Drug News Perspect 20( 1), January-February 2007
`
`Available on the web at: www.prous.com/joumals
`
`DRUGLINE
`
`As patents expire and innovation declines, the pharmalbiotech industry must
`pursue aggressive strategies and adopt a fresh perspective to stay ahead.
`
`Overcoming the Challenges
`in the Pharma/Biotech Industry
`
`by A./. Graul and J.R. Prous
`
`T he pharmalbiotech industry has
`
`suffered repeated setbacks in
`the last decade, with seemingly
`more bad news than good making the
`headlines, fewer new drugs reaching
`the market and bottom lines showing
`grimmer results. Several reasons for
`the industry slowdown have been put
`forward, as reviewed in the following
`sections, in order to put these chal(cid:173)
`lenges into perspective so that they
`may be surmounted.
`
`Increased generic
`competition
`In 19841, the Dmg Priice Com(cid:173)
`petition and Patent Term Restoration
`Act (originally known as the "Hatch(cid:173)
`Waxman Act") was enacted, thereby
`establishing the modern system of
`generic drugs in the United States.
`'T'his law expedites the availability of
`generic drugs and has popularized
`generic drug substitution. In the year
`2004 alone, the U.S. FDA approved
`more than 400 generic products, a
`record number for that agency. In
`countries outside the United States,
`especially in Europe, sales of generic
`
`Summary
`In the face of patent expirations at a time of declining innovation across the industry,
`companies are restructuring their research and development operations and are pur(cid:173)
`suing an aggressive strategy of acquisi1tions, licensing deals and research collabora(cid:173)
`tions to boost their drug pipelines. © 2007 Prous Science. All rights reserved.
`
`dmgs have also increased significant(cid:173)
`ly in recent years.
`
`Over the last two decades, phar(cid:173)
`maceutical research-based companies
`have grappled with the problem of
`increased generic competition. In the
`long nm, however, companies may be
`stimulated to develop new products to
`offset the plunging sales ofthose prod(cid:173)
`ucts whose patents have expired or are
`near to expiration. This is already the
`case in the United States, where more
`than 50% of medications used are
`generics, 1 and at the same time, where
`more new drugs are developed than
`any other country in the world.
`
`One frequently cited example of a
`popular generic is the diabetes drug
`metfonnin (marketed by Bristol(cid:173)
`Myers Squibb as Glucophage®),
`which lost patent protection in January
`2001. The drug, which racked up sales
`ofUSD 1.7 billion in the year 2005, is
`one of the largest-volume synthetic
`
`prescnptwo dmgs on the market
`worldwide, due to the fact that it treats
`a chrome disease and is administered
`as a comparatively large dose. This
`drug is considered to be a valuable
`generic opportunity, and is reportedly
`available from more than 40 suppliers
`worldwide at a significantly lower
`price than the brand product. 2
`
`It is expected that by the year 2012,
`drugs worth more than USD 50 billion
`in sales will go generic (Table I).
`According to CNNMoney.com, the
`outlook is even grimmer: in April
`2006, this source reported that block(cid:173)
`buster dmgs worth more than USD
`I 00 billion would lose patent exclu(cid:173)
`sivity in the next 5 years. 'l he shock
`waves from the loss of patent protec(cid:173)
`tion may be even more widely noted:
`experience has demonstrated that
`when one dmg in a class- such as
`simvastatin in the statin class- goes
`generic, other dmgs in the same class
`may also suffer lost sales. Patent pro-
`
`Copyright © 2007 Pro us Science. CCC: 0214-0934/2007.
`
`57
`
`Page 1 of 12
`
`Biogen Exhibit 2017
`Coalition v. Biogen
`IPR2015-01136
`
`

`
`DRUG LINE
`
`Dmg News Perspect 20(1), January-February 2007
`
`tection for Zoco~ (simvastatin),
`Merck & Co.'s best-selling product in
`the U.S. market, lapsed last swmner,
`and generic versions of Zocor pushed
`Merck's sales of the branded drug
`down by 65%, to USD 379' million, in
`the last quarter of 2006 as compared
`with the same period in 2005. The
`company js already struggling over(cid:173)
`seas with the competition presented by
`generic forms of Fosamax®, its osteo(cid:173)
`porosis drug, which will go generic in
`the United States as well in 2007. The
`company is hoping that sales of newer
`products, including Gardasif® and
`Januvia™ , will help to make up for
`these losses.
`
`A more recent development in the
`drug industry has been the loss of
`patent protection for bioJ.ogics, bio(cid:173)
`pharmaceuticals and biotechnology
`drugs. Generic versions of these prod(cid:173)
`ucts-known as biosimilars-are now
`being developed. The first two such
`products were approved last year in
`the European Union: Sandoz's Omni(cid:173)
`trope® and Biopartners' Valtropin®,
`both generic versions of Pfizer 's
`Genotropin® (somatropin [rDNA]).
`This was enabled by the EMEA's
`adoption, in late 2005, of guidelines
`regulating the development and mar(cid:173)
`keting authorization of this type of
`
`product. European regulators expect to
`soon begin receiving applications for
`biosimilar versions of insulin, erythro(cid:173)
`poietin (EPO) and granulocyte-colony
`stimulating factor (G-CSF), among
`otJ1ers. Biosimilar medicines are also
`authorized for sale in Australia and
`some countries of Asia and Latin
`America.
`
`In the United States, Omnitrope
`received U.S. approval in May 2006 as
`tl1e fi rst "follow-on version" of a pre(cid:173)
`viously approved recombinant bio(cid:173)
`technology drug. T he FDA declined,
`however, to classify the drug as a bio(cid:173)
`generic (as these drugs are commonly
`called in the United States) and said
`that its approval did not set a precedent
`for other biological medicines in that
`country. According to the FDA, the
`drug's designation as a follow-on
`product indicates that its similarity to
`previously approved human growth
`hormones (in this case, Genotropin)
`allowed consideration of the safety
`and efficacy data for the latter as part
`of the approval process. However, the
`FDA stressed that Omnitrope "is not
`therapeutically equivalent to (and
`therefore substitutable for) any other
`approved human growth hormone
`products." This was not even the fust
`time that the agency had approved a
`follow-on version of a protein thera-
`
`peutic: other follow-on protein prod(cid:173)
`ucts previ-ously approved under sec(cid:173)
`tion 505 of the Food, Drug and
`Cosmetic Act
`include G!ucaGen
`(glucagon recombinant for injection),
`Hylenex (hyaluronidase recombinant
`human), Hy dase and A mphadase
`(hyaluronidase) and Fortical (calci(cid:173)
`tonin salmon recombinant) nasal
`spray.4 The widespread approval of
`biogenerics in the United States can(cid:173)
`not occur until appropriate legislation
`is in place. This is clearly a decision
`that will have important financial
`repercussions in the industry. Ac(cid:173)
`cording to the U.S. Generic Phar(cid:173)
`maceutica[ Association (GPhA), bio(cid:173)
`pharmaceuticals worth more than
`USD 10 billion will come off patent
`over the next 5 years.
`
`Table I presents selected block(cid:173)
`buster drugs for which U.S. patent pro(cid:173)
`tection will soon lapse. A list of select(cid:173)
`ed companies involved in generics is
`presented m Table II.
`
`The approval in January 2006 of
`Medicare Part D in the United States
`may provide some impetus to both
`generic and prescription phannaceuti(cid:173)
`cal drug companies in that country.
`Part D is a new, first-time Medicare
`prescription drug benefit that provides
`
`TABLE I. SELECTED BLOCKBUSTER DRUGS LOSING U.S. PATENT PROTECTION DURING 2007-2012
`
`PRODUCT
`
`Alendronate (Fosamax)
`
`Cetirizine (Zyrtec)
`
`COMPANY
`
`Merck & Co.
`
`UCB
`
`Interferon beta-1b (Betaseron)
`
`Berlex/Bayer Schering Pharma
`
`Risperidone (Risperda~
`
`Johnson & Johnson
`
`Lansoprazole (Prevacid)
`
`Atorvastatin (Lipitor)
`
`Takeda
`
`Pfizer
`
`Docetaxel (Taxotere)
`
`sanofi-aventis
`
`Donepezil (AricepQ
`
`Pioglitazone (Actos)
`
`Clopidogrel (Piavix)
`
`Eisai
`
`Takeda
`
`Bristol-Myers Squibb/sanofi-aventis
`
`November 2011
`
`Enoxaparin (Lovenox)
`
`sanofi-aventis
`
`Sildenafil (Viagra)
`
`Tolterodine (DetroVLA)
`
`Pfi2er
`
`Pfizer
`
`February 2012
`
`March 2012
`
`March 2012
`
`' Source: U.S. Patent and Trademark Office (httpJ/www.uspto.gov/web/offices/pac/dapp/opla/term/156.html, consulted December 13, 2006).
`••source: lntegrityt', based on company-reported sales figures.
`
`58
`
`A.l. Graul and J.R. Prous pp. 57- 68
`
`PATENT EXP. DATE*
`
`2006 SALES (IN USD)**
`
`August2007
`
`June 2007
`
`July 2007
`
`December 2007
`
`May 2009
`
`$3.1 billion
`
`$2.5 billion (estimated)
`
`$1.2 billion (estimated)
`
`$4.2 billion
`
`$4 billion
`
`September 2009
`
`$13.7 billion
`
`May 2010
`
`November 2010
`
`January 2011
`
`$2.2 billion
`
`$2.1 billion
`
`$2.6 billion
`
`$6 billion
`
`$3 billion
`
`$1.7 billion
`
`$1.1 billion
`
`Page 2 of 12
`
`

`
`Drug News Perspect 20(1), January-February 2007
`
`DRUGLINE
`
`TABLE IL PARTIAL LIST OF
`COMPANIES INVOLVED IN GENERICS
`
`Acta vis
`
`Alpharma
`
`Amphastar Pharmaceuticals
`
`Aspen Pharmacare
`
`Apotex
`
`Barr Laboratories
`
`Cangene
`
`Cipla
`
`Dr. Reddy's Laboratories
`
`EGIS
`
`Gedeon Richter
`
`King Pharmaceuticals
`
`Lannett
`
`Merck Generics
`
`Mylan Laboratories
`
`Nichi-lko
`
`Par Pharmaceuticals
`
`Perrigo
`
`Ranbaxy
`
`Ratiopharm
`
`Sandoz
`
`Sawai
`
`Sicor
`
`Stada Arzneimittel
`
`Teva
`
`Towa Pharmaceutical
`
`Watson
`
`Winthrop
`
`Wockhardt
`
`Zydus Cadilla
`
`increased access to prescription med(cid:173)
`ications for senior citizens and the dis(cid:173)
`abled. Medicare has provided hospital,
`physician, medical equipment and
`other health services to beneficiaries
`for more than 40 years, but until now
`did not cover prescription medica(cid:173)
`tions. The program has also been
`expanded to cover poor and low(cid:173)
`income beneficiaries, as well as
`increased preventive care. All of these
`modifications are expected to have
`positive repercussions throughout the
`pharmaceutical industry, but especial(cid:173)
`ly for generic drug manufacturers.
`
`R&D failures
`T he all-too-frequent failure of
`dmgs in an advanced stage of clinical
`testing incurs a significant loss of time
`and money for pharmaceutical compa(cid:173)
`nies. According to one analysis, more
`than 40% of drugs tlhat enter phase III
`clinical testing are discontinued due to
`problems related to efficacy, safety or
`both. Furthermore, phase TIT trials are
`the most costly stage of development,
`accounting for up to 70% of the total
`cost of developing a dmg.5
`
`Some factors have been found to
`be associated with a higher failure rate
`than nonnal. Not surprisingly, drugs
`with a novel mechanism of action fail
`more frequently in clinical testing than
`those with a tried-and-true mecha(cid:173)
`nism. Similarly, drugs for difficult-to(cid:173)
`treat indications such as stroke and
`other CNS disorders as well as cancer
`drugs are associated with a higher fail(cid:173)
`ure rate, often because animal models
`of these human diseases are impre(cid:173)
`cise and poorly reflect the human
`condition.5
`
`All too frequently, however, drugs
`are dropped from development for rea(cid:173)
`sons that are neither scientific nor
`technical in nature. According to one
`estimate, as many as 25% of the drugs
`that are eliminated from company
`pipelines are discarded due to man(cid:173)
`agerial decisions regarding shifting
`priorities, marketing reassessment or
`loss of management interest when
`development takes longer than expect(cid:173)
`ed.6 On the contrary and no less impor(cid:173)
`tant ly, however, many dmgs are
`pushed through clinical development
`in S!Pite of inconclusive results because
`companies are reluctant to admit fail(cid:173)
`ure, for both emotional and fmancial
`reasons. This reluctance ultimately
`backfrres, with drugs eventually being
`withdrawn from the pipeline at a later
`stage, when
`significantly more
`resources have been poured into their
`development.
`
`Some of the more notable exam(cid:173)
`ples of trial discontinuations that made
`the news during 2006 include the fo:t(cid:173)
`lowing:
`
`• In December 2006 Pfizer halted all
`clinical trials of the cholesterol
`(CETP)
`ester
`transfer protein
`inhibitor torcetrapib, which had
`been the most advanced product in
`this promising new class of athero(cid:173)
`sclerosis therapeutics, in interests
`of patient safety. The decision was
`made based on recommendations
`by an independent Data Safety
`Monitoring Board (DSMB), which
`was monitoring the ILLUMINATE
`morbidity and mortality study of
`torcetrapib (in combination with
`atorvastatin). The DSMB noted a
`significant increase in mortality (82
`deaths vs. 51 in the control group)
`and cardi avascular events (a 3- to 4-
`mmHg increase in systolic blood
`pressure) in patients receiving the
`combination as compared with
`those receiving atorvastatin alone.
`The company elected to terminate
`the ILLUMINATE sh1dy as well as
`the development program for this
`compound. Pfizer claimed that the
`new infonnation from the trial was
`totally unexpected, although a pre(cid:173)
`vious report from a phase 11 trial
`had in fact already indicated sys(cid:173)
`tolic blood pressure increases with
`the drug combination. 7 Pfizer's
`shares took a dive upon disclosure
`of the news, dropping 11% on the
`day of the announcement. The com(cid:173)
`pany had invested USD 800 million
`in the clinical development of
`torcetrapib, expecting the drug to be
`its next blockbuster.
`
`• In October AstraZeneca discontin(cid:173)
`ued development ofNXY-059 (dis(cid:173)
`ufenton sodium) in acute ischemic
`stroke after NXY-059 showed lack
`of efficacy in the SAINT II (Stroke
`Acute Ischemic NXY-059 Treat(cid:173)
`ment) trial. In contrast to previous
`phase Ill results, which had been
`described as promising,8 the new
`results showed that NXY-059 did
`not meet its primary outcome of a
`statistically significant reduction
`in stroke-related disability, as
`assessed by the modified Rankin
`Scale (mRS) compared to placebo.
`Subgroup analyses, including time
`to treatment, did not demonstrate a
`
`A. I. Graul and J.R. Prous pp. 57-68
`
`59
`
`Page 3 of 12
`
`

`
`DRUG LINE
`
`Dmg News Perspect 20(1), January-February 2007
`
`treatment benefit. In addition,
`NXY-059 did not cause a statisti(cid:173)
`cally significant improvement in
`neurological status versus placebo
`on the National Institutes of Health
`Stroke Scale. There was no evi(cid:173)
`dence of NXY-059 lowering the
`incidence of symptomatic intracra(cid:173)
`nial hemorrhage when administered
`with rt-PA. Mortality and the inci(cid:173)
`dence and profile of adverse events
`in patients receiving NXY-059
`were similar to placebo. Renovis
`appears to have opted to continue
`development of the product for the
`treatment of hemorrhagic stroke.
`Both companies suffered serious
`losses upon announcement of the
`negative
`results: AstraZeneca
`shared dropped by 7.5% and those
`ofRenovis by a whopping 75%.5
`
`• In the Spring of 2006 news chan(cid:173)
`nels were filled with the horrifying
`story of a phase I trial that went
`
`tTagically wrong. Of eight healthy
`volunteers who participated in the
`first clinical experience with
`TeGenero's TGN-1 4 12, the six who
`received the experimental dmg suf(cid:173)
`fered catastrophic multisystem fail(cid:173)
`ure as a result of a "cytokine
`stonn." The dntg, a humanized
`monoclonal antibody to the CD28
`T-cell surface receptor, induced a
`systemic inflammatory response
`within minutes of administration
`characterized by headache, myal(cid:173)
`gia, nausea, diarrhea, erythema
`vasodilatation and hypotension.
`Within 12- 16 hours of dosing, sub(cid:173)
`jects manifested lung injury, renal
`fai lure and disseminated intravas(cid:173)
`cular coagulation, and two of these
`progressed to prolonged cardiovas(cid:173)
`cular shock and acute respiratory
`distress syndrome. Fortunately, all
`six volunteers survived. The two
`volunteers who were given placebo
`showed none o.f these effects.9 In
`
`July 2006, TeGenero filed insolven(cid:173)
`cy proceedings.
`
`The development of several other
`drugs was discontinued during the
`just past, as
`reported
`in
`year
`DailyDrugNews.com and summarized
`in Table III.
`
`An even more costly "mistake" is
`the approval and marketing of drugs
`that must later be withdrawn from the
`market, most often due to safety prob(cid:173)
`lems that were not detected during
`clinical testing. Several products were
`withdrawn last year from markets
`worldwide, including AstraZeneca 's
`anticoagulant Exanta™ (ximelaga(cid:173)
`tran), announced in February 2006.
`The company made the decision to
`withdraw the product and discontinue
`all further development upon teaming
`of serious side effects in ongoing clin(cid:173)
`ical studies. Results obtained in the
`EXTEND clinical trial, which was
`
`TABLE Ill. SELECTED PRODUCTS DISCONTINUED FROM CLINICAL DEVELOPMENT IN 2006
`
`PRODUCT
`
`Fenofibrate/metformin
`(Synordia)
`
`COMPANY
`
`Solvay
`
`STATUS WHEN
`DROPPED
`
`Preregistered
`
`Muraglitazar
`
`Bristol-Myers Squibb
`
`Preregistered
`
`Rubitecan
`
`SuperGen
`
`Preregistered
`
`REASON
`
`Company unable to respond to need for
`additional information in the specified time
`frame
`
`Need for additional trials to obtain approval;
`competition from other products
`
`MAA withdrawn pending receipt of results of an
`ongoing phase II trial
`
`Disufenton sodium (acute
`ischemic stroke indication)
`
`AstraZeneca
`
`Phase Ill
`
`Lack of efficacy
`
`Lonidamine
`
`Threshold Pharmaceuticals
`
`Phase Ill
`
`Lack of efficacy; adverse effects
`
`Temsirolimus (breast cancer Wyeth
`indication)
`
`Sosei
`
`lncyte
`
`Evotec
`
`Novartis
`
`GlaxoSmithKiine
`
`Phase lib
`
`Phase lib
`
`Phase lib
`
`Phase II
`
`Phase II
`
`Lack of efficacy
`
`Adverse effects
`
`Lack of efficacy
`
`Reason undisclosed
`
`Formulation problems
`
`Cont.
`
`A.T. Graul and J.R. Prous pp. 57- 68
`
`AstraZeneca
`
`Pfizer
`
`GlaxoSmithKiine
`
`SGX Pharmaceuticals
`
`Phase 111111
`
`Phase Ill
`
`Phase Ill
`
`Phase Ill
`
`Phase 111111
`
`Low probability of efficacy, as determined by
`DSMB
`
`Lack of benefit over existing therapies
`
`Safety concerns
`
`Unfavorable benefiUrisk profile
`
`Low probability of efficacy, as determined by
`DSMB
`
`Tesaglitazar
`
`Torcetrapib
`
`GR-270773
`
`T roxacitabin e
`(AML indication)
`
`AD-452
`
`Dexelvucitabine
`
`rEV-131
`
`Balicatib
`
`Brecanavir
`
`60
`
`Page 4 of 12
`
`

`
`Drug News Perspect 20(1), January-February 2007
`
`DRUGLINE
`
`TABLE Ill CONT. SELECTED PRODUCTS DISCONTINUED FROM CLINICAL DEVELOPMENT IN 2006
`
`PRODUCT
`
`CRx-140
`
`DITPA
`
`Emapunil
`
`Ethyl pyruvate
`
`FK-962
`
`COMPANY
`
`CombinatoRx
`
`Titan
`
`Dainippon Sumitomo
`Pharma/Novartis
`
`Critical Therapeutics
`
`Astellas
`
`STATUS WHEN
`DROPPED
`
`Phase II
`
`Phase II
`
`Phase II
`
`Phase II
`
`Phase II
`
`REASON
`
`Lack of efficacy
`
`Reallocation of resources
`
`Development plan under review
`
`Stability issues
`
`Lack of efficacy
`
`Male hormonal contraceptive
`
`Schering AG/Organon
`
`Phase II
`
`Poor product acceptability
`
`Manitimus
`
`MK-0354
`
`ON0-6126
`
`Astellas
`
`Merck & Co.
`
`Ono
`
`Pranlukast (COPD indication) Ono
`
`Phase II
`
`Phase II
`
`Phase II
`
`Phase II
`
`Phase II
`
`Lack of benefit over existing therapies
`
`Reason undisclosed!
`
`Lack of efficacy
`
`Lack of efficacy
`
`Lack of efficacy
`
`Lack of efficacy
`
`Ono
`
`Takeda/Mitsubishi Pharma Phase II
`
`Rivenprost
`
`TAK-128
`
`TAK-715
`
`CER-227185
`
`EVT-301
`
`ON0-4127.Na
`
`TGN-1412
`
`Takeda
`
`Cerep
`
`Evotec
`
`Ono
`
`TeGenero
`
`Phase II
`
`Phase 1111
`
`Phase I
`
`Phase I
`
`Phase I
`
`Did not meet development criteria
`
`Adverse effects; narrow therapeutic window
`
`Adverse effects
`
`Poor oral absorption
`
`Serious adverse effects
`
`Source: lntegrit~ and DailyDrugNews.com.
`
`evaluating a longer treatment period
`than that approved in Germany in
`2004, indicated a potential risk of
`severe liver injury, with an observation
`of rapid onset of signs and symptoms
`in the weeks following the end of the
`35-day treatment period. The compa(cid:173)
`ny elected to suspend marketing of the
`product in Germany and to withdraw
`regulatory applications in other coun(cid:173)
`tries worldwide. Although the compa(cid:173)
`ny said in its press release announcing
`the action that this side effect had not
`been previously observed, an FDA
`advisory committee had in fact recom(cid:173)
`mended against approval of the drug in
`the United States in September 2004,
`citing as one reason the observation of
`an increased incidence of severe liver
`injury among patients taking the dmg.
`
`Postmar!keting changes in recom(cid:173)
`mended dosages are another less well(cid:173)
`known but no less common occur(cid:173)
`rence that also have significant effects
`on patients, drug companies and regu(cid:173)
`latory agencies. These dosage adjust(cid:173)
`ments, both increases and reductions,
`
`cou.ld be avoided through more rigor(cid:173)
`ous dosage optimization studies prior
`to phase III testing and regulatory
`approva l. 10 These same strategies
`could also be applied to help prevent
`the occurrence of market withdrawals.
`
`the Phannaceutical
`to
`According
`Research and Manufacturers of
`American (PhRMA), in the United
`States, investment increased from
`USD 2 billion in 1980 to USD 8.4 bil(cid:173)
`lion in 1990. 11
`
`On a related note, the trend in
`recent years to initiate marketing of
`new drugs on a massive scale has had
`an unfortunate downside: by the time
`unexpected and serious side effects are
`encountered in postmarketing and
`pharmacovigilance studies (which, of
`themselves, are hindered and made
`more difficult by the massive market(cid:173)
`ing campaigns accompanying new
`launches), millions of drug exposures
`have already taken place. This occur(cid:173)
`rence was much less common in the
`past, when the medical community
`was more cautious about using new
`medicines and companies built up
`their franchises more gradually.6
`
`R&D expenditures
`During the 1980s pharmaceutical
`R&D expenditures grew steadily.
`
`Current figures are even more
`astounding. According to a report
`released in November 2006 by the
`U.S. Government Accolllntability
`Office, industry-reported annual R&D
`expenses (after adjustment for infla(cid:173)
`tion) rose from USD 16 billion in 1993
`to almost USD 40 billion in 2004, an
`increase of 147%. 12 In 2005, the entire
`biopharmaceutical industry of the
`United States (both PhRMA members
`and nonmembers) invested more than
`USD 51 billion in R&D. 11 This invest(cid:173)
`ment is greater than the total annual
`budget of the National Institutes of
`11
`Health, reported at USD 28 billion.6•
`The number of new drug applica(cid:173)
`tions (NDAs) submitted to the FDA
`over the same time period did not
`reflect this investment, however, with
`an increase of only 7% in the number
`
`A. I. Graul and J.R. Prous pp. 57-68
`
`61
`
`Page 5 of 12
`
`

`
`DRUG LINE
`
`Dmg News Perspect 20(1), January-February 2007
`
`ofNDAs filed for new molecules over
`the same period. This trend indicates
`that the productivity of R&D invest(cid:173)
`ments has decreased continuously
`since the mid-1990s. 12
`
`The U.S. Government Accoun(cid:173)
`tability Office, echoing figures from
`PhRMA, asserts that on average, for
`every 10,000 compounds identified at
`the drug discovery stage, only one
`drug will successfully reach the stage
`of FDA approvalY Only 10-20% of
`the drugs and biologics that enter the
`stage of clinical testing eventually
`reach the market.6 PhRMA asserts that
`only 30% of drugs that do reach the
`market ever recover the investment
`made in their development (estimated
`at USD 800 million). 13
`
`Increasingly, pharmaceutical com(cid:173)
`pany management insists that the only
`viable solution to this imbalance is to
`decrease overhead. In late November
`2006 Pfizer announced that it would
`reduce its workforce by 20%, primar(cid:173)
`ily affecting the company's sales
`force, following the loss of patent pro(cid:173)
`tection for Zoloft and torcetrapib's
`failure in phase III trials. Greater cut(cid:173)
`backs were announced in January
`2007, this time affecting the compa(cid:173)
`ny's research facilities in the United
`States, Japan and Europe. Lilly and
`Merck have also announced plans to
`cut their workforces in the coming
`months.
`
`Boosting drug pipelines
`In the face of patent expirations,
`R&D failures and pricing pressures,
`big pharma companies are pursuing
`more aggressive strategies-primarily
`mergers and acquisitions (M&A),
`research collaborations and licensing
`deals-to fill the gaps in their own
`pipelines.
`
`Licensing deals and research
`collaborations
`As published in Daily DrugNews.
`com, several hundred new research
`collaborations and licensing deals
`were established during the year 2006
`alone, ranging from deals in the area of
`basic research to those covering mar-
`
`62
`
`keting and distribution of products in
`late development or already on the
`market. Some of the more significant
`deals involving big pharma companies
`announced during 2006 are listed in
`Table IV at the end of this article.
`
`An analysis oflast year's patent lit(cid:173)
`erature permits the identification and
`analysis of research collaborations
`between industry and academic insti(cid:173)
`tut ions, an ever more widely employed
`strategy for accelerating the discovery
`of novel medicines. Such collabora(cid:173)
`tions resulted in the publication of
`more than 300 new patent applications
`dming 2006. Bioactive compounds
`synthesized at research institutions
`usually do not progress into lead com(cid:173)
`pounds, do not undergo development
`as drug candidates and, unfortunately,
`do not find clinical application. The
`partnership between industry and
`academia is vital for fmding the way
`forward in therapy. Table V, at the end
`of this article, presents a list of select(cid:173)
`ed patent applications published last
`year by big pharma companies in col(cid:173)
`laboration with academic and research
`institutions.
`
`Mergers and acquisitions:
`The strategy of pipeline
`consolidation
`The year 2006 saw a new wave of
`mergers and acquisitions, although
`none on the scale of the mega-mergers
`that took place in the preceding years,
`exemplified by the ones that gave birth
`to Glaxo Well come ( 1995), Novartis
`(1996), GlaxoSmithKline (2000) and
`sanofi-aventis (2004 ), among others.
`The reasons for pursuing mergers and
`acquisitions are varied. In an era of
`fewer new drug approvals coupkd
`with the impending loss of major
`patent exclusivity, these transactions
`are widely believed to result in consol(cid:173)
`idation of pipelines, filling gaps in one
`company's pipeline with products
`from the other company and complet(cid:173)
`ing portfolios of marketed drugs. In
`some cases, such as that of Lilly's
`acquisition ofiCOS, the merger results
`in consolidation of profits of a drug (in
`this case, CiafisTM) that previously had
`been codeveloped by the two compa-
`
`for continued
`nies. Cost-cutting
`growth (i.e., layoffs) is also often cited
`both as a reason for merging and as a
`consequence of the action.3 Layoffs
`often result in inefficiencies and sti(cid:173)
`fling of innovation, however, as the
`decision makers are often uninvolved
`and uninformed about the people and
`programs affected.6
`
`The only truly large company
`merger (or "horizontal merger") of
`note for the year was the purchase by
`Bayer of Schering AG, following a
`bidding war with Merck KGaA.
`Acquisition of Schering, the biggest
`deal in Bayer's 142-year history, cre(cid:173)
`ates Germany's leading health care
`company, with forecasted ruumal sales
`of more than Eur 15 billion and a
`diverse product portfolio. Merck, after
`being left out of the deal, made a suc(cid:173)
`cessful bid for and acquired the fami(cid:173)
`ly-owned Swiss biotech company
`Serono. While this type of merger may
`ultimately yield a more dynamic and
`more complete R&D portfolio,
`research is often put on hold for an
`agonizingly long period of time while
`company management makes deci(cid:173)
`sions regarding new priorities. In the
`long run, however, the newly merged
`company's pipeline can only be as
`good as the two preexisting pipelines,
`and big takeovers do not compensate
`for a serious underlying problem
`plaguing the industry: the failure to
`discover good new drugs.3
`
`Mergers and acquisitions may also
`result in the acquisition of technology
`platforms needed by one company to
`further develop drugs in its pipeline or
`to branch out into new areas of
`research. Over the course of 2006,
`Merck & Co. perfonned this maneuver
`no less than three times, acquiring two
`smaller companies in the second quar(cid:173)
`ter and announcing a third acquisition
`in
`the year. Glycof i and
`later
`Abmaxis, privately owned biotech
`companies specializing in glycoengi(cid:173)
`neering and monoclonal antibody
`technologies,
`respectively, were
`acquired in May and June. The acqui(cid:173)
`sition by Merck & Co. of Sima, a com(cid:173)
`pany focused on the creation ofRNAi-
`
`A.l. Graul and J.R. Prous pp. 57- 68
`
`Page 6 of 12
`
`

`
`Drug News Perspect 20( 1), January-February 2007
`
`DRUGLINE
`
`based therapeutics, was announced in
`the Fall as a move to complement the
`research on RNA expression conduct(cid:173)
`ed by Merck since the 200 I , when it
`acquired Rosetta Inpham1atics. Ver(cid:173)
`tical acquisitions of this type may be
`most productive if the acquired com(cid:173)
`pany's research team is allowed to
`maintain autonomy and work in paral(cid:173)
`lel with the larger company's scien(cid:173)
`tists, rather than being completely
`
`overtaken and integrated into the over(cid:173)
`hanging research organization.3
`
`Selected phannaceutical company
`mergers and acquisitions that were
`reported in Daily DrugNews.com dur(cid:173)
`ing 2006 include those in Table VI at
`the end of this article.
`
`Already it appears that this trend
`will continue in 2007, as evidenced by
`
`the news, announced in January, that
`sanofi-aventis and Bristol-Myers
`Squibb had begun "friendly negotia(cid:173)
`tions" toward a merger. The outcome
`of the negotiations is likely to be
`affected by the ongoing patent litiga(cid:173)
`tions regarding the companies' shared
`product Plavix, which will probably
`not be resolved until later in the year.
`Stay tuned ...
`
`TABLE IV. SELECTED MAJOR RESEARCH COLLABORATIONS AND LICENSING DEALS ANNOUNCED IN 2006
`
`COMPANY A
`
`COMPANY B
`
`SUMMARY OF AGREEMENT
`
`AstraZeneca
`
`Abraxis BioScience
`
`Copromotion of Abraxan~ in the U.S.
`
`Cubist
`
`Dynavax
`
`Development and marketing of daptomycin (Gubici,_} in China
`
`Research collaboration and license agreement for the discovery and development
`of TLR-9 agonist-based therapies for the treatment of asthma and COPD
`
`Bayer
`
`CuraGen
`
`Bayer in-licenses Bay-76-7171 for development
`
`Boehringer lngelheim
`
`Ajinomoto
`
`Boehringer receives exclusive worldwide development, production and sales
`rights for Ajinomoto's SGL T2 inhibitor
`
`Bristol-Myers Squibb
`
`OSI Pharmaceuticals
`
`BMS obtains worldwide nonexclusive license to OSI's dipeptidyl peptidase IV
`(DPP IV) patent portfolio for the treatment of type 2 diabetes
`
`GlaxoSmithKiine
`
`ChemoCentryx
`
`Epix
`
`Galapagos
`
`Genmab
`
`Kissei
`
`Myogen
`
`Merck & Co.
`
`Gladstone Institutes
`
`Worldwide multitarget strategic alliance to discover, develop and market novel
`medicines targeting chemokine and chemoattractant receptors, including
`Traficet-EN®
`
`Worldwide multitarget strategic collaboration to discover, develop and market
`novel medicines targeting four G-protein-coupled receptors; includes
`PRX-03140 for Alzheimer's disease
`
`Worldwide, multiyear, multiprogram drug discovery and development alliance
`in the field of osteoarthritis
`
`Worldwide agreement to codevelop and commercialize HuMax-CD20TM
`(ofatumumab)
`
`Kissei out-licenses exclusive development and marketing rights for the SGL Tt
`inhibitor KGA-2727 to GSK
`
`Two-part collaboration in pulmonary hypertension inclu ding Myogen's ambrisentan
`(development and marketing) and GSK's epoprostenol sodium (marketing only)
`
`Collaboration and license agreemen t for research and development of drugs to
`treat neurodegenerative diseases, including Alzheimer's disease, that are linked
`to apoE-regulated mechanisms in the body
`
`Harvard Medical School Merck in-license molecules that could slow the production of toxic byproducts in
`the eye, for treatment of age-related macular degeneration and Stargardt disease
`
`Neuromed
`
`NicOx
`
`Paratek
`
`Novartis
`
`Ablynx
`
`A. I. Graul and J.R. Prous pp. 57-68
`
`Codevelopment and licensing of novel compounds for pain and other neurological
`disorders, including NMED-160
`
`Codeveloping of nitric oxide-donating antihypertensive drugs
`
`Exclusive worldwide codevelopment and licensing agreement covering Paratek's
`antibiotic PTK-0796
`
`Collaboration to discover and develop novel Nanobody1 M-based therapeuti