Demand for New Drugs
An increasing elderly population in industrial nations over the next 25 years will be the most important factor in the growing demand for therapies. The main causes of death are cardiovascular disease, cancer, and respiratory disorders, all of which are strongly age related. Other age-related illnesses such as osteoporosis, arthritis, and Alzheimer and Parkinson diseases are major factors affecting quality of life as well.
Mortality from cancer, diabetes, liver and kidney diseases has hardly changed, offering significant areas for research breakthroughs. Cancer, poorly served by traditional chemotherapies, is a major opportunity for biotech firms because the investment needed to develop a cancer drug is lower than other diseases: the field has high priority with regulatory authorities who are willing to give it fast-track status on the basis of smaller (and therefore cheaper) clinical trials (a few extra months of survival could be enough to win FDA approval); the clinical community is highly concentrated; and the market size is often larger than the approved indication because of a high off-label use (for other cancers).
Infectious diseases, the third most common cause of death in many geographic regions, highlight the pressing need for new therapies with novel mechanisms of action to avoid issues like drug resistance.
The market for biopharmaceutical treatments for autoimmune disorders is the largest segment. The market’s leading suppliers include Abbott with Humira, Johnson & Johnson with Remicade, and Amgen with Enbrel. Combined these companies account for a large share of autoimmune biologics and indeed for one-seventh of the entire biopharmaceutical market. The remainder of the automimmune market is serviced by companies such as Pfizer, Bristol-Myers Squibb, Merck, Bayer, Biogen Idec, Merck Serono, UCB, Takeda, Eisai, Elan, and others.
Cancer is the second largest segment in drug therapy and is the fastest growing segment. Suppliers to the market include a handful of leaders, most notably Roche. Roche, which includes Genentech and Chugai subsidiaries, recorded sales of about $17.5 billion for cancer biopharmaceutical treatments in 2010. Competitors include Serono and Biogen Idec.
While autoimmune diseases and cancer will continue to dominate and grow, additional growth will also come dimensionally from new therapeutic areas. Cardiovascular and blood products account for the third largest segment in the biopharmaceutical market. Other biologics include Novo Nordisk’s hormone therapies, Pegasys, CellCept, Lucentis, and botox.
Despite the new approaches, new technologies, and a wealth of new information, drug R&D is still challenged by understanding exactly how drugs will work and why they may fail. Target validation remains a quandary as well. Thus the hurdle of getting past Phase III trials and launching more products continues. In order to overcome this, many large pharmaceutical entities have turned to smaller drug discovery firms.
The biotech industry is generally thought of as the leading source for innovative drug products. New biologic drug approvals have been climbing for the past 10 years and have been making up a larger portion of all drugs approved.
Some of the major mergers and acquisitions in the last year have been from transitioning pharmaceutical companies that want to take advantage of leading biopharma businesses. For example, Pfizer acquired Wyeth in October 2009. The acquisition was part of Pfizer’s shift toward becoming a broader, more competitive biopharma company. In February, Sanofi acquired Genzyme, a leading developer of biologic products.