Pharma Forecast: Into the Woods - Pharmaceutical Executive


Pharma Forecast: Into the Woods

Pharmaceutical Executive

For example, Pfizer is making a major move into biologics. GSK has sharply upped investment in its global vaccine division, including an ambitious rollout of its cervical cancer vax, Cervarix, pending FDA OK. Meantime, with a growing stake in the future of personalized medicine, Roche tapped the chief of its diagnostics division, Severin Schwan, as CEO last summer, and its $3 billion bid to take over Ventana Medical Systems, maker of a key breast cancer test, will be one of 2008's hot M&A stories.

The once-verboten territory of generic drug production is increasingly tempting to branded drugmakers. Novartis' generics division, Sandoz, last year accounted for 20 percent of overall profits. Other firms with their own generic shops, like Johnson & Johnson and Pfizer, are expected to battle to save market share by offering generic versions of their off-patent brands. The use of "authorized generics" will jump, following the Supreme Court's recent OK. As for reverse-payment strategies to delay generic competition, congressional attempts to end the practice will gather steam.

Tactics to squeeze the last millions out of blockbusters by marketing them as over-the-counter (OTC) or behind-the-counter (BTC) consumer products will also accelerate. Following its successful launch of the weight-loss pill Xenical as the OTC Alli, GSK will aim to combine it with cholesterol-lowering Rx-to-OTC drugs and other natural allies. But prospects look poor since, at press time, FDA handed Merck its third strikeout at taking its statin, Mevacor, OTC. With both pharma and consumers backing the BTC category, FDA's gears will likely start creaking in that direction this year.

In the end, though, only innovative new drugs will save the industry from its patent cliff. And in the New Normal, when specialty drugs targeted to smaller populations and priced high but taken short term will replace the Lipitors and Nexiums, pipelines will have to spit out more winners that ever.

That's why all the top pharmas will continue working overtime to reinvent their R&D processes. From Wyeth's Learn and Confirm to AstraZeneca's Quality on Time (to name only two), sweeping efforts are being made to speed development and cut attrition with the use of biomarkers and other cutting-edge technologies and trial designs.

Analysts agree that these initiatives are critical. They also agree that it's way too early to declare mission accomplished. "Companies are all saying interesting things," says Chuck Farkas. "But we will only know whether it all pays off in five or six years."

There's also skepticism about the ability of giant R&D organizations to function with biotech's entrepreneurial drive—or anything approaching it. "Revolutionizing the R&D model will not be a short-term process," says Omar Chane. "The industry has made progress in the creation of franchises of therapeutic areas. But the silos between the scientists and the marketers that prevent collaboration have to go. They're pharma's worst enemy."

As if on cue, at press time, Moncef Slaoui, GSK's head of R&D, offered a blistering critique to the Financial Times of the company's celebrated drug-development reorganization known as its Centers of Excellence. "The science is overridden by managers.... We just can't afford [the bureaucratic mind-set]," he said. "In every single project, we could have reached the critical decision with 50 to 60 percent fewer experiments."

The molecular biologist and GSK vet predicted that, in the near future, half of GSK's pipeline would be acquired out of house, up from 10 percent today.


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