Biotechnology, People and the Environment

mutebabiesBiotechnology

Dec 6, 2012 (4 years and 11 months ago)

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Group

TIS

Global Bio
-
pharmaceutics and Healthcare

Biotechnology, Capital Markets & Macroeconomics

Robert Lepley, Ph.D.


TIS Group, Inc.

North Oaks, Minnesota



Lecture Material Presented March 31, 2010


CFANS 1501


Biotechnology, People and the Environment


Dr. Doug Foster



College of Food, Agriculture and

Natural Resources Sciences

St. Paul Campus

University of Minnesota



Group

TIS



Increasing transfer of wealth from developed to developing world



Emergence of global middle class



Geopolitical power decentralized




Global information parity



WWW provides rapid global dissemination



Limitations imposed by asymmetrical access, generation and exploitation




Alteration in global perception of risk



Demand for wealth protection



Cultural self identity at expense of national ideology




Shift in work force from agriculture and manufacturing to services



Productivity gains



Increase in discretionary / leisure time



Increase in discretionary income




Increased demand for nutritional resources



Increased dietary consumption of high value foods




Anthropogenic climate change



Moving away from attribution and prediction to mitigation and adaptation



Carbon management affects all industries


Group

TIS

Increased Awareness of Global Health & Food Security


-

Macroeconomic Changes in Global Architecture
-


Group

TIS

Perspectives on Global Healthcare

sovereign economies & macroeconomic imbalances


World Distribution of Wealth and Population 2008
3%
22%
3%
3%
5%
26%
37%
2%
15%
51%
5%
6%
5%
13%
2%
2%
0%
10%
20%
30%
40%
50%
60%
Latin Am &
Caribbean
Middle East
North
America
Oceana
South
America
Europe
Africa
Asia
% World GDP
% World Populaiton
Source Data: World Bank

http://web.worldbank.org/

Source Data: Centers for Medicare and Medicaid Services

Post
-
symptomatic Medicine Based Healthcare System Too Expensive?

Less costly to “treat” wellness?

$0
$2
$4
$6
$8
$10
$12
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
0%
5%
10%
15%
20%
25%
National Healthcare Expenditure
US GDP (Chain Weighted)
% of GDP
US$ Trillions
% of GDP

Group

TIS

How Are Macroeconomic Forces Changing Bio
-
pharmaceuticals?


Group

TIS

Summary of Life Sciences Global Market Data


Human Healthcare Market is the Dominant Global Market

Relative Market Size %
Medical
Technology
25%
Human
Healthcare
73%
Animal
Healthcare
1.7%
Molecualr
Diagnostics
0.29%
Relative Size by US$ (blns)

Relative Size by %

Human Healthcare
$773
Medical Technology
$268
Animal Healthcare
$18
Molecular Diagnostics
$3
2008 Total
$1,063

Group

TIS

Human and Animal Pharmaceutical Markets


Different Sizes and Patterns of Growth

Source Data: IMS Health

http://www.imshealth.com/

Human healthcare market

growth in Asia and Latin

& South America


Animal healthcare market growth

in Western & Eastern Europe

along with Asia


Sales
US$ Blns
Sales %
Market
Share
%
Growth
YoY
North America
$6.1
34.1%
8.8%
Latin & S. America
$2.1
11.6%
11.2%
Western Europe
$5.7
31.7%
16.9%
Eastern Europe
$0.8
4.6%
10.8%
Asia
$2.7
15.3%
7.2%
Rest of World
$0.5
2.8%
9.8%
Total Market
$17.9
100.0%
11.4%
Source Data: Vetnosis

http://www.vetnosis.com/

2008
Market
US$ Bln
2008
Market
Share
2009
Forecast
Growth
North America
$311.8
40.3%
-1% to 4%
Europe
$247.5
32.0%
3% to 4%
Asia / Africa / Australia
$90.8
11.7%
11% to 12%
Japan
$76.6
9.9%
4% to 5%
Latin America
$46.5
6.0%
9% to 10%
Global Total
$773.1
100.0%
2.5% to 3.5%

Group

TIS

Human and Animal Pharmaceutical Markets

Market Changes Require Adaptation


High costs of research, clinical development and registration



Global market must repay R&D costs



“Blockbuster” pharma model flawed


too few innovator drugs



Pharmaceuticals must change business model to survive




Developed economies primary markets by sales



Looming problems:



Weak growth


increasing generic penetration



Healthcare policy reform and directives to contain costs



Shift from post
-
symptomatic medicine to wellness



Macro economic shift in funding priorities




Emerging economies primary markets by growth



Emerging middle class demand for health and food security growing



Healthcare and food provisioning infrastructure poorly developed



Affordability



Accessibility



Adoption

Critical Strategic Challenges

Preclinical




Discovery’



Preclinical



Set the dose



Phase I



Phase II



Phase III



Revenue



Phase IV



New Label

Next Generation
-

“Evergreen”

USPTO Patent Critical



20 years


When? Overlap?



No patent


No innovator drug



$$$ No Revenue $$$

Clinical

Market

Pharmaceutical Research and Development Cycle


Group

TIS

Global Pharmaceutical Industry Applies

Same Basic Template for Drug Discovery & Development


Group

TIS

Pharmaceutical Preclinical Drug Discovery

Complex Biology Requires Synchronization of Many Skill Sets

Project Team

Biology

Chemistry

Molecular Biology

/ Fermentation

Informatics /

Computational

Biomarkers

Genomics /

Proteomics

Statistics

Formulation

Regulatory

/ Legal

Marketing

Consultants

Screening

Project Teams are the Essential Core from which

Developmental Drug Candidates Emerge

Preclinical Research

Early / Mid

Late

Very Late

Discovery


Target Identification


Target Validation


Lead finding chemistry


PK & PD


Pathology & Toxicology


Formulation


IP

Lead Declaration


Senior management approval


Set the dose


Go to humans


Lead is the prospective drug

Investigational New Drug Application



Regulatory transition



IND to FDA



Defines approach to clinical trials in


great detail



“The Protocol”
-

doesn’t change, costly!!



Group

TIS

Pharmaceutical Drug Development Pathway
-

Preclinical


Group

TIS

Drug Candidate Development

Overview of U.S. FDA Clinical Trial Process

IND

BLA

NDA

Panel

Small Mql Drug

Biologic Drug

FDA CDER

FDA CBER

PI/PII/PIII

Approval / PIV

PMA

Panel

Approval / PIV

Medical Device

IV Diagnostic

FDA CDRH

FDA CDRH

PMA

Panel

Approval / PIV

510(k)

IDE

Approval

Class III

Class II

Class I

Class I

Class II

Class III

Some Class III Devices are “Combination Products”

that enter the CDER/CBER approval pathway

Clinical Development

Phase I



Numbers: 20
-
100



Length: several months



Goal: Safety



Cost: $10s Millions

Phase II


Numbers: 100’s


Length: months
-

2yrs


Goal: Efficacy


Cost: $10’s


$100’s Mlns

Phase III


Numbers: 1000’s


Length:1
-

4+yrs


Goal: safety, dose, efficacy


Multi
-
center / Transnational


Cost: $100’s Mlns

Attrition Rate


≈ 29%

Successful Launch

≈ 52%

Attrition Rate


≈ 15%

Successful Launch

≈ 40%

Attrition Rate


≈ 6.5%

Successful Launch

≈ 76%


Group

TIS

Pharmaceutical Drug Development Pathway
-

Clinical

Source Data: PharmaProjects



Preclinical To Launch



Cost: $100s Mlns to Blns



Preclinical Costs Variable



$100s Mlns to Blns



Preclinical to Successful Launch



2006 data ≈ 10%



Variable


depends on therapeutic class



Oncology ≈ 4%



Anti
-
infective ≈ 10%



Variable
-

depends on compound



NCE generally lower



Biologics vs small molecules?


Phase I, II & III and Clinical

Launch

Marketing & Sales



Name



Advertisement



Hospital / Clinic / Physician contacts



Feedback

Phase IV



Numbers:

100’s to 1000’s



Length: indefinite



Goals: Population specific effects,

safety, dosages, efficacy, toxicity.

New label claims



Cost: $10’s to $100’s millions



Withdrawal Possible



COX II Inh / Rezulin / Tysabri



FDA re
-
approval possible



Tysabri

Patent Life is 20 Years !!



Don’t patent too early



Stack IP

Next generation underway in preclinical.

$$$


Group

TIS

Development Pathway

Registration / Launch Boundary

Global Status of Compounds at R&D Stages
462
540
3927
1084
1414
145
85
558
162
86
622
1334
1648
4734
0
1000
2000
3000
4000
5000
Pre-clinical
Phase I
Phase II
Phase III
Pre-
Registration
Registration
Licensed
2007
2008
Source Data: PharmaProjects


Group

TIS

Pharmaceutical R&D Pipeline Census

Source Data: U.S. FDA


Group

TIS

While Biotechnology is Applied to Nearly All Aspects of R&D

The Majority of New Drugs Are NOT Biologics


0
10
20
30
40
50
60
1993
1995
1997
1999
2001
2003
2005
2007
2009
NME Approvals
Biologic Approvals
Approvals
Annual
Average = 27
New Medical Entity and Biologic Approvals

Source Data: U.S. FDA


Group

TIS

What’s Wrong With Pharmaceutical

Preclinical Research & Drug Discovery? Lack of Innovation!


The majority of FDA drug approvals are “me too” drugs

FDA Standard vs Priority Approvals


0
20
40
60
80
100
120
140
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Priority Appriovals
Standard Approvals
Source Data: OECD


Group

TIS

Pace of Innovation Has Slowed in Pharma and Biotech


Too few innovator drugs in pipelines to support blockbuster model

0
500
1,000
1,500
2,000
2,500
3,000
1999
2000
2001
2002
2003
2004
2005
2006
2007
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Renewable Energies
Biotechnology
Pollution & Waste Mgmt
Nanotechnology
Electrical & Hybrid Vehicles
Energy Eff Bldg & Lighting
Internet Communications
Internet Communications Triadic Familes
Triadic Patent Familes
Sharp decline in the number of triadic biotech patent families


Group

TIS

What’s Wrong With the Pharmaceutical Industry

Why the Lack of Innovation?


Major fault lies with failure of “blockbuster drug” business model




Merger and acquisition strategy emerged in the early 1990’s



Created huge internal R&D apparatus to focus on billion Dollar drugs



Gave rise to “blockbuster drug” business model



Idea that synergies of scale would make blockbuster drug discovery efficient



Assumed era of no price controls and long periods of patent exclusivity




Business model driven by R&D speed and efficiency



No real understanding of the biology


metric driven



Macro level management view that discovery needed to be everywhere




Biology was too complex and discovery programs were not well integrated



Management focus on performance metrics that did not correlate well


with discovery of innovator drugs




M&A led to internal competition between acquired sites



Post merger strategy should have been top close sites



But by keeping sites open, duplicated efforts became competitive



Management did not want personalized medicine



Because markets were not blockbuster drug oriented

Source Data: Bloomberg, LP

NYSE Top 10 Pharmaceuticals



Market Cap and Total Assets on Balance Sheet


Group

TIS

Macro Economic Forces Have a HUGE Impact on Corporations


U.S. Pharma Market Is NOT Growing


Capital Market Effects

$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Market Cap
Total Assets on Balance Sheet
US$ Blns
‡ Top NYSE by R&D Spending

1 PFIZER INC


6 SANOFI
-
AVENTIS

2 NOVARTIS AG
-
ADR

7 ASTRAZENECA PLC

3 JOHNSON&JOHNSON

8 ELI LILLY & CO

4 GLAXOSMITHKLINE

9 BRISTOL
-
MYER SQB

5 MERCK & CO


10 ABBOTT LABS

Source Data: Bloomberg, LP

NYSE Top 10 Pharmaceuticals Ranked by R&D Spending




Group

TIS

Macro Economic Forces Have a HUGE Impact on Corporations


U.S. Pharma Market Is NOT Growing


Capital Market Effects

$0
$10
$20
$30
$40
$50
$60
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0
2
4
6
8
10
12
14
16
18
20
Total R&D Spending
Average R&D to Net Sales Ratio
US$ blns
Ratio R&D / Net Sales
Total R&D Spending by Top-10
‡ Top NYSE by R&D Spending

1 PFIZER INC


6 SANOFI
-
AVENTIS

2 NOVARTIS AG
-
ADR

7 ASTRAZENECA PLC

3 JOHNSON&JOHNSON

8 ELI LILLY & CO

4 GLAXOSMITHKLINE

9 BRISTOL
-
MYER SQB

5 MERCK & CO


10 ABBOTT LABS

Source Data: DiMasi, J.A., R.W. Hansen, and H.G. Grabowski, “The Price of Innovation:


New Estimates of Drug Development Costs,” Journal of Health Economics 22:151
-
185. 2003



Tufts CSDD. Cost to develop new biotech products is estimated to average $1.2 billion."


Impact Report Volume 8 Number 6. November/December 2006.



Group

TIS

Pharmaceutical R&D Requirement for Innovator Drugs

Is Very Costly
-

Must Justify ROI in Drug Price

$54
$104
$467
$626
$84
$214
$335
$615
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
1975
1987
2000
2006
Clinical Trial Phase
Preclinical Phase
$138
$318
$802
$1,241
Total R&D Cost
to market
US$ mlns
Source Data: U.S. Census Bureau. The 2009 Statistical Abstract:


The National Data Book
-

Health & Nutrition: Health Expenditures.


http://www.census.gov/compendia/statab/cats/health_nutrition/health_expenditures.html


Group

TIS

Pharmaceutical Branded Drugs

Face Increasing Pressure from Generic Drugs

$49.55
$60.66
$65.29
$69.75
$77.49
$85.57
$97.65
$107.48
$109.62
$121.20
$40.22
$91.80
$53.51
$35.20
$32.60
$29.76
$29.21
$28.23
$27.69
$24.89
$21.72
$19.33
$18.76
$17.33
$16.95
$14.84
$0
$20
$40
$60
$80
$100
$120
$140
1995
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Branded Drug
Generic Drug
Government pressure to contain healthcare costs favors generic drug market



Healthcare reform in U.S. market


world’s largest drug market by sales




Significant downward pressure on prescription drug costs

New R&D risk mitigation strategies needed




New markets in Asia, Latin America and South America

Personalized medicine


phenotypic drug response differences

Imposition of new globalized discovery strategies

Companies can’t export culture




Healthcare paradigm shift to wellness

Emphasis on prophylaxis: vaccines, biomarkers and surrogate endpoints

Wellness based therapeutics




Anthropogenic climate change

Unknown healthcare implications




Innovation needed!



Group

TIS

The Pharmaceutical Sector Faces New Strategic Challenges


Group

TIS

What are likely business solutions to the innovation problem?




Biopharma is adapting a partnership based approach to drug discovery



Internal R&D operational units becoming smaller



Focused, inter
-
firm partnerships




Shift away from outsourcing to avoid loss of synergy in internal talent pool




Repurpose preclinical discovery projects



Less emphasis on target driven approaches: target = technology = metrics



Integrate all aspects of biology



Translational medicine and systems biology have increasing importance





Drug discovery will shift to smaller market scales



Personalized medicine



Couple pharmacogenomics to get companion diagnostics for drugs



Identify in advance of treatment in who drug will work and wont work





Longer term, pharmaceuticals will demerge to become small “biotech
-
like”



Group

TIS

Most Important Solution Will be Talented People



Knowledge of science, the technology, the business and the global context




Strong problem solving skills




Willing to be part of a team




Dedicated, goal oriented and focused




Willing to adapt as changes are imposed on R&D




Innovative and entrepreneurial