Report: R&D Strategies: Incremental improvements and paradigm shifts in strategy are both necessary to boost productivity TOC

CHAPTER 1 EXECUTIVE SUMMARY
- Scope of the report
  - Methodology for primary and secondary research
- Key findings
CHAPTER 2 CONCERNS OVER R&D PRODUCTIVITY HAVE INCREASED THE FOCUS ON R&D STRATEGIES
- The fall in innovative drug approvals, coupled with soaring R&S costs, indicates that Big Pharma is suffering from an R&D productivity crisis
  - The number of innovative drug approvals is falling
  - The cost of developing each successfully launched drug has soared
- But is the drug development industry really facing a fall in R&D productivity?
- A range of challenges faces drug developers, increasing the importance of prioritizing enhanced R&D productivity
  - Factors making it more profitable for drug developers to become more focused on R&D investment and switch away from biasing spending towards sales and marketing
  - Factors creating less stability or threatening profitability, which are making companies more risk-averse
CHAPTER 3 ANALYSIS OF MEDTRACK CLINICAL PIPELINE DEALS AND DRUG DATABASES
- Partner mix in deals: earlier-stage companies are the most active deal makers
- Primary deal goal: co-development and licensing deals remain the most popular deal types
- Therapeutic focus of the pipeline: oncology remains the dominant target
  - Approval times are quickest for infectious disease and oncology/IDI drugs
  - Both probability of progression through development and development speed are optimal for oncology, IDI and infectious disease drugs
  - Specific characteristics of therapy areas make them attractive to different drug developers
  - Cost of development is also vital in deciding which therapy area to target
- Deal product type focus: biologics are popular, although small molecules remain dominant
CHAPTER 4 A WIDE RANGE OF R&D STRATEGY RECOMMENDATIONS CAN BE IMPLEMENTED TO IMPROVE R&D PRODUCTIVITY
- An introduction to R&D: the history of drug development
- Many different strategies have been held up as the panacea of the drug development industry
- Companies such as Bayer Schering Pharma are leading the pack in development time
- Case-study examples of how Big Pharma is changing R&D to enhance productivity
  - A number of companies are making small refinements to drive incremental improvement; however companies will need to ally these with seismic changes to yield dramatic access to innovation in the future
    - Merck' s model
    - Lilly' s model
    - Novartis' s business model strategy
    - Wyeth' s business model strategy
  - Some Big Pharma companies have thrown out the old models and have started again: these are likely to be the big winners in the future from an innovation capture perspective
    - GSK' s model
    - Roche' s model
  - Which model is best?
- Datamonitor has identified two groups of strategies to optimize R&D: those that improve the R&D model, and those that optimize R&D pathway progression
CHAPTER 5 RECOMMENDATIONS TO OPTIMIZE THE R&D MODEL
- Optimize outsourcing strategies
  - Drug developers should implement strategies to optimize the way that CMOs are used
  - Across the drug development industry, there is increased strategic usage of outsourcing and globalization of functions
    - Introduction to contract research outsourcing
    - A range of factors are driving the use of CROs
    - Despite the significant number of benefits, there are some downsides to using CROs
    - There are a wide variety of CROs
  - The CRO market is becoming increasingly globalized
  - Outsourcing R&D: advantages and disadvantages of emerging countries
    - There are a range of advantages and disadvantages with outsourcing to emerging markets
    - How can Western CROs survive? The UK situation as a case study for how CROs can be used in Western markets
  - India and China are the most popular emerging countries for outsourcing CRO activity
    - Indian CROs-advantages and disadvantages
    - Chinese CROs-advantages and disadvantages
  - Strategies that can be used to optimize the CRO experience
    - Make significant commitments in the relationship with the CRO
    - Ensure that communication between the CRO and the drug developer is strong, and that the right information is communicated
    - Ensure that the way that staff are used is optimal
    - Drug developers should try to remain appropriately cautious and not take unnecessary risks with the CRO relationship
    - There are also some recommendations that are specific to the Chinese market
- Major drug developers need to improve their access to early-stage research
  - Private equity arms of Big Pharma companies are particularly useful in capturing European early-stage innovation
  - Incubators are a relatively new strategy designed to improve earlier-stage innovation capture
  - Despite significant potential in providing access to early-stage pre-commercial data, open-source research remains under-utilized
- Drug developers should use licensing and M&A to support in-house R&D
  - There are a range of advantages and disadvantages with licensing
  - A range of factors are influencing the licensing environment
  - There are a range of recommendations that drug developers can use to optimize their licensing strategy
  - Big is not always best for drug discovery and development: why mega-mergers are not always the solution for improved R&D productivity
- Optimize macro drug development strategy
  - Companies must determine the strategic balance between me-too incremental improvement and first-in-class targeting
  - Even large multinational drug developers should look to tighten therapeutic focus
  - Implementing infrastructure improvement-focused strategies including optimizing portfolio management is integral to improving R&D
  - Broaden the range of targets but maintain the therapeutic focus is another option
- Improving specific R&D tools will help improve the R&D model
  - Biomarkers use patient stratification and market segmentation to drive future market growth
    - Introduction: the evolution of patient treatment into personalized therapies
    - The current state of the biomarkers market
    - Biomarkers are used in a range of functions
    - Factors driving the evolution of biomarkers
    - Factors restricting the biomarkers market
  - Better implementation of IT can also significantly help R&D
CHAPTER 6 OPTIMIZING R&D PROCESSES WILL HELP TO BOOST R&D PRODUCTIVITY
- Optimize safety assessment in preclinical tests
  - The problem: the evolution of effective safety assessment is lagging
  - The solution: improved safety assessment tools plus the implementation of a rigorous assessment program
- Drug developers should look to improve the way that clinical trials are being run in-house
  - Better use of academic medical centers helps to improve clinical trial progression
  - Introduce innovative clinical trial designs to get rid of redundancy and identify where parallel operations can be carried out
- Develop robust strategies to reduce attrition
  - What causes attrition?
  - Why reduce attrition?
  - How can attrition and risk be reduced?
  - Taking attrition early helps reduce the financial impact
- Optimize use of, and interaction with, regulators
  - Use regulatory bodies to gain access to huge amounts of data
  - Use increased interaction to reduce the cost and time-delays associated with regulatory procedures
  - Build a strong understanding of the global regulatory environment
  - Focus on developing innovative drugs to capitalize on regulatory rewards
  - Capitalize on regulatory programs to help develop drugs for niche or serious indications
    - The launch of the accelerated development program in Europe brought it more in line with the many acceleration programs in the US
    - Drug developers should make use of the FDA' s fast-track program
    - Orphan drug regulations aid innovative drug development
- Introduce greater P&R involvement in clinical trial design
- Improving patient enrollment and retention in clinical trials helps to speed up clinical trials
- Close relationships with key opinion leaders bring a number of advantages
CHAPTER 7 BIBLIOGRAPHY
- Publications and online articles
- Conference resources
  - CHI Conference, San Francisco, February-March 2007
  - BioBusiness Network, 2006
  - Economist: 12th Annual Pharmaceutical Conference, February 2006
- Datamonitor resources
APPENDICES
- Appendix A: The drug discovery process
- Appendix B: Categorization of deals in the MedTRACK deal database
- Appendix C: Categorization of therapeutic areas
- Appendix D: Glossary of terms
- List of Tables
  - Table 1: Emerging market CROs offer a range of services
  - Table 2: Advantages and disadvantages of CROs in emerging markets
  - Table 3: Costs are considerably cheaper in India and China than in the US
- List of Figures
  - Figure 1: NME and BLA approvals are falling, 1990-2004
  - Figure 2: FDA drug approvals from 1989-2000 were primarily for low-innovation drugs
  - Figure 3: A variety of different studies have shown that the cost of R&D has increased over time
  - Figure 4: The number of priority approvals has risen consistently over the last 40 years
  - Figure 5: The greatest number of deals in 2005-06 involved Phase II drugs, and the greatest number of clinical drugs in development are also in Phase II
  - Figure 6: Deal activity is relatively constant, but spikes slightly at the end of each year
  - Figure 7: Earlier-stage companies dominate as both source and partner in deals
  - Figure 8: Collaborations between earlier-stage companies are the leading deal type
  - Figure 9: Some partner deal mixes are more prevalent in certain phases of development than others
  - Figure 10: Co-development and licensing agreements are the most common deal goals, accounting for more than two-thirds of all deals
  - Figure 11: Single-product deals were the primary focus
  - Figure 12: Different deal objectives are more common at different stages of development
  - Figure 13: The deal database indicates cancer is also the dominant therapeutic focus among 2005-2006 R&D deals
  - Figure 14: The pipeline database snapshot indicates that cancer is the dominant pipeline therapy class
  - Figure 15: Oncology/immunologic and CNS therapies have dominated the clinical pipeline from 1993-2005
  - Figure 16: Immune disorders and inflammation dominate R&D focus, based on a snapshot of the current patent situation
  - Figure 17: Systemic anti-infectives are the most likely drug class to move from entering clinical testing to being approved by the FDA
  - Figure 18: Antiparasitic drugs have the highest probability of approval and transitioning through from Phase II to approval
  - Figure 19: HIV drugs are among the quickest therapies to develop
  - Figure 20: Respiratory drugs are among the most expensive to develop
  - Figure 21: Antibodies and vaccines dominate the deal focus
  - Figure 22: Merck redesigned its business model to focus on capturing innovation and carrying out effective lifecycle management
  - Figure 23: Lilly' s business model aims to improve productivity and reduce waste
  - Figure 24: Novartis' s model for better integration
  - Figure 25: Wyeth has revolutionized its approach to R&D
  - Figure 26: GSK' s CEDD model is designed to mimic smaller-scale biotech companies
  - Figure 27: Roche' s networked Pharma model provided significant innovation
  - Figure 28: Optimizing the R&D process and the R&D model are central to improving R&D productivity
  - Figure 29: High CRO usage projects have faster development times than low CRO usage projects
  - Figure 30: BRIC countries compare favorably with European countries in terms of places to perform clinical trials outside the US
  - Figure 31: AstraZeneca' s licensing opportunity evaluation strategy
  - Figure 32: Factors that restrict licensing deals
  - Figure 33: There is an inverse correlation between company size (defined by sales) and R&D productivity
  - Figure 34: A range of safety-focused activities should be carried out to optimize safety assessment
  - Figure 35: Oncology trials shows multiple opportunities to change clinical trial design
  - Figure 36: The greatest amount of drug development spending is in Phase III, 2005
  - Figure 37: Poor pharmacokinetics/ADME and lack of efficacy top the reasons for attrition
  - Figure 38: Clinical development is still the most expensive and lengthiest section of drug development
  - Figure 39: Regulatory initiatives designed to help accelerate the development for niche or serious indications

R&D Strategies: Incremental improvements and paradigm shifts in strategy are both necessary to boost productivity

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