regulatory system must be an important part of the solution to ensure a productive and profitable pharmaceutical sector, both globally and in the UK.
Researchers from the ESRC’s Innogen centre, in Edinburgh, UK, have studied the innovation models in the pharmaceutical industry and how the industry has been able to remain sustainable for so long.
The results of their research show that the lengthy and expensive regulatory system that now applies to most products for the life sciences is causing innovation failure.
Regulation has a large impact on the kinds of product that are developed by any industry sector: it is designed to ensure that products are safe, effective and of high quality.
Innogen’s research demonstrates that the impacts of regulation in pharmaceuticals are especially far reaching.
They determine overall company strategies; which types of companies succeed; and ultimately the structure and dynamism of the sector as a whole.
Under current circumstances, regulation prevents the development of the radically innovative technologies that could provide opportunities for the sector to become more effective in developing innovative products.
Innogen research has predicted that the industry is approaching a tipping point in the not too distant future.
Professor Joyce Tait said: “We do not need less regulation, but smarter regulation that can deliver expected standards of safety and efficacy, is flexible enough to respond to new scientific discoveries and can do so more efficiently than our current systems within a shorter time frame.”
Innogen research also shows that policymakers and governments need an understanding of all the major causes and relevant options available.
Radical regulatory reform for the life science industries needs to be a priority in discussions regarding the future of the industry.
Reform could provide the lever to profitably unleash the creativity that has been so effectively generated from public funding of basic science, leading to something closer to the innovative performance that we have seen in information and communication technologies over the past twenty years.
Why Investors Like Potato Chips More Than Pharmaceuticals
Why have the share prices of major pharmaceutical companies been dropping for years? I asked Sanofi-Aventis chief executive Christopher Viehbacher to chat following his company’s full-year earnings call. Here’s an edited transcript of our conversation about layoffs, the future of drug industry research, and why his company is trying to acquire Genzyme.
How much can you cut R&D? How much can other companies cut R&D? You were first out of the box to say that costs can actually be reduced. Now Ian Read, Pfizer’s CEO, is saying very much the same thing, even closing down his Sandwich labs. How far do you think that can go?
We’ve cut about 30%, that’s where we are. I don’t know where Ian is. There’s two ways of looking at cost. One is the fixed running cost of your R&D, you’ve got buildings, you’ve got maintenance, you’ve got security guards, you’ve got people with salaries and benefits. That actually accounts for most people for about two-thirds of the R&D budget. The other third is your development costs which are essentially clinical trial costs. Most people have very limited discretionary spending on R&D.
You really have to put your portfolio through the R&D equivalent of a bank stress test. Most companies have not really been as tough as they should be in figuring out what products should be in there. And then you go back and look at your fixed costs. Once you have too many R&D facilities you essentially have to keep your money in those facilities. If there’s not a lot coming out of it and you want to bet on a new team it becomes pretty difficult – because you already have all these teams.
So to me the question is how to make this variable. There is no correlation between how much you spend and how successful you are. To a degree this becomes risk management.
You made a bet to bring research in from the outside by buying BiPar Sciences, which was developing a drug for triple-negative breast cancer. But the first phase III study of that drug turned out negative. This was supposed to be Sanofi’s entry into innovative cancer research. What happened?
Just because it’s external doesn’t mean it’s a guarantee. If it were that easy, we’d all have much higher share prices.
We did have a setback. The phase III results did not meet their primary endpoint. However, you’ve got a drug that has had such extraordinary phase II results you’ve got to ask yourself what went wrong. I can’t give you a complete answer to that, partly because we are presenting the data at ASCO and partly because we’ve got an external swat team on it. But I can tell you that the top experts in breast cancer outside the company are not concerned. [Viehbacher argued that the trial looked at too broad a swath of patients, and that this is common with new cancer drugs because patients are so excited to enroll in the trial.—M.H.]
What does bringing in former NIH chief Elias Zerhouni to run your labs mean for your R&D organization?
Elias brings a number of interesting skill sets. What that really brought it is an understanding of the science that is going on around the world. Second, he’s an entrepreneur. He’s founded five companies and been able to sell three of them. But Elias can’t be a one-person R&D organization. What Elias does is make sure that we have the best people working in the organization, and be a lot better at finding the opportunities. I think Elias can really help us to up the scientific horsepower in the company.
As you’re going through the patent cliff [the expiration of patents on major drugs] what kind of levers do you actually have to maintain sales and earnings?
Essentially we know that between 2010 and 2012 we lose 25% of sales and a little more than that on profits. We have one of the most concentrated patent cliffs. A lot of companies have them spread out over a five to seven year period, ours are over a three year period. All those things are basically cash, they’re not the future of the company. If it stays an extra six months, it really just represents an extra six months of cash flow. But it’s not something that has any particular impact on the underlying value of the company. We have very few levers, really, but you have to just say that’s going to happen.
What you can do is look inside the company and say, I need to find stuff that grows, I need to find stuff that has some level of competency, and I need to build on those things. It’s a bit of a race against time.
What I’ve seen over the last ten years is we sweat every quarter and watch the share price slide. Only because people tend to look forward in terms of valuation, and unless they can see some kind of sustainability, people are not going to give you any value for that. You’re not getting any value for pipelines. So you need some businesses like vaccines and consumer health and emerging markets where people can say yeah, I can do a ten year sales forecast on that and it’s not going to disappear.
You know the whole industry is at a 25%, 30% discount to the S&P 500, whether you’re Pfizer, you’re Merck, you’re J&J even. If you make potato chips and soft drinks you’re going to have a higher P/E than we do, but it’s because potato chips and soft drinks are a more sustainable business.
Can we talk a bit about the decision to go after Genzyme? Why do you want to buy them?
Certainly I’m happy to talk about the strategic rationale. Without anything of substantial size in acquisitions, we could basically make these growth platforms offset what we lose. If we have stabilized the business, we can use our cash flow, which is about 4 billion euro after dividends, to go after growth opportunities.
We identified Genzyme because it really accelerated our push into biotechnology, and also because of the history of our company we also weren’t as present as we wanted to be in the U.S. in research. I’m not sure it’s going to be the case in ten years, but still today the hot research is going on in the U.S. and you need to have a presence. Third, we thought the company was under-managed and we could do a better job running the company and therefore deliver value to our shareholders.
Zogenix Receives 2011 Drug Delivery Partnerships Innovation Award for SUMAVEL(R) DosePro(TM)
Zogenix, Inc. (“Zogenix”) (Nasdaq:ZGNX) today announced that it has received the 2011 Drug Delivery Partnerships™ (“DDP”) Innovation Award in the Industry Achievement category for SUMAVEL DosePro (sumatriptan injection) Needle-free Delivery System. Winners of this year’s DDP Awards, which recognize success within the drug delivery industry, were selected by attendees at the 15th annual DDP conference, held in Miami, Florida.
SUMAVEL DosePro is the first drug product approved by the U.S. Food and Drug Administration (FDA) using the Zogenix DosePro needle-free drug delivery technology, which allows for the subcutaneous delivery of medication. SUMAVEL DosePro is indicated for the acute treatment of migraine attacks, with or without aura, and the acute treatment of cluster headache episodes. During the first year of production over 1,000,000 commercial units have been produced establishing the viability of a single-use, disposable, pre-filled needle-free technology for use in other important therapeutic applications.
Roger L. Hawley, Chief Executive Officer and Director of Zogenix said, “The DDP Industry Achievement Award is a significant honor at one of the pharmaceutical industry’s largest drug delivery conferences. We believe it reinforces SUMAVEL DosePro as an innovative treatment for the migraine market and further validates our DosePro technology platform.”
Stephen J. Farr, Ph.D., President and Chief Operating Officer said, “We believe this award recognizes the importance of our DosePro technology for the biopharmaceutical industry. The commercial experience of 2010 showed that physicians and patients alike are willing to use treatment administered subcutaneously instead of orally if it is available in an easy-to-use needle-free system like DosePro. The competitive advantage offered by the DosePro technology is now available for licensing to other biopharmaceutical firms. Clinical studies suggest that DosePro will have significant versatility in delivering various types of therapeutic compounds, including biologic products.”
Zogenix and its co-promotion partner, Astellas Pharma US, Inc., launched SUMAVEL DosePro in the United States in January 2010. Zogenix has a partnership with Desitin Arzneimittel GmbH to develop and commercialize SUMAVEL DosePro in the European Union (EU). Desitin plans to launch SUMAVEL DosePro in Germany and Denmark in early 2011. Desitin is responsible for pursuing MAA approvals and broader commercialization on a country-by-country basis under the EU decentralized procedure in territories in the EU for which Desitin elects to undertake such activities.
About SUMAVEL DosePro
SUMAVEL DosePro (sumatriptan injection) is indicated for the acute treatment of migraine attacks, with or without aura, and the acute treatment of cluster headache episodes.
SUMAVEL DosePro should only be used where a clear diagnosis of migraine or cluster headache has been established. SUMAVEL DosePro is not intended for the prophylactic therapy of migraine or for use in the management of hemiplegic or basilar migraine and should not be administered intravenously. For a given attack, if a patient does not respond to the first dose of SUMAVEL DosePro, the diagnosis of migraine or cluster headache should be reconsidered before administration of a second dose.
IMPORTANT SAFETY INFORMATION
SUMAVEL DosePro is contraindicated in patients with uncontrolled hypertension, in patients with history, symptoms or signs of ischemic heart disease, coronary artery vasospasm, cerebrovascular or peripheral vascular disease including ischemic bowel disease and in patients with other significant underlying cardiovascular diseases or known hypersensitivity to sumatriptan. SUMAVEL DosePro should not be given to patients in whom unrecognized coronary artery disease is predicted by the presence of risk factors without a prior cardiovascular evaluation.
Serious cardiovascular events, including death, have been reported when taking sumatriptan, including patients with no findings of cardiovascular disease. Considering the extent of use of sumatriptan in patients with migraine, the incidence of these events is extremely low. Cerebrovascular events, some fatal, have been reported in patients treated with sumatriptan. In a number of cases, it appears possible that the cerebrovascular events were primary, sumatriptan having been administered in the incorrect belief the symptoms experienced were a consequence of migraine when they were not. It is important to advise patients not to administer SUMAVEL DosePro if a headache being experienced is atypical.
SUMAVEL DosePro should not be used within 24 hours of other ergotamine-containing or ergot-type medications or other 5-HT1 agonists and is not generally recommended for use with MAO-A inhibitors. The development of a potentially life-threatening serotonin syndrome may occur with triptans, including treatment with SUMAVEL DosePro, particularly during combined use with selective serotonin reuptake inhibitors (SSRIs) and serotonin-norepinephrine reuptake inhibitors (SNRIs). SUMAVEL DosePro should be used during pregnancy only if the potential benefit justifies the potential risk.
In controlled clinical trials with sumatriptan injection, the most common adverse reactions were injection site reactions, tingling, warm/hot sensation, burning sensation, feeling of heaviness, pressure sensation, feeling of tightness, numbness, feeling strange, tight feeling in head, flushing, tightness in chest, discomfort in nasal cavity/sinuses, jaw discomfort, dizziness/vertigo, drowsiness/sedation and headache.