H1 : DRUG R&D - PHARMACEUTICAL INDUSTRY
1.1 INTRODUCTION
● Chemicals
○ Small molecular entities (SME) → ex. aspirin
○ Advantage = high affinity → you can take them oral
○ Disadvantage = low specificity → they won’t activate 1 specific receptor = off-target effect
● Natural products
○ Complex molecules → ex vinblastine
● Biologicals
○ Large molecules = therapeutic modalities / biopharmaceutical biologicals → ex. insulin
○ Advantage = high specificity = they activate 1 specific receptor → less off target effects
○ Disadvantage = low affinity → parenteral administration, can not been taken oral
1.2 SOME FACTS
Why is the biopharmaceutical sector so expensive
1) Drugs for a small target population
● Price setting needs to be high to cover the drug development process
● Uncommon disease → small target population → small group to cover the cost = high price
● Common disease → big target population → big group to cover the cost = low price
2) 1 company produces many drugs but nog all get approved
● Once 1 drug is approved it needs to cover the development costs of all the drugs
,1.3 PHASES OF DRUG DEVELOPMENT
Drug development = lengthy process up to 12 years
→ from molecule to a drug on the market
PHASES OF DRUG DEVELOPMENT
1. Pre-human / pre-clinical stage
● Necessary before every clinical phase
● Every clinical phase needs a specific preclinical package
○ Not 100% correct that preclinical comes first
○ They are interfering with each other
2. Clinical trials
● Phase I: expose healthy human volunteers
○ Look at pharmacokinetics
○ Look at exposure / concentration levels
○ How is it absorbed, distributed, eliminated,..
○ Mostly males : lower risk for fertility problems
● Phase II: enroll a real patient and a placebo group
○ First small group, then bigger group
● Phase III: large cohort of patients from different regions in the world.
3. Approval
4. Pharmacovigilance (phase IV):
● follow-up for side effects in large populations
● After the medicine is brought on the market
5. Uncategorized
➔ Clinical trials are the most costly for the companies (57%), 21.5% the preclinical stage.
➔ Fail fast fail cheap = if you stop the development of a drug in the preclinical stage you save money
HEALTHCARE SPENDING IN RELATION TO AGE
Figure
The people get older so we’ll have to deal with age-related diseases and co-morbidities. As
you get older the healthcare spending increases. E.g. osteoporosis, arthritis, prostate cancer,
type II diabetes.
Caution
The age group of your population should be taken into account because certain organ
systems don’t work optimal anymore. This could mean other concentration levels are present in older people.
,DEVELOPMENT COSTS AND REVENUE CYCLE
The total cost for one new marketed drugs is about 0.8 to 1.5 billion USD.
● BUT this is largely dependent on therapeutic area
● Some diseases are less interesting for pharmaceutical companies because of a lower income.
○ Tropical diseases
○ Orphan diseases (low number of patients)
○ Pediatric diseases
Figure
1) Drop = investment → spending money
2) Increase = drug on market → sales
3) Top = patent expire → other companies come with
look-alike drug = generic drug (mostly cheaper)
No investment in orphan diseases
= disease in a small group of people = rare!
→ pharmaceutical industries are not interested in investing in these diseases because there are no large sales!
TIMELINES OF DRUG DEVELOPMENT
It takes 10-15 years for a drugs to make it to the market but in this period you already need your patent
because you want to protect it from competitors
➔ Patent will expire after 20 years
➔ Only 7 years that you will profit from your patent application
The preclinical development stage happens over and over again before every other phases because for
each phase to start you need a pre-clinical package, depending on the clinical phase. It also differs if
you want to include women, children, old people... It is thus not 100% correct to say the pre-clinical
phase happens first and then the clinical phases. They are interfering with each other.
BLOCKBUSTER DRUGS (SALES > BILLION USD/YEAR)
Blockbuster drugs = sales more than 1 billion USD/year
Ex. Humira = Ab for juvenile arthritis
Ex. Keytruda = Ab against lung cancer
→ Roche is the biggest player because of 3 blockbusters.
70% of the income of big pharmaceutical companies come from 20%
of the drugs marketed. This is the reason companies are buying up each other. A lot of companies are
outsourcing preclinical studies to contract research organizations, which is more profitable. These are bought
up by big pharma.
, CHALLENGES FOR PHARMACEUTICAL SALES
Challenges for pharmaceutical sales
30% generic competition Why could u pay a drug with patent which will be more expensive, if you could get
a generic, cheaper drug. Dafalgan would be more expensive than a generic one.
24% price containment When you get a FDA approval, you need to discuss with each member state how
much you can charge for it.
24% poor product A drugs can not be approved because it’s essentially the same than one
differentiation that is already on the market. ~ Increased competition from “me-too” drugs
4% parallel importion Normally you have a provider which is importing the drug, but it’s possible to
get importations from other countries, where the price setting can be different.
Counterfeiting of drugs: fraud. People are buying medication on the internet, for example against a
headache. In some cases these drugs have not been tested and can contain other
solvents. ‘Fakes’.
PRODUCT POSITIONING
1. Generics (without a patent)
→ Have a lot of sales
→ It’s easily accessible so high-sales volume but also high competition.
→ Low medical differentiation
2. Targeted therapeutics (niche drugs)
→ only for a specific indication occurring in a small population.
→ So a very high medical differentiation (valuable), but because of the niche, the sales are low.
→ High medical differentiation
3. Mega-blockbusters
→ high sales with not too much competition
1.1 INTRODUCTION
● Chemicals
○ Small molecular entities (SME) → ex. aspirin
○ Advantage = high affinity → you can take them oral
○ Disadvantage = low specificity → they won’t activate 1 specific receptor = off-target effect
● Natural products
○ Complex molecules → ex vinblastine
● Biologicals
○ Large molecules = therapeutic modalities / biopharmaceutical biologicals → ex. insulin
○ Advantage = high specificity = they activate 1 specific receptor → less off target effects
○ Disadvantage = low affinity → parenteral administration, can not been taken oral
1.2 SOME FACTS
Why is the biopharmaceutical sector so expensive
1) Drugs for a small target population
● Price setting needs to be high to cover the drug development process
● Uncommon disease → small target population → small group to cover the cost = high price
● Common disease → big target population → big group to cover the cost = low price
2) 1 company produces many drugs but nog all get approved
● Once 1 drug is approved it needs to cover the development costs of all the drugs
,1.3 PHASES OF DRUG DEVELOPMENT
Drug development = lengthy process up to 12 years
→ from molecule to a drug on the market
PHASES OF DRUG DEVELOPMENT
1. Pre-human / pre-clinical stage
● Necessary before every clinical phase
● Every clinical phase needs a specific preclinical package
○ Not 100% correct that preclinical comes first
○ They are interfering with each other
2. Clinical trials
● Phase I: expose healthy human volunteers
○ Look at pharmacokinetics
○ Look at exposure / concentration levels
○ How is it absorbed, distributed, eliminated,..
○ Mostly males : lower risk for fertility problems
● Phase II: enroll a real patient and a placebo group
○ First small group, then bigger group
● Phase III: large cohort of patients from different regions in the world.
3. Approval
4. Pharmacovigilance (phase IV):
● follow-up for side effects in large populations
● After the medicine is brought on the market
5. Uncategorized
➔ Clinical trials are the most costly for the companies (57%), 21.5% the preclinical stage.
➔ Fail fast fail cheap = if you stop the development of a drug in the preclinical stage you save money
HEALTHCARE SPENDING IN RELATION TO AGE
Figure
The people get older so we’ll have to deal with age-related diseases and co-morbidities. As
you get older the healthcare spending increases. E.g. osteoporosis, arthritis, prostate cancer,
type II diabetes.
Caution
The age group of your population should be taken into account because certain organ
systems don’t work optimal anymore. This could mean other concentration levels are present in older people.
,DEVELOPMENT COSTS AND REVENUE CYCLE
The total cost for one new marketed drugs is about 0.8 to 1.5 billion USD.
● BUT this is largely dependent on therapeutic area
● Some diseases are less interesting for pharmaceutical companies because of a lower income.
○ Tropical diseases
○ Orphan diseases (low number of patients)
○ Pediatric diseases
Figure
1) Drop = investment → spending money
2) Increase = drug on market → sales
3) Top = patent expire → other companies come with
look-alike drug = generic drug (mostly cheaper)
No investment in orphan diseases
= disease in a small group of people = rare!
→ pharmaceutical industries are not interested in investing in these diseases because there are no large sales!
TIMELINES OF DRUG DEVELOPMENT
It takes 10-15 years for a drugs to make it to the market but in this period you already need your patent
because you want to protect it from competitors
➔ Patent will expire after 20 years
➔ Only 7 years that you will profit from your patent application
The preclinical development stage happens over and over again before every other phases because for
each phase to start you need a pre-clinical package, depending on the clinical phase. It also differs if
you want to include women, children, old people... It is thus not 100% correct to say the pre-clinical
phase happens first and then the clinical phases. They are interfering with each other.
BLOCKBUSTER DRUGS (SALES > BILLION USD/YEAR)
Blockbuster drugs = sales more than 1 billion USD/year
Ex. Humira = Ab for juvenile arthritis
Ex. Keytruda = Ab against lung cancer
→ Roche is the biggest player because of 3 blockbusters.
70% of the income of big pharmaceutical companies come from 20%
of the drugs marketed. This is the reason companies are buying up each other. A lot of companies are
outsourcing preclinical studies to contract research organizations, which is more profitable. These are bought
up by big pharma.
, CHALLENGES FOR PHARMACEUTICAL SALES
Challenges for pharmaceutical sales
30% generic competition Why could u pay a drug with patent which will be more expensive, if you could get
a generic, cheaper drug. Dafalgan would be more expensive than a generic one.
24% price containment When you get a FDA approval, you need to discuss with each member state how
much you can charge for it.
24% poor product A drugs can not be approved because it’s essentially the same than one
differentiation that is already on the market. ~ Increased competition from “me-too” drugs
4% parallel importion Normally you have a provider which is importing the drug, but it’s possible to
get importations from other countries, where the price setting can be different.
Counterfeiting of drugs: fraud. People are buying medication on the internet, for example against a
headache. In some cases these drugs have not been tested and can contain other
solvents. ‘Fakes’.
PRODUCT POSITIONING
1. Generics (without a patent)
→ Have a lot of sales
→ It’s easily accessible so high-sales volume but also high competition.
→ Low medical differentiation
2. Targeted therapeutics (niche drugs)
→ only for a specific indication occurring in a small population.
→ So a very high medical differentiation (valuable), but because of the niche, the sales are low.
→ High medical differentiation
3. Mega-blockbusters
→ high sales with not too much competition
