Biopharmaceutical drug discovery companies have progressively tailored their pipelines to specialty therapeutic areas and smaller patient populations, driven by several factors: better understanding of underlying disease biology leading to significant gains in efficacy; innovation in technologies; faster development and regulatory timelines in high unmet need populations; uncertainty around generic competition entering legacy markets; and significant pricing power. An analysis of new molecular entity (NME) approvals since 2000 shows that new drugs with orphan-drug designations have steadily risen; nine of the 27 approvals in 2013 were orphan drugs. Robust pipelines in specialty areas like oncology, neurology, and immunology suggest a continuation of this trend.
However, the specialty business model has lately shown signs of strain and outright constraints in continued scalability. Agents such as Gleevec, Zaltrap, and Sovaldi have been under fire from physician groups and government officials in recent months for high price points. Companies have also increased the prices of drugs already on the market in recent years (see chart), raising questions about the overall costs to the healthcare system. A careful review of the market environment yields three key challenges to the focus on specialty indications that are particularly critical for drug companies.
Manufacturers have increased the prices of leading specialty drugs, such as those listed above, in recent years.
» Increased competition
» Finding patients who benefit
» Market access (including accessibility, pricing, and reimbursement)
As the market for specialty biopharmaceuticals has become more lucrative, companies have naturally responded by moving aggressively into these therapeutic areas. The result has been a dramatic increase in clinical development pipelines, particularly oncology. Whether viewed through the lens of new mechanisms of action (MOA) or specific indications such as multiple sclerosis or renal cell carcinoma, multiple branded agents are now available. Even the most promising emerging MOAs such as PD-1 and CDK-4/6 inhibitors have multiple entrants in the pipeline despite their newer status and compressed clinical development time frames. This has put incredible pressure on companies to move quickly, as many of these markets exhibit advantages for early entrants or even a "winner-takes-all" dynamic due to a new product's potential to significantly raise the efficacy standard.