Molecular Diagnostics
array of problems. However, the tidal wave of con- sumer-driven, personalised medicine has forced pharmaceutical companies to reconsider their cur- rent business model. There is now a general con- sensus that the blockbuster model has significant limitations6 and that the future must include ther- apeutic agents that are more closely tailored to spe- cific patient populations. By necessity this must mean that such drugs are safer, more efficacious, more specific and less costly to develop7. The demands and constraints imposed by such a new model have had the pharmaceutical companies rushing to embrace and adopt Companion Diagnostics (CD).
In our previous paper in the series, we provided an ‘Overview of Companion Diagnostics in the Pharmaceutical Industry’8. We discussed the cur- rent state of CDs, as well as introduced the pletho- ra of key stakeholders. We noted that the stake- holders appear to have common goals but all speak very different languages and possess different expectations since they are driven by very different goals and needs. This has lead to a number of dis- tinct CD definitions, and a struggle to adopt a uni- versal business model for the development of CDs in the pharmaceutical sector. In addition, we noted that the adoption and growth of CDs in the phar- maceutical sector has been significant in the past several years. This is evidenced by the number of major pharmaceutical companies undertaking deals as well as the number of CD companies now professing to offer services and products in exis- tence8. In this article we examine the different value propositions held by the major stakeholders as well as discuss the difficulties of constructing CD-pharmaceutical company business deals as well as building and adapting the optimal business model. In a subsequent article we will describe the regulatory and reimbursement issues that are looming on the near horizon in this nascent and complex space.
Companion Diagnostic value Pharmaceutical companies have developed superb infrastructure capabilities in terms of their drug discovery and development (DDD) efforts. In addition they are adept at creating third party outsourcing and joint venture oppor- tunities to facilitate the creation of new thera- peutic drugs. However, many pharmaceutical executives have limited experience and under- standing of the diagnostic sector, and thus for them, a unifying business model for discovery and development of a CD has been hard to define and determine. This is compounded by the
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changing nature of the stakeholders, and the dif- ferent expectations and needs of pharmaceutical companies versus CD companies.
Stakeholders Historically, pharmaceutical companies have tight- ly controlled the discovery, development, market- ing and post-marketing surveillance process of their therapeutic drug products. However, as we described in our first paper, with the creation of an informed patient/consumer base, the advent of per- sonalised medicine and a changing healthcare delivery system, numerous other influential stake- holders now exist. Hence pharmaceutical compa- nies must recognise that these stakeholders hold very different perspectives on the value of the CD versus the therapeutic drug, and this is highlighted below:
i Pharmaceutical companies are in the business of selling therapeutic drugs, thus they place a premi- um on the safety and efficacy of the drug and look to maximise a return on their DDD investment through effective pricing. In the case of the CD, its usefulness is solely connected to the quality and hence the value of the therapeutic product. ii Companion Diagnostic companies are responsi- ble for discovering, validating and commercialising the CD product. They also provide CDs to a phar- maceutical company(s) partner. They look to develop a CD with optimised specificity and sensi- tivity, at minimum cost to themselves and maxi- mum price to their client/payor. Obviously such deals can be constructed in a variety of different way that includes front-loaded premiums for CD development, to back-end loaded deals with a gen- erous royalty payment per CD test. They have lim- ited business interest in the therapeutic agent. iii CRO companies are primarily responsible for offering a wide range of services to the pharma- ceutical industry. Based on their business model both the therapeutic agent and CD themselves have limited value to the CRO. iv CD testing laboratory: the cost, reliability and reimbursement of the CD test accrue considerable value, whereas there is obviously no value in the therapeutic agent to the testing laboratory. v Physician/healthcare provider: the safety and efficacy of the therapeutic drug and the specifici- ty/sensitivity of the CD are of critical value to the physician as they look to optimise treatment and disease management of their patients. The cost/pricing of both the drug and the CD are of limited interest to the physician. vi Patient/consumer: the value of both the drug
Drug Discovery World Summer 2010
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