Comments on: The Future Is Uncertain, The End Is Always Near http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/ News, Comment and Conversation Fri, 10 Feb 2012 20:42:01 +0000 http://wordpress.org/?v=2.6.2 By: Outsidethe box http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30540 Outsidethe box Fri, 07 Dec 2007 15:31:00 +0000 http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30540 So we're shifting from an old industry model to a new one - and some are doing it better than others. The cost of in-licensing isn't a real issue. If you look at almost every deal the risk to the buyer is mitigated by having the vast majority of costs in the back end of the deal. If the product doesn't work you pull out of the deal and big pharma's cost are contained at a much lower level (or at least that is the plan). Headline deal numbers are only relevant if the product actually hits the market. This is becoming the Hollywood model. In the old days the studio owned everything from the star to the theater. Now small production companies are set up to make the movies and the studio does the marketing and distribution. I am sure that it won't be long before most big pharmas have very much smaller research, a development pipeline that is over 75% in-licensed and concentrate their efforts on identifying in-license targets, productivity in development, low cost manufacture and high quality marketing. They're not there yet, but all of the majors are going this way. So we’re shifting from an old industry model to a new one - and some are doing it better than others. The cost of in-licensing isn’t a real issue. If you look at almost every deal the risk to the buyer is mitigated by having the vast majority of costs in the back end of the deal. If the product doesn’t work you pull out of the deal and big pharma’s cost are contained at a much lower level (or at least that is the plan). Headline deal numbers are only relevant if the product actually hits the market.

This is becoming the Hollywood model. In the old days the studio owned everything from the star to the theater. Now small production companies are set up to make the movies and the studio does the marketing and distribution. I am sure that it won’t be long before most big pharmas have very much smaller research, a development pipeline that is over 75% in-licensed and concentrate their efforts on identifying in-license targets, productivity in development, low cost manufacture and high quality marketing. They’re not there yet, but all of the majors are going this way.

]]> By: Bob Freeman http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30400 Bob Freeman Thu, 06 Dec 2007 20:55:25 +0000 http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30400 It's beginning to look to me that the "new" model is basically a sales & marketing organization that relies on in-licensing for new products. What is troubling me is that the costs of licensing deals and acquisitions is extraordinarily high, which begs repeating the question of value for money. I don't see how the industry can justify its pricing practices and tax breaks in that kind of environment. Off-sourcing, while rational, is resulting in the loss, at least temporarily, of high paying manufacturing and research jobs. Re personalized medicine, I believe we're probably 10 years away from knowing what this fully means and its implications for health care financing. It’s beginning to look to me that the “new” model is basically a sales & marketing organization that relies on in-licensing for new products. What is troubling me is that the costs of licensing deals and acquisitions is extraordinarily high, which begs repeating the question of value for money. I don’t see how the industry can justify its pricing practices and tax breaks in that kind of environment. Off-sourcing, while rational, is resulting in the loss, at least temporarily, of high paying manufacturing and research jobs.

Re personalized medicine, I believe we’re probably 10 years away from knowing what this fully means and its implications for health care financing.

]]> By: Nathan http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30399 Nathan Thu, 06 Dec 2007 20:30:20 +0000 http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30399 Jack, I beg to differ. There is lots of unexplored chemical space waiting to be exploited. The problem isn't chemical space, the problem is the combination of a lack of medically relevant targets (enzymes, receptors, etc) combined with a lack of relevant animal disease models. This is compounded by the fact that existing treatments must be at least equivalent to existing treatments (of which there are many for most diseases). Remember how quickly we were able to conquer the HIV virus? Look what we had going for us: a clear target involved in the disease (reverse transcriptase), a clear unmet medical need, and a disease state which had such a dramatic endpoint (death) that side effects were acceptable. The industry was able to rapidly respond multiple drugs were on the market in less than a decade. The only current disease areas that even approaches these criteria are HCV and cancer. Jack, I beg to differ. There is lots of unexplored chemical space waiting to be exploited. The problem isn’t chemical space, the problem is the combination of a lack of medically relevant targets (enzymes, receptors, etc) combined with a lack of relevant animal disease models. This is compounded by the fact that existing treatments must be at least equivalent to existing treatments (of which there are many for most diseases).

Remember how quickly we were able to conquer the HIV virus? Look what we had going for us: a clear target involved in the disease (reverse transcriptase), a clear unmet medical need, and a disease state which had such a dramatic endpoint (death) that side effects were acceptable. The industry was able to rapidly respond multiple drugs were on the market in less than a decade. The only current disease areas that even approaches these criteria are HCV and cancer.

]]> By: Hank http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30398 Hank Thu, 06 Dec 2007 20:27:04 +0000 http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30398 So what will the "new" industry look like? As Ed suggests, the core story has been repeated many times for at least the past ten years. But the "solutions" that have been most visible have been two-fers (like Vytorin), exploiting the pediatric market for all its worth (and sometimes more), pushing the off-label market, and so on. Anything to keep doing what is doing. We hear about "designer drugs" and the suggestion of untapped reserves via biotech, but is there anything there? In this part of the country, it's hard not to think of the auto industry, which keeps making the same mistake from which it never learns but every now and then pretends to. So what will the “new” industry look like? As Ed suggests, the core story has been repeated many times for at least the past ten years. But the “solutions” that have been most visible have been two-fers (like Vytorin), exploiting the pediatric market for all its worth (and sometimes more), pushing the off-label market, and so on. Anything to keep doing what is doing.

We hear about “designer drugs” and the suggestion of untapped reserves via biotech, but is there anything there?

In this part of the country, it’s hard not to think of the auto industry, which keeps making the same mistake from which it never learns but every now and then pretends to.

]]> By: Jack http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30393 Jack Thu, 06 Dec 2007 19:53:40 +0000 http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30393 I think there's still low-hanging fruit in infectious tropical diseases - as far as finding small molecules go - but as to securing equivalent reimbursment for those molecules - that's another story. Basically, there's not a lot of unexplored chemical space that hasn't been high-throughput screened several times over. I think there’s still low-hanging fruit in infectious tropical diseases - as far as finding small molecules go - but as to securing equivalent reimbursment for those molecules - that’s another story. Basically, there’s not a lot of unexplored chemical space that hasn’t been high-throughput screened several times over.

]]> By: ol cranky http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30360 ol cranky Thu, 06 Dec 2007 14:52:46 +0000 http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30360 I'm not really sure we're investing more and more into R & D. Large pharma completely ignore the any attempts to mind the gap and sink the entire budget into huge programs to develop "sure thing" blockbusters" that don't even come close to the $2B mark (heck, some of them don't even get approved). The end result is the old blockbusters go off patent and they don't have other approved drugs selling to fill in the gaps. This results in even more mergers (which is really as bad for the industry as it is for consumers) and reorganizations. Of course the cost of clinical development has also increased exponentially because the companies are laying off employees to cut employment costs and hiring contractors and/or CROs at significantly higher costs than the employees (I'm not talking about supplementing a development team, I'm talking about almost completely replacing the team and, in many cases, doing so in a way that duplicates efforts). They'll complain about the increased cost of development to anyone who will listen but the staffing changes are made so the can talk about the huge [non cost-efficient] investment to justify drug costs while taking advantage of the shift of the costs tax deductible R & D charges. I’m not really sure we’re investing more and more into R & D. Large pharma completely ignore the any attempts to mind the gap and sink the entire budget into huge programs to develop “sure thing” blockbusters” that don’t even come close to the $2B mark (heck, some of them don’t even get approved). The end result is the old blockbusters go off patent and they don’t have other approved drugs selling to fill in the gaps. This results in even more mergers (which is really as bad for the industry as it is for consumers) and reorganizations.

Of course the cost of clinical development has also increased exponentially because the companies are laying off employees to cut employment costs and hiring contractors and/or CROs at significantly higher costs than the employees (I’m not talking about supplementing a development team, I’m talking about almost completely replacing the team and, in many cases, doing so in a way that duplicates efforts). They’ll complain about the increased cost of development to anyone who will listen but the staffing changes are made so the can talk about the huge [non cost-efficient] investment to justify drug costs while taking advantage of the shift of the costs tax deductible R & D charges.

]]> By: Ed Silverman http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30338 Ed Silverman Thu, 06 Dec 2007 11:29:11 +0000 http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30338 Hi Nathan, Yes, the low-hanging fruit is largely picked, (something I wrote three years ago, but not for Pharmalot), and so the challenges have grown. As I indicated, the story isn't new, but the climate has gotten still tougher. Cheers ed at Pharmalot Hi Nathan,

Yes, the low-hanging fruit is largely picked, (something I wrote three years ago, but not for Pharmalot), and so the challenges have grown. As I indicated, the story isn’t new, but the climate has gotten still tougher.

Cheers
ed at Pharmalot

]]> By: Nathan http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30335 Nathan Thu, 06 Dec 2007 11:08:31 +0000 http://www.pharmalot.com/2007/12/the-future-is-uncertain-the-end-is-always-near/#comment-30335 One thing that the WSJ article didn't point out: I think to some degree we are a victim of our own success. We've attacked all the "easy" therapeutic targets. We have at least marginally effective treatments for most major disease categories. Drug discovery always has to build on existing success. A cancer or diabetes drug as successful as something made 10 years ago won't get approval today. Profits are going to get harder and harder to make. I think there are a lot of analogies that can be made between the oil industry and the pharma industry. The oil industry has tapped into almost all of the "easy to reach" oil. So now, they have to invest a WHOLE LOT more money just to keep the taps flowing at the same rate. Pharma is in the same boat. We invest more and more in R&D, getting the same or worse results -- but that's because we have to "dig deeper" than ever before to come up with new products. One thing that the WSJ article didn’t point out: I think to some degree we are a victim of our own success. We’ve attacked all the “easy” therapeutic targets. We have at least marginally effective treatments for most major disease categories. Drug discovery always has to build on existing success. A cancer or diabetes drug as successful as something made 10 years ago won’t get approval today. Profits are going to get harder and harder to make. I think there are a lot of analogies that can be made between the oil industry and the pharma industry. The oil industry has tapped into almost all of the “easy to reach” oil. So now, they have to invest a WHOLE LOT more money just to keep the taps flowing at the same rate. Pharma is in the same boat. We invest more and more in R&D, getting the same or worse results — but that’s because we have to “dig deeper” than ever before to come up with new products.

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