The 21st Century Model Of Drug Discovery
By Dr. Chris Newton
The recent article by Dixon, Lawton, and Machin (Nature Reviews Drug Discovery, June 2009) predicted that the model of fully integrated pharmaceutical companies (FIPCOs) performing all the functions necessary to research, develop, and market pharmaceuticals was broken. As replacement, a model of vertical disintegration was suggested. The model included research companies discovering new medicines, development companies developing them, and marketing companies actually selling them to the healthcare providers. In the light of a great swathe of big pharma mergers and layoffs in 2009, how far is this model being realized, and is vertical disintegration indeed the likely next model of 21st century drug discovery?
The Next Model
Commencing with the research sector, there is no question that big pharma has not been the sole provider of candidate medicines for more than 10 years, with the biotechnology sector probably now accounting for approximately 50% of all clinical candidate compounds. The model where big pharma purchases the product outright by buying the company (Pfizer’s 2005 purchase of San Diego-based Idun Pharmaceuticals was one such deal) and assumes the development responsibilities is now being supplemented by big pharma funding external research projects on an ongoing basis by equity or research funding (e.g. GSK’s funding of research projects by Cellzome, Biotica, Vernalis, Chroma, Addex, and Galapagos in Europe and those of Concert Pharmaceuticals and Supergen in the United States). Even where big pharma continues to invest in homegrown ideas, an increasing quantity of this funding is going to third parties for commodity offerings like chemistry (in China with the CRO Wuxi) and for high-technology offerings to Western-based CROs — targeting discovery by using knock-down technologies, fragment-based drug discovery, NMR (nuclear magnetic resonance) screening, and high technology pharmacological models. I predict the continued decline (but not the demise) of big pharma’s internal research contribution to development pipelines and a continued increase from small organizations that will research products. One caveat should be mentioned: Such biotech research must give development candidates having attributes worthy of product development. Big pharma knows those particular attributes best and should share those attributes’ standards more widely. It would certainly save time in reviewing substandard dossiers by in-licensing and outsourcing executives. It would also help CROs set a standard of operation that can be passed to classic nonprofit making organizations that as yet do not understand the complex scientific and legislative environment in which candidate medicines will be judged.
The evolution of the development activities is far from the prediction of Machin et al. It is true that development has been a long-outsourced activity, with very large CROs like Quintiles and Covance even being able to undertake substantial parts of development activities, almost to the extent of total projects, to market registration. In addition, there are a number of CROs and specialist CROs in chemical and formulation development offering GLP (good laboratory practices) and GMP (good manufacturing practices) services. However, the model whereby such a development CRO actually buys a research candidate and subsequently sells the product on to large pharma has not yet come to pass; more common is the research company that sells a product to a pharma company that performs some development and may sell the product on — voluntarily or not — to another FIPCO, before the product reaches the market.
Big pharma and midsized pharma companies are already powerful marketing companies. Interestingly, there are already CRO companies that will provide marketing capabilities to organizations. Some such organizations evolve into simple marketing pharma companies, licensing products from an organization to sell under their own brand — UK-based Speciality European Pharma Ltd. is one such company.
In summary, the predictions of Machin et al are coming to pass most quickly in the upstream, research part of the pipeline. This gives enormous opportunities to entrepreneurial organizations with new ideas for medicines and to CROs that can facilitate each part of the process. However, in the end, the payer will be the marketing organization, and the prices judged viable for a new medicine in any therapeutic area will then set the corresponding prices of both research and development products.
Dr. Chris Newton is managing director and SVP of BioFocus. He is responsible for all BioFocus operational and commercial activities from target discovery to clinical candidate provision. Between 2000 and 2005, he was a founding scientist, CSO, and board director at Argenta Discovery Ltd. From 1979 to 2000, he held a variety of senior management positions in both research and development in the Rhone-Poulenc group of companies.