Explaining the Drug Drought - Pharmaceutical Executive

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Explaining the Drug Drought


Pharmaceutical Executive



Eve E. Slater, M.D.
This is a time of deep uncertainty for the big players in the research-based industry, where the traditional metric of performance—strong profits—fails to translate to the traditional metric of reward—increased shareholder value. Most analysts attribute the disconnect to investors' lack of confidence in the industry's future, as represented by a faltering development pipeline characterized by skyrocketing risks and fewer new products with significant clinical breakthrough potential.

The burning question is: Is it time to declare the traditional model of drug discovery and development dead?


Kenneth Kaitin, Ph.D
The question brings with it no ready answer. The exact explanation for dry pipelines and static timelines remains elusive, while the task of delivering on expectations is made harder by a convergence of external factors: a looming patent cliff, narrowing of reimbursement margins, higher pre- and post-approval regulatory hurdles, and the financial impact of US health reform, which has made the largest and most predictable of markets a blank slate for the industry going forward. Companies are responding with lateral rather than groundbreaking strategies: consolidation and alliance creation, engagement of functional service providers, "off-shoring" of clinical trials, expansion into emerging markets, and production of branded generics. These may bolster the balance sheet but do little to strengthen the underlying core competency and build R&D capacity.

Any improvised and short-term approach such as this raises a second, broader question: What will become of biomedical innovation if Big Pharma relinquishes its responsibility in serving as the key driver of new drug development?

Private-sector R&D budgets—essential to ensuring that a pill can be taken safely by patients, for the intended clinical effect—are shrinking as the industry contracts. Reallocation of resources is also under way; the shift of monies from "R" to "D" has become unavoidable as trial endpoints become more complex, and regulatory requirements, such as risk mitigation strategies, escalate. Much of the innovation emanating from smaller biotech companies has been locked up by the big players in deals, and new venture money for cash-strapped startups is dwindling as the buyout specialists shift focus.

Without a substantive course correction, the pressures on the R&D model will constrict what remains of the pharmaceutical industry's ability to innovate. And that leads us to a third question: Will society—and patients—suffer as a result? Why can't government take on this task?


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