BACK TO CONTENTS Paving the way for nichebusters
So with a rising number of drugs approaching the patent cliff, a lack of new, replacement blockbusters, and government cutbacks on health spending, more and more pharmaceutical and life sciences companies recognise the need to embrace personalised products aimed at smaller audiences, but with (hopefully) better outcomes.
New drugs launched between 2006-2010 in the USA had average sales of £85 million three years after launch, compared with £125 million from 2001-20064
, whereas drugs targeting niche therapeutic areas typically enjoy
stronger support from regulators and governments, with tax breaks and longer market exclusivity licences. These medicines also often command much higher prices, with gross margins up to fi ve times the industry average. Kalydeco, the fi rst drug to treat cystic fi brosis in patients with a G551D mutation, can cost as much as £180,000 a year, with margins further protected by high entry barriers in the form of complex and sensitive manufacturing processes that deter competitors.
Chris Stirling, global head of life sciences at KPMG says: “The transition to nichebusters will affect every aspect of a pharmaceutical company’s operations.” R&D is likely to be carried out by a series of smaller scale, autonomous teams able to work swiftly and fl exibly to react to changes in adaptive trial results. “Sales and marketing models should also change dramatically, with the old model of huge fi eld forces selling one or two drugs becoming redundant, to be replaced by compact teams detailing very specifi c treatments to a specialised target group of physicians.”
“Such a revolutionary change can only succeed with the permission of regulatory authorities, and pharma fi rms must work in partnership to agree a new, accelerated and adaptive approach to trials, and a suitable payment model based on outcomes and quality of life.” The industry can also play a part in educating physicians on the concepts and benefi ts of genomics. Finally, the return on investment in R&D may have to be reappraised, with a regular stream of new compounds that have shorter life cycles, rather than expecting a decade or more of patent-protected blockbuster revenue.
AVERAGE SALE OF NEW DRUGS IN USA 3 YEARS AFTER LAUNCH
£85M 20 06-20 1 0 £125M 20 0 1 -20 06 So near and yet so far THE TRANSITION
TO NICHEBUSTERS WILL AFFECT EVERY ASPECT OF A
PHARMACEUTICAL COMPANY’S OPERATIONS
When the Human Genome Project began in 1990, no one involved could have predicted the potential for genomics to tackle rare or complicated conditions. Despite considerable progress, the healthcare sector as a whole is only now beginning to truly understand the link between therapeutic effectiveness and genetic makeup.
As the costs of sequencing continue to fall, every citizen will eventually have a recorded genetic profi le that can be used by providers and researchers to predict the likelihood of disease, and treat known conditions more effectively. The challenge is to capture, process and use this information in a way that improves the targeting of existing drugs and stimulates the development of new drugs that attack specifi c conditions.
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ncbi.nlm.nih.gov/pmc/articles/PMC3153529/online.wsj.com/news/articles/SB10001424052702304281004579222362098933226 © 2014 KPMG LLP, a UK limited liability partnership, and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
FOCUS 25
GENOMICS
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