Europe: An attractive place for biopharmaceutical R&D?

drawerbeamerBiotechnology

Dec 6, 2012 (5 years and 1 month ago)

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Elmar Schnee

President of Merck Serono

General Partner and Member of the Executive Board Merck KGaA


Europe:

An attractive place for biopharmaceutical R&D?

Seville


4 March 2010

Content


Introduction to Merck Serono


Overview of Europe’s R&D pharma industry


Challenges to R&D productivity and investment


Europe as a favourable environment for R&D


Recommendations

Introduction to Merck Serono

The biopharmaceutical division of Merck KGA


Oldest pharma company in the
world


Headquarters: Geneva,
Switzerland


17,500 employees


Annual R&D budget of Euro 1.3
billion (23% of turnover)



Pharmaceuticals
Chemicals
Generics
Consumer Health Care
Merck Serono
Merck Group
Business
sectors
Liquid Crystals
Performance &
Life Science
Chemicals
Divisions
Pharmaceuticals
Chemicals
Generics
Consumer Health Care
Merck Serono
Merck Group
Business
sectors
Liquid Crystals
Performance &
Life Science
Chemicals
Divisions
Focus on unmet medical needs:


Oncology
: Targeted cancer therapies


Neurodegenerative diseases
: Multiple sclerosis
and Parkinson’s disease


Autoimmune and inflammatory diseases
: e.g.
rheumatology, osteoarthritis, etc.


Fertility
:

Leading innovation with new embryology
technologies and solutions to improve pregnancy
rates


Endocrinology
:

Growth hormone and targeted
indications

Spain, a key player

Facts and Figures


Since 1924.


Three working sites.


1.000 employees.


Spain, Top 5 European sites in the
Group
.


More than 388 million euros sales in
2008.


More than 125 marketed products.


Euro 55 million export in 2009

With three production plants and a thousand
employees, Spain ranks among the five key
European countries in the Group.

Maria de Molina (Madrid)

Tres Cantos (Madrid)

Mollet del Vall
ès (Barcelona)

Spain, a key player

Production Plants


Biotech production plant (Tres Cantos
-

Madrid)


Manufacturing capacity to cover worldwide needs for r
-
FSH and r
-
hGH


Investment (2008): 1.092 K



Active participation in R&D projects


1 of 3 biotech plant in the world



Pharma production plant (Mollet del Vallés
-

Barcelona)


Manufacturing 470 products of high pharmacological relevance


Investment (2008): 3.631 K



Manufacturing capacity : 3.000 million pharma doses and 105 million finished units



Chemical production plant (Mollet del Vallés)


Conceived as a multipurpose organic synthesis plant


Manufacturing Capacity: 2.200 tonnes/year


Investment (2008): 628 K


The Pharma Industry is key to Europe





27.2 billion invested in R&D


19% of global business R&D expenditure and higher percentage than any other
industrial sector




5th largest industrial sector


3.5% of the total EU manufacturing value added




635,000 highly qualified jobs


117,000 of them in R&D




Trade surplus of


48.1 billion


Highest contribution among high
-
tech industries to Europe’s trade balance

Pharma R&D in Europe: Some Facts


Pharmaceutical R&D expenditure 1990
-
2008

(million national currency units)



Changes in research sites

(2001


2006)

7766
17849
21949
26010
27200
11874
21364
30969
36608
38428
6422
7462
10477
11484
6803
12537
5161
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
1990
1995
2000
2005
2007
2008
Europe
USA
Japan
7,7
10,4
6,4
9,6
6,0
6,6
0,0
2,0
4,0
6,0
8,0
10,0
12,0
%
1994-1998
1999-2003
2004-2008
Europe
USA

Pharmaceutical R&D Expenditure

Annual growth rate (%)

Innovative Medicines Initiative (IMI)


Public Private Partnership


To accelerate the discovery and
development of better medicines

IMI budget for the period 2008
-
2017 is

2 billion

(

1 billion from the European Community and

1 billion from industry)

Pharmaceutical innovation is about
patients



Can expect to live 30 years
longer than 100 years ago


Huge reductions in mortality
(e.g. HIV/AIDS, many cancers,
cardiovascular diseases)


Significant progress in quality
of life (e.g. asthma, diabetes)


Huge challenges remain (e.g.
Alzheimer, multiple sclerosis,
orphan diseases)

The race for new medicines:

an unpredictable lottery?

Start

Target


Basic research leads to
new

scientific knowledge


> 30 Pharma
companies start

R&D programmes


3
-
5 substances reach

market within 3
-
5 years


Different obstacles in

toxicology, kinetics,

formulation, R&D

framework


Development: 12
-
15 years


No certainty of success


Profile of products not yet

known

It takes approximately USD 800 million to bring a new medicine to market*

*
DiMasi J, Hansen R, Grabowski H (2003). "The price of innovation: new estimates of drug development costs".
J Health Econ

22 (2): 151

85.

Causes of the decline in R&D
productivity


More complex scientific targets


Investments in biotechnology retooling


Increased product development costs


Shift towards risk avoidance means higher regulatory
costs


Higher attrition rates in late stage development due to risk
aversion/negative signals from pricing authorities not
willing to pay for incremental innovation


Increasing regulatory requirements to mitigate perceived
risks

Increasing regulatory requirements


Market Access and research work together throughout
the product lifecycle to best meet the evolving needs of
patients


“Megatrials” to determine the long
-
term benefits in real life


On
-
going pharmacovigilance monitoring


Pharmaco
-
economic studies to gather additional data on
economic benefits


Search for new indications for proven safe and effective molecules


Publishing activities, scientific community outreach


Risk
-
benefit shift to pre
-
approval phases makes
innovation more difficult

-

12

-

Need to reward incremental innovation


Most medical innovation is incremental

(cardiovascular, asthma treatment, transplantation, antivirals,
cancer drugs)


Without respect for patents no future innovation


Patent implies innovation, but what about added value?


Within a (therapeutic) group


Adequate reward for incremental innovation


Significant reward for breakthrough innovation


Innovation can come also from:


Better adherence


Improved quality of life


New modes of actions, treatment regiments, devices, etc


Qualified labor force


Favorable infrastructure for research


Education overall at high levels


but…


Lengthy reimbursement delays after approval


Inconsistencies between research, economic and health care policies


Over
-
regulation & rigid cost
-
containment policy


Different tax
-
laws, approval procedures etc.


Increased R&D competition between countries

Insufficient reward for innovation = Insufficient incentives for investment

The arguments for and against pharma
R&D investments in Europe

How can Europe attract more pharma
R&D?

Incentives
to reward innovation
that reflect the current
R&D trends

Improved patent system and European Community
Patent

Simplified European regulatory and administrative
processes

Predictable marketplace conditions (reward for
innovation through value
-
based pricing)

A sustainable pricing and reimbursement system

Support for the development of centres and clusters of
excellence

Strong political support and leadership to realise long
-
term investments in healthcare

Building a policy agenda to address the following: