R&D
Innervation or enervation in pharma?
It is all too easy to focus on the research-based pharmaceutical industry’s negative prospects,
but how worried should we really be, ask Alix Biancardi and Sophie Green
T
he pharmaceutical industry has, over areas accessible to the pharma industry, but battle for market dominance between
the years, built up a straightforward this blockbuster model did generate vast Merck & Co’s Gardasil and
method of developing and returns for investors. Between 1993 and GlaxoSmithKline’s rival Cervarix, both
commercialising drugs to meet market 2000 the FT Pharmaceuticals index rose by prophylactic anti-HPV vaccines that show
demands and create a highly profitable more than 350%, indicating sizeable huge marketplace potential. Now, new
business model. More recently, however, this investments made in a traditionally hugely drugs not only have to compete in terms of
model has evolved and, like Darwin’s profitable industry. Over the next two years, marketing and branding in a crowded
Theory of Evolution, been acted on by a however, the index lost half its value against marketplace; there is also far greater
sort of “natural selection”, albeit over a a backdrop of ongoing substantial financial emphasis placed on demonstrating
much shorter timeframe. Pipelines are success. In fact, at this time, the combined significantly better safety and/or efficacy
subject to external forces exerting profits for the top 10 drug companies in compared with existing therapies to gain
pressures that determine which drugs will the index were $35.9 billion, compared with approval in the first place, especially under
be successful competitors, and which will $33.7 billion for all the other 490 businesses the US accelerated approval process. In
enter evolutionary dead ends. The old drug put together. From the beginning of 2000 to addition, there is growing pressure for
development model that brought the March 2007, the FTSE global products to demonstrate cost-effectiveness
pharma industry so much success is now pharmaceuticals index rose a mere 1.3% to satisfy health economics considerations.
under unprecedented pressure to adapt or compared with the Dow Jones World Index There simply is not enough space left in
face extinction. increase of 34.9%. What did analysts and niches to support more newcomers.
In the past, drug development focused on investors see that made them shy away Under the pressure of competition,
discovering blockbusters from large from a sector with such phenomenal novelty is now an adaptive requirement for
pipelines of chemical entities. While there figures? creating a new, competition-free niche. This
were many notable successes, there was a The pharmaceutical marketplace has means that companies must use an
high attrition rate as candidates were tested changed dramatically in the past decade. It innovation-led model for drug development
for efficacy in a hit-and-miss high- is becoming flooded with generics and (instead of the serendipitous discovery of
throughput approach in a narrow spectrum “me-too” rival branded prescription drugs, “magic bullet” drugs, such as penicillin) and
of disease areas. This strategy was costly, creating a crowded and competitive focus on targeted treatments. New
and it limited the number of therapeutic environment. One example is the ongoing approaches include identifying those
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