How Big Pharma's R&D Focus Is Changing
Decision Resources, Inc, November 2011
The secret for success in today’s pharmaceutical industry is how to mold the company around the concept of developing value-added drugs by using technology rather than focusing the company on the technology itself. As an example, Roche has been hugely successful but came to realize that the biologics and innovation culture from Genentech were its primary growth drivers. Predictably, Roche decided to acquire and integrate Genentech into its operations. But, the far more difficult and potentially much greater opportunity is how to transform the rest of Roche to also take advantage of Genentech’s way of discovering and developing drugs, whether the agents are small molecules or larger proteins.
Not only has the pharmaceutical industry gone through an acute phase of cost-cutting and downsizing (or right-sizing), driven mostly by global economics and payer cost-containment initiatives, but many Big Pharma managements are now also aggressively working to change their company’s behavioral culture and R&D operations. Companies need to make strategically important commitments to new R&D models, which may be experimental models right now but have the potential to be new growth engines.
Questions Answered:
- Much innovation occurs by academic and government-funded researchers who have a passionate focus and comprehensive understanding of science. What strategies are some Big Pharma companies adopting to better access academic research and researchers? What is open-access R&D? What is the academic superstar model?
- Many Big Pharma companies embrace the strategy of externalizing R&D to improve R&D productivity. What strategies are GlaxoSmithKline and Pfizer implementing for this purpose? What percentage of its development operations does Pfizer want to move out of house?
- Some companies are moving to downsize their R&D operations and diversify into market sectors that are less R&D intensive. What opportunities exist in generics, branded generics, and OTC market sectors? What transformational new model does Teva Pharmaceutical Industries say has the potential to reshape the entire global OTC market?
- For far too long, some Big Pharma companies have defined themselves as small-molecule or chemistry-based outfits rather than as companies designed to produce value-added drugs. Why has this created an identity crisis for these companies? Why is bolting on a biologics or vaccines company only a short-term stopgap for fixing this crisis?
- When Pfizer acquired Wyeth Pharmaceuticals in 2009, the combined R&D spend of the two companies was about $11 billion. In 2012, Pfizer plans to invest only between $6.5 billion and $7.0 billion on R&D. What is targeted R&D? What affect will it have on R&D spend?
- GlaxoSmithKline has said that the biggest threat facing the pharma industry is the growing pressure from payers around the world who demand drugs that make a real difference to patients and provide economic value to society. What is GlaxoSmithKline doing to address this threat? What is market-driven R&D?
Scope:
- Geographies: Asia; Brazil, Russia, India, and China (BRIC); Belarus; Kazakhstan; Commonwealth of Independent States (CIS); emerging markets; Europe; the Middle East; North America; Latin America; the United States; Western Europe.
- Big Pharma industry: Global ethical drug sales, ethical drug R&D expenditures, R&D spend as a percentage of total global ethical drug sales, industrialized R&D, pharmaceutical value curve, gross margins, restructuring, cost-cutting, large-volume mass-market brands, regulatory oversight, pricing and reimbursement, incremental cost-effectiveness ratio (ICER), quality-adjusted life year (QALY), inlicensing, bolt-on acquisitions, collaboration deals, joint ventures, tail products, return on investment.
- Business opportunities: Innovative brands, biosimilars, biologics, vaccines, established products, branded generics, emerging markets, generics strategies, commodity generics, technology shifts, diversification, geographic expansion, consumer healthcare, over-the-counter (OTC), access to early innovation, balancing risk, targeted R&D model, corporate venture financing, collaborations among Big Pharma companies, primary care, specialty pharma, pharma sales channels, value-added drugs, cultural change, therapeutic realignment, personalized medicine, orphan drugs, comparative effectiveness, targeted cancer therapies, prescription drug to OTC switches, blockbuster capable, personalized R&D, option-based deals, externalization, contract research organizations (CROs), academic superstar model, open access R&D, precompetitive collaborations, public-private partnerships.
- Exhibits: 9 data-rich tables and figures
Executive Summary
- Strategic Considerations
- Stakeholder Implications
Big Pharma’s Identity Crisis
R&D Spend
Pharma Industry at a Turning Point
- Technology Shift
- Therapeutic Realignment
- Focusing on Emerging Markets
- Regulatory and Reimbursement Oversight
- Value for Money Spent
Strategies That De-Emphasize R&D
- Consumer Healthcare Partnerships
- Generics and Branded-Generics Initiatives
Strengthening the R&D Core
Targeted R&D Model
Externalization of R&D
- GlaxoSmithKline
- Pfizer
Market-Driven R&D
Partnering Among Big Pharma Companies
Early Access to Innovation
- Academic Superstar Model
- Osmosis Inside Biotech Hubs
- Open-Access R&D
- Corporate Venture Financing
Outlook
About the Authors
- Abbott Laboratories
- Ablexis
- Affimed Therapeutics
- Aileron Therapeutics
- Akebia Therapeutics
- Albert Einstein College of Medicine
- Alios BioPharma
- Altheos
- Alzheimer’s Disease Neuroimaging Initiative
- Amazon
- Amgen
- Amgen Ventures
- Anaphore
- Anchor Therapeutics
- Apple
- Applied Genetic Technologies
- Aptuit
- Aquinox Pharmaceuticals
- Archimedes Pharma
- Archipelago to Proof of Concept in Medicine (Arch2POCM)
- Arginetix
- Asian Cancer Research Group (ACRG)
- Astellas Pharma
- Astellas Venture Management
- AstraZeneca
- Aureon Laboratories
- Aurobindo Pharma
- Aurospharma
- Avid Radiopharmaceuticals
- Avila Therapeutics
- Bayer
- Biocartis
- Biogen Idec New Ventures
- Biomarkers Consortium
- Boehringer Ingelheim
- Bristol-Myers Squibb
- C10 Pharma
- CalciMedica
- Calistoga Pharmaceuticals
- Catabasis Pharmaceuticals
- Cell Biosciences
- Cellerix
- Centers for Therapeutic Innovation (CTI)
- Cephalon
- CJSC Ofifen
- Columbia University Medical Center
- Constellation Pharmaceuticals
- Corridor Pharmaceuticals
- Daiichi Sankyo
- Diod Pharmaceutical
- Dr Reddy’s Laboratories
- East River Science Park
- Eli Lilly
- Enlight Biosciences
- Envoy Therapeutics
- Epizyme
- European Molecular Biology Laboratory
- Euthymics Bioscience
- Evolva
- f-star
- Fate Therapeutics
- Flexion Therapeutics
- FoldRx Pharmaceuticals
- FORMA Therapeutics
- Funxional Therapeutics
- Genentech
- Genetix Pharmaceuticals
- Genocea Biosciences
- Genzyme Ventures
- GlaxoSmithKline
- Gloucester Pharmaceuticals
- GlycoMimetics
- HemaQuest Pharmaceuticals
- Heptares Therapeutics
- Human Genome Sciences
- Hydra Biosciences
- IBM
- ICON
- Immune Targeting Systems
- Inotek Pharmaceuticals
- Intellikine
- International Structural Genomics Consortium (SGC)
- Intradigm
- JB Chemicals & Pharmaceuticals
- Johnson & Johnson
- Johnson & Johnson Development Corp
- Karolinska Institute
- Lilly Phenotypic Drug Discovery Initiative
- Lilly Ventures
- Logical Therapeutics
- Lux Biosciences
- MedImmune Ventures
- Memorial Sloan-Kettering Cancer Center
- Merck & Co.
- Merck KGaA
- Merck Serono Ventures
- Merck Sharpe & Dohme
- Merus Biopharmaceuticals
- Metabolex
- Molecular Partners
- Mount Sinai Hospital
- Nabriva Therapeutics
- National Health Service (NHS) (U.K.)
- National Institute for Health and Clinical Excellence (NICE) (U.K.)
- National Venture Capital Association
- Nereus Pharmaceuticals
- NeuroTherapeutics Pharma
- NEWMEDS consortium
- NKT Therapeutics
- Nodality
- Novartis
- Novartis Bioventures
- Novartis Korea Venture Fund
- Novartis Option Fund
- Novo
- Novo Growth Equity
- Novo Nordisk
- Novo Seeds
- Novo Ventures
- NYU Langone Medical Center
- Opsona Therapeutics
- Ophthotech
- Oxagen
- Parexel International
- Pfizer
- Pfizer Venture Investments
- PharmAbcine
- PhaseBio Pharmaceuticals
- Predictive Safety Testing Consortium
- PricewaterhouseCoopers
- Probiodrug
- ProCertus BioPharm
- Procter & Gamble (P&G)
- Pronota
- ProtAffin
- PTC Healthcare
- PTC Therapeutics
- Pulmatrix
- Reata Pharmaceuticals
- Receptos
- Rib-X Pharmaceuticals
- Roche
- Roche Molecular Systems
- Roche Venture Fund
- Rockefeller University Hospital
- Royal Free and University College Medical School
- Sage Bionetworks
- Sanofi
- SR One
- St. Jude Children’s Research Hospital
- Symetis
- Synosia Therapeutics
- Takeda Pharmaceutical
- Tarsa Therapeutics
- Tempero
- TetraLogic Pharmaceuticals
- Teva Pharmaceutical Industries
- Tokai Pharmaceuticals
- U.S. FDA
- University of California at San Francisco
- University of Oxford
- University of Toronto
- VaxInnate
- VentiRx Pharmaceuticals
- Viamet Pharmaceuticals
- ViiV Healthcare
- Virdante Pharmaceuticals
- Weill Cornell Medical College
- Xori
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