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A better understanding of the economic challenges facing research based companies is needed
In 2002 spending on medicines exceeded $400bn (£248bn; 
377bn)
worldwide. Optimists in the pharmaceutical industry believe that the
global market for their products will go on expanding by around 10% a
year, with the United States continuing to lead towards higher per
capita outlays.1 Expenditure on research
by the pharmaceutical industry is also increasing worldwide. It is
now over $45bn a year
twice
the sum recorded at the start of the 1990sand
projected to rise to $55bn by 2005-6.2 Concerns
are growing, however, about the productivity of research being
funded by the major pharmaceutical companies.
Industry leaders have argued that advances in areas such as genomics will in time identify many new targets for pharmaceuticals to act on.3 Yet some analysts fear that current programmes will not deliver innovations that are capable of generating the earnings currently coming from high selling medicines close to the end of the lives of their patents. The changed nature of future pharmaceutical products and the marketing support they need may mean that the business model underpinning the mainstream pharmaceutical industry since the 1950s will have to be restructured.
Empirical evidence indicates a crisis in productivity in pharmaceutical research. The number of medicines introduced worldwide that contain new active ingredients dropped from an average of over 60 a year in the late 1980s to 52 in 1991 and only 31 in 2001.4 The overall number of new active substances undergoing regulatory review is still falling. Perhaps more disturbingly from the perspective of investors in "big pharma," the number of genuinely innovative products launched by the companies responsible for most of the spending on research and development has also declined relative to the number launched by their smaller competitors.
The reasons behind such trends range from tighter regulation to the
inherently complex nature of modern research in areas such as
oncology, neurology, and virology. For example, unavoidable technical
reasons may exist so that tomorrow's new pharmaceuticals willunlike
present blockbusters such as the statins, cyclo-oxygenase-2
inhibitors, and selective serotonin reuptake inhibitorsbe
products with a relatively high cost for low volumes that unlike
"blockbusters" are tailored to the needs of well defined relatively
small groups.
Social factors linked to the efforts of research based companies to survive intensified economic competition and reduced protection of brand names could also have affected the productivity of research programmes. Corporate mergers and subsequent processes of reviewing priorities and downsizing have reportedly destabilised research teams. Occasionally, potentially productive lines of inquiry have been abandoned because their projected benefits failed to meet the expectations of incoming accountants rather than the hopes of incumbent medical researchers.
Additional challenges confronting investors in pharmaceutical industry research range from the possible weakening of medicine patents to vulnerabilities associated with an excessive reliance on domestic market revenues in the United States. The latter already represent half the global earnings of the research based industry. They support an even higher proportion of its research and development. One fear that is haunting executives of major companies relates to the political unacceptability of a situation in which high prices limit the ability of Americans to benefit from new medicines, while elsewhere in the world access to the latest treatments becomes better assured because of reduced protection of patents.
However, pharmaceutical companies are well aware of the problems they need to address in order to restore research productivity and maintain financial viability. In the immediate future major firms can "buy in" promising new molecules from smaller enterprises and extend the use of existing treatments via fresh applications.
Some data indicate the start of a more definitive strategic response to improving research productivity. The number of stage one and two clinical trials has increased by over 50% since the mid-1990s,5 although as yet no equivalent rise has occurred in the number of more costly phase three trials. This might indicate that the quality of the overall research pipeline is set to improve through more selective approaches to taking new molecules through development phases.
The future for pharmaceutical industry research is less certain than it seemed during the second half of the 20th century. Nevertheless, new treatments are still being developed. For example, the first of a new class of HIV cell fusion inhibitors is due to be marketed during 2003. In the field of biotechnology, recently introduced monoclonal antibodies are already of proved value in treating conditions such as rheumatoid arthritis and some cancers. Upwards of 100 new products based on monoclonal antibodies are now in trial.
Although the pharmaceutical industry's new product pipeline is running leaner
than in the past, it would be wrong to assumeas
yet, at leastthat
it is running dry. Critics may welcome the prospect of pharmaceutical
companies losing economic power and the opportunities for reform that
this might bring.6-8 But the value of
the industry's contributions to therapeutic innovation should not be
ignored. Those who wish to see as many effective new medicines as
possible introduced in the 21st century will hope that the
pharmaceutical industry succeeds in strengthening its research
performance and is permitted an operating environment in whichin
part through adequate protection of intellectual propertyit
can continue investing in advances that ultimately benefit
everyone.
David Taylor
Pharmaceutical and Public Health Policy, School of Pharmacy, University of
London, London WC1N 1AX
Footnotes
Competing interests: DT has received income from a number of pharmaceutical companies and public sector organisations with interests in medicines and allied research in the past five years.
| 1. | IMS Health. PharmaChemical Horizons 2002. www.imshealth.com (accessed 6 Dec 2002). |
| 2. | Van den Haak MA, Vounatsos FJG, McAuslane J. International pharmaceutical R&D expenditure and sales 2001. Epsom: CMR International, 2002. |
| 3. | Sykes RB. New medicines. The practice of medicine and public policy. London: Stationery Office, 2000. |
| 4. | Van den Haak MA, Sculthorpe PD, McAuslane J. New active substance activities: submission, authorisation and marketing 2001. Epsom: CMR International, 2002. |
| 5. | Pharmaprojects database CD. London: PJB publications, December, 2002. (Update.) |
| 6. | Medawar C. Health, pharma and the EU. Direct to consumer promotion. London: Social Audit, 2002. |
| 7. | Collier J, Iheanacho I. The pharmaceutical industry as an informant. Lancet 2002; 360: 1405-1409[CrossRef][ISI][Medline]. |
| 8. | Henry D, Lexchin J. The pharmaceutical industry as a medicines provider. Lancet 2002; 360: 1590-1595[CrossRef][ISI][Medline]. |
© 2003 BMJ
Publishing Group Ltd
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