Drug innovation stalled
More R&D money should mean more new products, right? That's not the case in the increasingly desperate pharmaceutical industry, where older, profitable patents are ticking down and are not being replaced by innovative new drugs. With blockbuster drugs lick Merck's Zocor (blood pressure), Bristol-Myers Squibb's Pravachol (also blood pressure) and Pfizer's Zoloft (depression) about to lose patent protection, these companies are about to take a big financial hit.
We've written before about the difficulty large drug companies have in innovation, and the way in which big companies buy up smaller ones where entrepreneurial desperation can lead to new breakthroughs.
But, according to a New York Times article (Drugs in '05: Much Promise, Little Payoff, 1/1/06), even that strategy is not working. As the article notes:
According to newly released statistics from the Food and Drug Administration, it approved only 20 new drugs, down from 36 in 2004. Only once in last 10 years has the number of newly approved drugs been lower than last year's figure.
According to newly released statistics from the Food and Drug Administration, it approved only 20 new drugs, down from 36 in 2004. Only once in last 10 years has the number of newly approved drugs been lower than last year's figure.
According to newly released statistics from the Food and Drug Administration, it approved only 20 new drugs, down from 36 in 2004. Only once in last 10 years has the number of newly approved drugs been lower than last year's figure.
That's in spite of record spending on research and development by the big pharma companies ($39 billion). And several of the biggest companies, namely Pfizer, Eli Lilly, and Johnson & Johnson, failed to get even one patent. The problem is compounded in that a significant portion of the newer drugs are targeted at rather rare diseases.
The reasons for this drought are complex. They come in spite of major advances in basic science about disease, based on advanced understanding of genomics and the mechanics of how diseases work. Among reasons given for the shortfall are:
- A periodic trough in a cyclical industry, soon to be corrected
- The complexity of the process of testing and proving the efficacy and safety of new drugs
- The skittishness of the FDA in approving new drugs after the Vioxx difficulties.
- Improved technology allows for easier development of new drugs, but shepherding them through three phases of drug trials is as hard as ever and more expensive with more potentially promising drugs
- The problem of too much new knowledge, still undigested by the research community. According to the article, the cycle from conception to marketability is usually around 10 years for new drugs.
In the short term, many drug companies are hurting badly and stockholders are restless. Most major drug companies are trying to cut costs, but they are afraid of cutting their already ineffective research efforts - a serious dilemma.
It's a climate that lends itself to further consolidation in the industry. It also means that drug companies will more than ever fight to keep their margins on remaining patented drugs, by fighting in the courts and the legislatures.
