Business


R&D T


he pharmaceutical industry has adhered to a ‘closed’ model for drug discovery and development for many years. Individual companies plough millions into in-house R&D in a bid to discover new molecules with therapeutic properties. Only a tiny proportion of those that show potential will run the gauntlet of lab-based testing, clinical trials and regulatory hurdles. Those that emerge, blinking, into the light of the market will be exclusively owned during the period of patent protection – and are heavily promoted to maximise profit and recuperate the prohibitive costs of R&D.


This strategy of ‘betting’ on in-house R&D to find potential medicines making it to market has paid off handsomely for shareholders for many years. But could the tactics of big pharma be set to change forever? Some experts certainly think so, pointing to a number of factors conspiring to bring this once stable model of ‘closed’ develop- ment into question.


Patently obvious?


New drugs are the life blood of the pharmaceutical business. Without new therapies to sell, the indus- try is in limbo, relying purely on the strength of ageing brands. But with the patents on many ‘blockbuster’ medicines launched in the glory days


Drug Discovery World Winter 2010/11


open verdict?


As pharmaceutical companies begin to shift from in-house R&D to external partnerships and ‘open innovation’, the traditional drug discovery model may soon be a thing of the past. In this article we explain what is driving these changes and what the implications are for the R&D workforce.


of the 1990s due to expire over the next few years, big pharma is starting to feel very exposed. According to Barbara Ryan, an analyst at Deutsche Bank, patents worth a projected $30 bil- lion in revenue are due to expire between 2010 and 2013. With the ensuing rise in generics flooding the market, pharma companies will need to raise their productivity in order to keep profits flowing. So it is a worry for the industry that the drugs pipeline, at least in some quarters, appears to be running dry. While pharma R&D spend has increased, the number of new drug approvals has remained relatively flat. In its 2007 report The Innovation Gap in Pharmaceutical Drug Discovery and New Models for R&D Success, Northwestern University’s Kellogg School of Management, based in Illinois, US, sug- gests three potential factors behind this crisis. The first is over-saturation. Have pharmaceuti- cal companies made all the breakthroughs they can with current technology, ask the researchers. Secondly, the authors cite increased risk taking. In recent years the pharmaceutical industry has shown a greater appetite for investments that have proven less than safe. For example, focusing on biologics and genomic-based therapies, which are often harder to develop and can struggle to receive regulatory approval.


By Dr Kay Wardle


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