A custom collaboration with: Quintiles
The high-risk, high-reward endeavor of making pharmaceuticals faces an entirely new landscape from drug discovery to post-marketing surveillance. In fact, the foundation of this business itself faces upheavals that can only be survived by finding ways to make better medications more efficiently and improving the real-world outcomes they produce.
As summed up in “Top 10 Health Industry Issues in 2010: Squeezing the Juice Out of Healthcare” from PricewaterhouseCoopers: “Faced with a revenue growth rate that has dropped from 9.9% in 1997 to 1.3% in 2008, pharmaceutical companies are shifting toward a more comprehensive patient-centered approach.”
A report by the New Development Paradigms (NEWDIGS) program of the Center for Biomedical Innovation at the Massachusetts Institute of Technology (MIT), outlines the basis of the problem: “Despite an enormous increase in R&D investment, and historical advances in technology through genomics, automation and computation, the number of new drugs produced each year remains at the same level that existed over 40 years ago (about 20 per year). Many of these new drugs do not match up to the most pressing medical needs we face today, and serious safety issues still crop up on medicines that have been approved, marketed, and administered to millions of patients.”
In short, the central business model of pharmaceutical companies is old, and ready for renovation. “Since World War II, big pharma has operated as a vertically integrated conglomerate,” explains Ron Wooten, executive vice president of corporate development at Quintiles in Durham, N.C. “They relied on their own research, development, sales, marketing—all within their own control.” That strategy worked while big pharma companies reaped the benefits of drugs for infectious diseases, cardiovascular diseases and other blockbusters. “Companies can no longer get that kind of return on capital,” says Wooten, “so they need a new model: more virtual, more partnering oriented and more collaborative with all of the stakeholders, including policymakers, payers and even financial resources.” In this way, the risk behind drug discovery and development gets spread among a team.
Such a business transition makes sense in theory, but presents numerous challenges in practice. While many large pharmaceutical firms face dwindling revenue as blockbusters go off patent, the companies also face higher expectations of drug safety and efficacy from regulators, payers and consumers. Moreover, drugmakers must leverage today’s technological tools to offer more personalized, patient-specific medicines for tomorrow and find ways to serve emerging markets, such as China and India, where economic boundaries and educational barriers are dissolving, paving the way for many more market opportunities. To make so many transitions at once, pharmaceutical companies will need new collaborations, fresh thinking, and all of the tools for furthering innovation.
The process of developing therapeutics has multiple expense points, which will undoubtedly change as new business models replace old ones. Here is a snapshot of the current major expenditures related to the bench-to-bedside enterprise.
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