Ind

Proof of Principle CTA

Pharmacology Toxicology Pharmacokinetics Formulations Manufacturing clinical

Studies Phase: (4-8 Yrs)

FDA Review (6-12Mo

Focus: Safety & Efficacy

Phase 1 (20-50 subjects)

Phase 2 (100-500 patients with target disease)

Phase 3 (1,000-5,000 patients with 100 investigators)

Pharmacoeconomics

FDA Review (6-12Mo

Focus: Safety & Efficacy

Focus:

Usage & Safety Adverse Events Phase 4 Trials Promotion Review Product Education 2nd Indications

- FDA: Inspections & Audits for Research, Clinical Operations & Manufacturing |

- Manufacturing: Product & Process testing at all Research & Commercial stages«

- Market Research: Ongoing Market analyses, Competition & Target audience |

Planning Needs x3 : Full Portfolio & All Products & All Projects

Fig. 1.31. Phase (6) - Content-Processes in R&D

Fig. 1.32. R&D challenges in drug development

Source: Tufts Center for Study of Drug Development, Outlook 2003. phRMA, Prescription Medicines 24 Years ago and Today: Changing Trends, Enduring Needs

Fig. 1.32. R&D challenges in drug development

Source: Tufts Center for Study of Drug Development, Outlook 2003. phRMA, Prescription Medicines 24 Years ago and Today: Changing Trends, Enduring Needs information and new needs. Also, throughout the R&D process, interactions with regulatory authorities (e.g., Food and Drug Administration [FDA]), are required often and desired for the filings of applications, reports, and communications for study and manufacturing issues.

In this next figure (Fig. 1.32), we have suggested nine significant external challenges involving science, business, health care, government, and the public at large that ratchet up the pressures on a company to be successful in creating the next blockbuster product for patients. (1) A company must identify what are current and especially future medical needs of patients and health care systems, projecting 10 years into the future, given the time necessary to develop a new product. Above, we have discussed public health statistics for deaths and disabilities, which must be tracked and examined to identify the opportunities for their molecules in their pipeline to impact diseases with sufficient advances in health for the public, which in turn offers financial opportunity for the company. (2) The success rate by the industry for new products has diminished over the past several years, which will be discussed later in this chapter, and competition has become more intense (multiple products in one drug category, more drug categories for one disease, and much more research investment with fewer companies). (3) The cost of R&D for a drug has ballooned to about $900 million for each successful product, such that good decision-making and efficiencies in clinical trials work and all operations has become even more paramount for the industry. (4) Pharmaceutical companies are public companies with stockholders who have high expectations for their investments and demand short-term return, often quarterly, which, for a business with a 5-10 year time frame for new products, further accents the pressure for a robust pipeline. Scientific milestones need to be met throughout the year with new products at least annually to satisfy the investment community. (5) The advance of science continues to accelerate at a dizzying pace, well represented by the 2001 publication of the sequencing of the human genome. But it is sobering to realize that proteomics, the protein fingerprint of the human body and disease, is even more complex. We have already shown the scientific change in oncology as one clear example of the scientific explosion of information and in turn potential product opportunities. (6) Government policy is an ever-changing landscape, because of new science, the need to protect the public, and the political arena that we live in. The new Medicare drug law in 2004 offers payment by government for seniors for drugs, expanding access to drugs, but interjects more government involvement in drug issues. A major drug withdrawal especially for adverse events, such as with Merck's Vioxx® for cardiac and stroke problems in 2004, raises public outcry and congressional demand to tighten the drug approval and monitoring processes. (7) Government regulation, especially from the FDA and the Office of Inspector General (OIG), also is an ever-changing world related to science, health care, and public pressures. Orphan drug and accelerated drug approval regulations have helped to bring life-saving products to market faster in the 1990s. However, new regulations have added onerous processes and costs to product development. For example, the new risk management guidelines from the FDA and guidelines for protection of privacy of patient information create new processes and information requirements for the research and marketing of products. The goal of more patient safety is most laudable, but the new rules carry a big price tag attached to them. (8) Globalization has been occurring in all business segments including the pharmaceutical industry. The bases are; better communication exists across the globe, business opportunities open around the globe vs. one nation, disease needs are universal around the world, consolidation creates operational efficiencies, and consolidation increases size and breadth to meet global business needs. New science and business models are being created to operate on this global scale. Also, the FDA now allows studies to be done with worldwide patient enrollment and even European studies being used for U.S. product approvals. (9) The investment community provides financial resources and can foster profitability but demands both short-term and long-term positive outcomes. They now track the industry ever more closely for their scientific advances as part of the business, using scientists and clinicians at their companies attending medical meetings to track a product's research progress. You must not only have product approvals but show achievement of interim scientific milestones, such as IND submissions, completion of phase 3 trials, and publications. In the 21st century, the challenges have only magnified in R&D. Alliances with many companies who are expert in specific fields are needed to exploit all the research opportunities of the disease targets and product candidates that a company has discovered [4, 10-16, 21, 36-48].

Although hundreds of drugs exist in the health care system to treat patients with almost all disease, opportunities for new products remain because treatments often only deal with symptom control or only partially control the disease presentation or progression. The expense of health care in the USA is $1.6 trillion dollars in 2002, of which drugs comprised about $250 million at that time. The cost for caring for patients is quite high in dollars and percentage of gross domestic product (USA, about 15%). Figure 1.33 lists 10 common maladies, their prevalence, estimated cost to the health care system, and a conservative estimate of the number of products in the pipeline. These 10 diseases involving many organ systems afflict about 177 million people in the USA and are mostly chronic conditions (some of these diseases overlap in the same patients). The costs to the health care sys tem for these 10 disease are staggering, $1.7 trillion in direct health costs and indirect costs like lost productivity, and range from $15 billion for migraine to $879 billion for all cancers. With an aging population, the economic impact and costs of Alzheimer's ($100 billion), arthritis ($65 billion), and osteoporosis ($18 billion), to name just three cases, will be rising significantly over the next 20 years. Their control is variable; excellent disease control in some, partial in most cases, and with many patients responding poorly. Therefore, many disease opportunities exist for new products for patients to improve disease control, remove some costs in various health care management (although adding drug costs), and hopefully slow or stop health problems lowering excessive economic impacts. The industry has more than 1,800 products in various stages of clinical trials as of 2004, including almost half of the products (890) for these 10 diseases. Cancer has the most products in trials for the collection of more than 20 diseases, followed by cardiovascular disease [49-57].

The financing of the industry involves a variety of sources of money needed to pay for the expensive and lengthy R&D, wherein the promise of a return (a new product) is far down the road, 5-10 years, from the first investment (Fig. 1.34). The biotechnology segment of the pharmaceutical industry includes more than 4,000 small companies worldwide (about 1,500 in the USA) and needs to employ a full range of financing to maintain their viability. It is estimated in the annual Ernst and Young report on the biotechnology industry that usually 25% or more of companies only have 2 years of financial capital left before they have to replenish their capital or go out of business.

In Figure 1.34, the sources noted include six areas. Pharmaceutical companies can partner with a small company and provide up-front dollars, followed by further investment

Selected Diseases

Costs (Annual)

Number of Products in Clin. Research

Alzheimer's3

4,000,000

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