Getting Less Generic
Though seemingly counterintuitive, with Big Pharma's pipelines dwindling, generics companies are now poised to address therapeutic
areas with unmet clinical needs. Many of these companies have honed knowledge around key health needs—specialty medical areas
that are complex structurally or exist within complex regulatory environments—diagnostic medicine, growth hormone therapy,
pain management, and oncology.
Firms like Teva are doing just that. Using a so-called 'distributed model'—combining internal and external assets to solve
medical problems in new and creative ways—these firms are expanding their focus to include new areas of pharmaceutical development,
such as new formulations and biosimilar development.
It starts by combining diagnostic and therapeutic assets, offering unique clinical opportunities to focus on medicine-delivery
systems. In some cases, one company may utilize a technology from a second company to solve a medical need, which may be marketed
by yet a third company that has the appropriate infrastructure to navigate complex regulations.
A modified R&D process is the driving force behind the distributed model. A single NCE takes between 10 years and 15 years
to develop from discovery to patient access on the open market, with an average cost of $800 million to $1 billion. In an
economic environment that demands cost-cutting measures and reduced R&D spending, a distributed model maximizes 'incremental
innovation,' allowing companies to innovate by reformulating and combining drugs with innovative delivery systems, rather
than investing millions in a novel therapy that may or may not provide unique patient benefit. Further, the distributed model
can make a huge difference in driving forward projects like drug development for neglected diseases, for which needs are great
but funds are scarce.
Focusing on areas such as pain and oncology, in which molecular targets are well understood, generics companies are providing
patients with new diagnostic and treatment options. Successful approaches come in the form of new formulation utility, improved
side-effect profiles, or achieving maximum therapeutic effect.
Finding the Balance
The time when all generics companies focused exclusively on the development of commodity generics—easy to manufacture, oral
versions of drugs with few barriers to market entry—has passed. Increasing competition, low margins, and fewer new molecules
entering the market have shaped generics industry survivors into more efficient market players.
If generics companies can balance both generics and NCE development—while deploying their channel and specialty medicine experience—they
may be able to reap the benefits offered by both product types in the global healthcare environment. Governments are emphasizing
cost containment and access to care, driving greater use of generics as alternatives to brand name drugs. Equally, if serious
and chronic diseases are to be tackled effectively, there will be a continuing demand for innovative, disease-modifying drugs.
Non-generic pharmaceutical companies, too, stand to gain from co-opting the distributed model and allowing it to flourish
in cooperative competition with traditional R&D. Building on external research through collaborative strategies will allow
companies to increase their innovation, productivity, and ultimately transform their business. In this era of tremendous scientific
potential and fast-paced advances, adapting to future marketplace needs means fundamentally rethinking business models and
demonstrating a willingness to implement major changes.
Who will benefit if innovators and generic companies can adapt to this new business model? Ultimately, government payers,
health providers, and patients will be the collective recipients of this best-practice adaptation. The call for change is
in the air. All we need do is listen to societal demands.
Timothy R. Wright is president of pharmaceuticals segment at Covidien plc. He can be reached at firstname.lastname@example.org