GEN recently interviewed biotech guru G. Steven Burrill, CEO of Burrill & Co. The interview focused on R&D trends, life science industry globalization, and the future of Big Pharma.
GEN: According to the recent Battelle-R&D Magazine Annual Global Funding Forecast, global R&D spending on the life science industry is expected to decline by 2.2% in 2012 to $147.3 billion. This report also notes that U.S. R&D spending in the life science industry is forecast to decline by 5.7% in 2012 as pharmaceutical companies put the squeeze on their R&D budgets. What is behind this decision by U.S. pharma?
SB: Several things. One, the era of blockbusterology as we knew it is over. Lipitor, the last great one, a $14 billion drug for Pfizer, is now off patent. We will still have blockbusters but not at the size and scale that the Lipitors of the world were.
We are leaving the one-size-fits-all world of historical small molecule big pharma drugs to a world of both personalized medicine and biologics. So big pharma firms are the dinosaurs of the current generation, seeing if they can move fast enough and change quickly enough to not become extinct.
On the other hand, the marketplaces are changing dramatically. China will be the largest pharmaceutical marketplace within ten years—some might say within five years. Thus, the triad of U.S., Europe, and Japan is being replaced by a new kind of BRICs orientation where the growth markets are Brazil, Russia, India, and China. This offers tremendous opportunities outside the old triad.
The big pharmaceutical companies are neither the dominant players in those markets nor have they necessarily adapted to the incidence of various diseases in those countries. As a result, they are building new companies or different companies as they try and focus on relatively different markets.
Finally, R&D efficiency within big pharma has not generated the kind of pipelines that they need so they are increasingly outsourcing their “innovation” needs to the biotechs. That is very good for the biotech industry.
GEN: Let’s pick up on a couple of points you just made. Fewer blockbuster drugs seem to be making it onto the market. What is making it more difficult for biotech and pharma companies to realize the fruits of their R&D investments as compared to their success in the past?
SB: As we just discussed there is the move away blockbuster drug development toward targeted therapy. So that changes the nature of the pharma market right there.
In the past the discovery and development challenge was arguably much lower. Today we are left with possibly as many as a thousand major diseases in the world that are poorly treated and a focus on a new set of diseases, many of which are more difficult to treat and understand than was the case before.
We have moved from an acute care system to chronic care. Most of the things that used to kill us do not do so and that has put extraordinary pressure on the payer community, whether that be governments around the world, providers, insurers, or even employers. They want to get more for less so there is a movement to use generics instead of ethical drugs.
In the U.S., 55% of the drugs consumed do not work for the patients for which they are prescribed so there is tremendous premium today on personalizing medicine. Now, it does not necessarily mean that blockbuster drugs will not happen. If you define blockbusters as a billion-dollar drug, I think we will still have billion-dollar drugs. But they will be much more personalized or tailored as opposed to kind of the one-size-fits-all world that we historically were in.