Is The U.S. Still The Biggest Pharma Game In Town?
By Rob Wright, Chief Editor, Life Science Leader
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By Rob Wright
I recently had a discussion with an EU-based pharma company executive. What was interesting was how this person consistently referred to the U.S. as North America and NAFTA. I struggled to keep from laughing out loud. Here’s why. Mexico’s legal pharmaceutical market is around $11 billion, and Canada’s is a bit over $20 billion. Not chump change to be sure, but when you compare it to the U.S., the two combined are less than 1/10 the size of the United States, which is in excess of $300 billion.
Like it or not, the United States remains the first court of drug approval and is still the biggest game in town. While everyone is talking about the emerging BRIC countries (which are growing and certainly not to be ignored), the reality is that the U.S., with a population < 1/3 that of China for example, has a pharmaceutical market that is six times bigger. The EU, which consists of 27 countries, remains second to the U.S. If you want to be successful in the pharmaceutical industry, try approaching the FDA with a bit of humbleness. Showing up at the FDA door bragging how many other countries have approved your drug is a bit insulting. It would be similar to the United States telling the rest of the world how to play soccer.
The FDA Doesn’t Base Decisions On What The Rest Of The World Does
When Organon showed up to get Tibilone approved by the FDA for treatment of osteoporosis in the early 2000s, it already had been approved elsewhere. Today, in fact, it is approved in over 90 countries around the world. Yet it failed to ever gain approval in the states — or did it. Actually, Tibilone, which was going to be marketed in the U.S. initially as Xyvion, was approved by the FDA. But the company wanted better labeling and basically said, thanks, but no thanks, deciding to resubmit down the road. Organon’s decision to push back on the FDA seemed to linger with future drugs approval problems. For example, in 2002, Organon’s parent company Akzo Nobel issued a statement that it would be unable to launch Ariza, the brand name for its depression drug, Gepirone, in the U.S., because the FDA wanted more data. Organon had another setback in 2003, when the FDA said it was not ready to approve the fertility treatment, Follistim-AQ cartridge. A company spokesman said he was surprised by the FDA's request and does not yet know what the agency is looking for. "It is a highly successful product in other countries, and we think we have a good case," he is quoted as saying. In the summer of 2004 the FDA finds Gepirone, “not approvable.” The final straw for Tibilone came in June 2006. After additional submissions, the FDA, yet again, denied Tibilone for approval. This time the drug was being submitted for treating women with menopausal symptoms. Toon Wilderbeek, General Manager of Organon and member of Akzo Nobel’s Board of Management responsible for Pharma, issued a statement which read, “Although Organon is disappointed with the FDA’s response, we will continue to be committed to this proven brand. Tibolone is available all over the world in countries outside the U.S. where it has been approved and marketed for nearly 20 years." Well guess what. When you are the most highly respected drug regulatory agency in the world, in the leading market in the world, you don’t base your decisions by “What everyone else is doing.” The comments of not knowing what the FDA is looking for and drugs being available elsewhere demonstrate Organon’s lack of understanding with how to effectively work with the FDA. So where is Organon now?
FDA Failure Leads to M&A
In 2007, Organon’s parent company, Akzo Nobel, announced the decision to spin off the company as its own publically traded entity under the name Organon Biosciences. Instead however, within just a few days of concluding a national POA meeting in Salt Lake City, UT, Organon employees at all levels were stunned to learn that the company had been sold to Schering-Plough for over $14 billion. No one will ever really know if the sale was the result of the company’s struggles in getting drugs approved in the U.S. or Akzo Nobel’s leadership doing what it thought was in the best interest of their shareholders. But in 2000, Organon had 11 compounds in development, three of which were considered to be potential blockbusters if granted FDA approval — Gepirone, Tibilone, and Asenapine (antipsychotic), plus a first-in-class selective relaxant binding agent, Sugammadex. To this day, only one of these drugs has received FDA approval — Asenapine, marketed by Merck as Saphris. Bottom line — if you want to be a globally successful pharmaceutical company, you need to get drugs approved by the FDA, and used in the U.S. Check your ego at the door. If you don’t know how the agency works, partner with someone who does. Otherwise your promising company may end up like Organon, a footnote in big pharma M&A.