RIP big pharma drug development?

Paul Tunnah interviews Dr Kenneth Kaitin

Tufts Center for the Study of Drug Development

In years gone by the drug development process seemed to function like a well-oiled machine, with investment fuelling the research at one end of the pipeline and a steady stream of blockbuster new medicines dropping out the other end. However, within the current pharmaceutical industry landscape, this machine seems to be grinding to a halt with increasing hurdles to gaining market approval and access for novel drugs. Even for those that do make it to market, the chances of blockbuster status are few and far between.

But is the traditional drug development model dead and buried, or does it just need a few tweaks to get it working again? pharmaphorum spoke with Dr Kenneth Kaitin, a world renowned expert on drug development and innovation, ahead of his keynote speech at the Pharma PPM Think Tank 2011 conference to hear his perspective on the current challenges and future direction. During the course of our discussion, it became clear that he sees a future pharma model that might look quite different from where we are today.

To listen to the full interview, please click on the play button below, with a shortened transcript of some edited highlights shown in print below.


Interview summary

PT: Kenneth thanks for joining me today. Can you tell me a little bit about your background please?

KK: My background is in pharmacology and I hold a faculty appointment at Tufts University School of Medicine in Boston. My group, the Tufts Centre for the Study of Drug Development, is the only academic group committed to exploring the scientific, economic, regulatory and political issues that affect pharmaceutical and biopharmaceutical innovation. We have a multidisciplinary staff and we publish quite a bit in peer reviewed journals, do a lot of presentations and hold courses to provide information that will help enlighten the debate about improving drug development.

PT: How would you summarise the key changes that you’ve seen in drug development for pharma?

KK: The major challenge for the industry is a drug development process that remains extremely expensive, risky, and time consuming. We have a reimbursement environment that’s increasingly restrictive, in particular the United States with healthcare reform and all the concerns about the overall healthcare bill. Patents on many high revenue generating products are expiring, that’s gone on ever since they began having patents but now the industry doesn’t have new products to follow on. The final issue is that the regulatory environment, especially within the last 10 years, has become extremely restrictive and much more risk averse – not just in the United States, but also Europe. Regulatory authorities are shifting the balance to being more cautious about allowing products on the market that may eventually have safety issues.


“Based on the most recent numbers that we put out the overall success rate for new molecular entities is 16%.”


PT: What success rates are you seeing for pharma in terms of getting drugs to market?

KK: Success rates is an area that industry has been focusing on for at least two decades, yet despite all that energy, companies have not been particularly successful at improving them. Based on the most recent numbers that we put out (in a published article in Clinical Pharmacology &amp, Therapeutics last March) the overall success rate for new molecular entities is 16%. Of course that hides significant differences across different therapeutic areas, so in areas like systemic anti-infectives where endpoints are fairly straightforward the success rate is around 24%. But in areas where the endpoints are more difficult to measure and drugs may be given over a lifetime, for example in the central nervous system or neurodegenerative disorders area, success rates are just above 8%.

PT: So do you think there’s a decline in innovation underpinning that or has the bar just got higher?

KK: It’s clear that the number of new products that are reaching the market is not enough to sustain the current R&amp,D levels. It may not necessarily be that the overall productivity of the industry has declined as we’re not seeing new product approval numbers much different from those in the 1980s and 1990s. However, the overall cost to develop those products has gone up at a very dramatic pace. In other words it’s not a productivity problem, it’s a business model problem for the industry.

PT: What do you see as the major risks involved in that development process for pharma?

KK: The major risk is maintaining a diverse enough portfolio so that companies can actually experience some failures in say biologics, vaccines or other new molecular entities versus follow on innovation. How companies are doing that from the perspective of my group is fascinating, because the industry is struggling with determining what the appropriate model is right now for the diversification of risk. Some companies are restricting the number of different product areas they’re investigating in, trying to eliminate everything but pharma R&amp,D for example, and other companies are taking the exact opposite approach of investing more heavily in other types of functions. It’s not clear at this point what the best approach will be.


“It’s clear that the number of new products that are reaching the market is not enough to sustain the current R&amp,D levels.”


PT: Anecdotally, there is this perception that small biotech is more effective at drug development than big pharma. Would you agree with this, based on your observations?

KK: We actually don’t see much evidence that biotech is more efficient. From big pharma’s perspective there is this view of biotech as being highly flexible, less risk averse and more efficient in bringing products to market, and I think a lot of biotech executives would like the pharma and investment communities to believe that as well! The fact of the matter is that when we look at the overall time, cost and risk of drug development then biopharmaceutical products don’t fare better than products developed by big pharma. What we do see though is the ability of smaller companies to avoid the internal silos that big pharma is always grappling with. So you have regulatory people or chemists that may also be involved in pre-clinical, clinical marketing and sales. You have groups working together in a collaborative way to see a product reach the market, without being passed from silo to silo.

PT: How are you seeing pharma adapting to this challenging environment?

KK: Pharma is trying to find a new model for R&amp,D. Some companies are divesting certain functions, such as Eli Lilly which has now created an entity called Chorus. Compounds from Lilly’s portfolio are outsourced to Chorus from candidate selection all the way until proof of concept, when Lilly can determine whether they want to bring that candidate back into their portfolio. We also see AstraZeneca outsourcing its active pharmaceutical ingredients, Bristol-Myers Squibb outsourcing pharmacovigilance and Sanofi-aventis outsourcing large parts of its process. So the divesting of certain functions, or “functional outsourcing”, is one way industry is trying to cope. Another way is for industry to partner more than it has in the past, with academic institutions, public-private-partnerships, patient groups and between companies even. We now have large companies working with each other to screen compounds and find a more efficient mechanism for bringing new products to the marketplace.

PT: If we look forwards are there any key environmental game changes evolving to impact on the drug development process?

KK: I’m not sure that are too many game changers, the challenge really resides in the hands of the industry. The most important issue for the industry right now is to get a handle on the drug development process itself – it is widely inefficient, extremely time consuming, the risk levels are enormous and the cost of bringing products to market is gigantic and growing. The earnings within the companies reflect the fact that investors don’t believe industry is able to manage this process. However, I do see the United States government (and to some degree Europe through the Innovative Medicines Initiative) trying to help industry by developing new biomarkers, new tools and better screens to improve research and discovery. But at the end of the day the industry holds the key to improving performance in its own hands.


“…at the end of the day the industry holds the key to improving performance in its own hands.”


PT: Finally, what do you think drug development in pharma will look like in the future?

KK: Diversification of risk across different stakeholders is going to be critical moving forwards. I’m often asked where the drugs of the future will come from and my sense is that they won’t come from individual pharma companies but rather from a network of institutions that will work together to bring products to market. We’ll still see large pharma companies playing a critical role in drug development, but for the earlier stages of development, such as discovery, pre-clinical and even early clinical, large pharma will coordinate and manage the process, rather than do these internally. A lot of the basic research and innovation will be done by academia, biotechs and small pharma. Big pharma will have well-established partnerships with contract research organisations and other partners, such as patient groups and payers, to better understand and execute the large pivotal trials. Ultimately, big pharma’s strength is in its ability to conduct these large pivotal trials, do the regulatory submission and in sales and marketing. But a network of innovation is going to be responsible for getting new products to market, as no one entity can do this alone.

About the interviewee:

Dr Kaitin is the keynote speaker at the forthcoming Fleming Europe conference Pharma PPM Think Tank 2011 where he will present on the current and future landscape for pharmaceutical drug development and innovation.

Dr Kaitin is Director of the Tufts Center for the Study of Drug Development, and Research Professor at Tufts University School of Medicine. In addition, he serves on the faculty of the European College of Pharmaceutical Medicine at the University of Basel, and he is a visiting lecturer at the Tuck School of Business at Dartmouth College. Dr Kaitin writes and speaks frequently on factors that contribute to the slow pace and high cost of pharmaceutical R&amp,D and the impact of efforts to speed the drug development process. He is an internationally recognized expert on the science of drug development and has provided public testimony before the U.S. Congress on pharmaceutical development, regulation, and policy issues. He is currently Editor-in-Chief of Expert Review of Clinical Pharmacology and serves on the editorial boards of a number of peer-review journals. Dr Kaitin also serves on the boards of directors and scientific advisory boards of several public, private, and not-for-profit life sciences companies and organizations.

What is the new drug development model?