July 1, 2006 (Vol. 26, No. 13)
Can Big Pharma Reverse the Trend?
Pharmaceutical productivity is down, partly because of the industry’s own inefficiencies, according to Robert Ruffolo, Ph.D., president, R&D, Wyeth Pharmaceuticals (www.wyeth.com), who spoke at the recent "Scrip R&D Productivity Summit" in London.
The productivity issue is a serious concern to professionals in the biotech and pharmaceutical industries and is a recurring theme at key industry meetings (see review of MipTec meeting, GEN, June 15, p. 1).
R&D productivity at the Scrip summit was defined by the majority of speakers as the number of NDAs approved relative to the cost of developing them. Dr. Ruffolo cited a number of reasons that this has been in decline for the past 10 years, among them poor management of R&D and clinical development.
Some speakers pointed out that R&D operations in big pharma have been inefficient in the past decade because the companies are often just too big to be controlled. Peter Joshua, vp and general manager, CMR International (www.cmr.org; recently acquired by Thomson), a provider of R&D performance metrics, presented data from 2004 comparing major pharmas with medium-sized drug firms. His study showed major companies spent, on average, $250 million on their clinical development and used 150 staff to bring a drug to market, whereas their smaller counterparts utilized 100 people and invested $200 million on clinical development to get theirs approved.
John Gibson, M.D., senior vp, global development at the specialist pharmaceutical firm Allergan (www.allergan.com), noted that "one of the problems is that big pharma is too big, and this presents too many leadership challenges. There are not enough people with the requisite skills to lead companies of that size and to put in place the correct business strategy."
Other speakers agreed with Gibson about company size. "In small biotechs and pharmas everyone knows each other and there is a greater sense of ownership of drug development projects. Key decisions are made rapidly, so productivity is bound to be higher," adds Mark Levick, M.D., Ph.D., vp, clinical pharmacology and discovery medicine biopharmaceutical CEDD at GlaxoSmithKline (www.gsk.com).
Dr. Ruffolo went one stage further and stated that mergers and acquisitions to make huge organizations have contributed more than many companies are willing to admit to slowing R&D productivity. He backed this claim with data from a Cambridge Healthtech study which showed that three years post merger R&D productivity is reduced by almost 50%. It is not difficult to see why.
"After our mergers we had over 1,000 standard operating procedures or working practices, which we worked hard to whittle down to less than 50 today," said Eliot Forster, Ph.D., vp development at Pfizer (www.pfizer.com). "You have to do this kind of thing, but if it is not addressed swiftly it can impact on other aspects of R&D."
"Suddenly having so many sites across different time zones can cause unforeseen problems too. For example, we found that every time the server was switched off in New York to do data transfer, our researchers in Mumbai could not work for two hours because their computers were down."
If you add all these examples of simple inefficiency together it is no great surprise that large pharmas are experiencing a productivity lag.
Many at the summit said that technological advances both in the techniques used for drug discovery and the types of innovative drugs now being developed are both contributing to slowing down the delivery of new drugs.
"Cynics point out that the growth in new technologies for use in R&D has coincided with a decline in productivity," says Dr. Forster. "However, this might be exactly thata coincidence. The time to judge the value of these new technologies will be in five to ten years time, when the drugs they’ve helped identify are being tested in the clinic."
Paul de Koning, head of exploratory development at the Japanese pharma firm Astellas Pharma (www.astellas.com), notes that "many of these technologies may have been over-hyped. But, in my opinion, the integration of these techniques can still improve productivity. If you have a combination of agreed targets against an agreed unmet medical need (agreement between marketing, development, and discovery), novel biomarkers, and experienced drug developers, your drug output will increase. But we are experiencing a lag phase since the technology still needs to prove itself and be better understood and integrated."
Ian Lloyd, managing editor of Pharmaprojects (www.pharmaprojects.com), confirmed what many speakers stated: there is a bottleneck of compounds stuck in Phase II.
Lloyd presented data which show in the past ten years the number of compounds in Phase II has doubled from 600 to 1,200 whereas the number in Phase III is static at around 400. According to Lloyd, this "pileup" is because many of the compounds in trials today are more novel types of drugs which require longer trials with more time for assessment by regulatory authorities. The average time for a Phase II trial is now 2.7 years, as long as a Phase III one.
The reason the numbers have not increased in Phase III is not just that drugs are stuck in Phase II. It’s also due to significantly increased attrition rates of Phase II compounds which could be occurring because the industry is getting more ruthless about going into expensive trials with drugs that are not going to cut it commercially.
Poor Portfolio Management
On the costs side of the productivity equation, many speakers at the conference said that not selecting the right candidates has increased development costs. John Hall, M.D., vp product development at Quintiles (www.quintiles.com), explained that "around 14 percent of drugs fail to get to market not because of safety or effectiveness but for strategic reasons. To my mind this means pharmas are still not involving their commercial people early enough in the clinical development."
"Many of our drugs have failed because we have been working on the wrong targets, and this is down to our drug development strategy being driven by scientists. We were trying to commercialize whatever the labs discovered which meant we had no input from the commercial team and this really was the road to ruin," adds Tony Ford-Hutchinson, Ph.D., executive vp, worldwide basic research at Merck (www.merck.com).
To their credit, some of the big pharmas such as GlaxoSmithKline, Pfizer, and Merck have owned up to their problems and reorganized in various ways to change their R&D models. For example, GSK’s well-publicized centers of excellence in drug discovery (CEDD) model of seven accountable and incentivized units, meant to function like small biotechs, has in the past four years, according to Dr. Levick, almost doubled the number of NCEs in clinical development from 50 to 97 and has generated an even spread of compounds in each phase of development.
"Alignment around a common vision is the cheapest way to improve R&D productivity," says Dr. Ruffolo. "The problem is scientists are tougher to align than any other group of employees; they are a bit like Q in James Bond films."
Based on the published research of industry success rates in each phase of drug development, Dr. Ruffolo and his team proposed a series of metrics which everyone in the R&D group allegedly knows by heart. This mantra is to have 12 NCEs go into Phase I, 8 into Phase II and 3 into Phase III; this then gives Wyeth the right number of candidates to achieve 2 NDAs approved every year.
"In the past five years the number of NCEs in development has increased by 400 percent, and we had two NDAs submitted in 2005 and are on course to have four submitted this year," says Dr. Ruffolo.
Many speakers emphasized that to reduce costs their companies have been looking at the oil or car manufacturing industries to find out how other large organizations with multiple suppliers can operate efficiently. As a result some are now assessing areas such as data management and shipping.
Merck, for example, has rationalized the ordering and delivery of ancillary products such as syringes and thermometers required for use in its clinical trials. "Using a six sigma analysis, we have selected vendors, put in cost-saving procurement deals, as well as set up regional depots and dedicated purchasing staff," explains Dr. Ford-Hutchinson. "This has saved money because scientific staff doesn’t spend valuable time ordering products for trials."
Other speakers at the summit also believe that outsourcing clinical development can reduce costs too. Dr. Hall presented data to show that 70% of clinical studies fail to recruit to target and 30% don’t recruit a single patient.
"Since patient recruitment is around 40 percent of the cost of a trial, spending all this money and then not recruiting a single patient is a terrible and avoidable waste," says Dr. Hall. "Most CROs have a greater global reach and can recruit and retain patients more successfully than big pharmas. At Quintiles, for example, we have taken 2.5 million people through clinical trials."
The Next Decade
For the next ten years, the message is that big pharma has to count every penny it spends more carefully than it has done in the past. It must continue to assess areas where cost savings can be made and outsource wherever possible.
Others believe that the current lack of new NDAs may resolve itself and think the Phase II bottleneck may be a short-term problem which will be overcome as novel drugs become the accepted norm.
"More unprecedented candidates will soon enter Phase III from Phase II. But, in the meantime, those firms that have a balanced pipeline will be in the best position to ride out the lack of new drugs," says Lloyd.
Other speakers went further and said that additional shakeups were needed with radical models of clinical development using integrated and continuous phases instead of the current stop/start approach.
Dr. Hall quoted an example where Quintiles had performed a Phase II/III combined study incorporating dose selection and confirmation stages which allowed this clinical development phase to be completed earlier than if they had done two separate studies. Dr. Hall went a stage further and controversially proposed that using this approach many companies could get their drugs through clinical trials in three to five years instead of the current 8󈝶.
"I realize for some drugs three- to five- year clinical trials may be difficult, but in oncology indications this time line really is achievable. If we don’t aim for this kind of reduction in clinical development, then productivity in the pharma industry will continue to decline," warned Dr. Hall.