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

Table of Contents

• 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