The global market in statins, once the pharmaceutical industry’s lead blockbuster products, is predicted to decline by 40% in the next five years.

The forecast by GBI Research of a negative CAGR of 7.2% up to 2013 for the cholesterol-lowering drugs is based on prospects of generic erosion, weak pipelines and failing prescriber confidence.

The decline in the statins market shows that the shift of healthcare towards prevention and management of long-term conditions is not without pitfalls for the pharma industry.

Statins, which lower cholesterol levels by targeting an enzyme in the liver, have been hailed as ‘wonder drugs’ that could radically reduce the global incidence of cardiovascular events.

Routinely prescribed for ‘high-risk’ patients such as people with high blood pressure or diabetes, statins have also been linked to reduced risk of bowel cancer and reduced death rate from influenza.

However, their global market declined from $23.7 billion in 2004 to $20.5 billion in 2011 (a negative CAGR of 2.5%), due largely to patent expiry.

The report predicts a much steeper decline in the statins market over the next five years, for four reasons:

• Patent expiry – the generic share of the statins market is predicted to grow from 11% in 2011 to 34% in 2018.

• Austerity health budgets – spending on prevention is likely to be cut back.

• Weak product pipelines – the ‘me-too’ nature of most statins betrays a lack of potential for innovation.

• Increased use of alternative drugs.

Medical writer Ben Goldacre has argued that the marketing of statins in terms of relative risk reduction glossed over the low absolute risk reduction they offer, and left the products open to a backlash over side-effects.

Statins are associated with both symptomatic side-effects (including digestive disorders) and potential ones (including increased risk of type 2 diabetes).

As the overall statins market declines, the report says, individual products will struggle to gain or keep a place within it: “The global statins market has reached the competitive stage of its lifecycle, with many branded and generic drugs competing with each other on price.”

Novartis expects its pharmaceutical division to have at least 14 ‘blockbuster’ products within the next five years.

The Group claims to lead the industry with the number of new approvals it has had globally since 2007 and expects the release of new products to be equally successful.

Joseph Jimenez, CEO of Novartis, said its “leading pipeline... positions us well for continued future growth.”

So far this year the company has received nine approvals or positive recommendations. It aims to build on this within the next 13 to 24 months with a further 11 pivotal trials, 11 filings and 10 regulatory decisions with various health authorities.

In addition, Novartis claims its pipeline boasts 139 projects in clinical development, including more than 73 New Molecular Entities across a multitude of disease areas.

It has highlighted compounds AIN457 from its oncology pipeline and LCZ696 and RLX030 for heart failure to create “significant newsflow” in the future. Also, Novartis claims compound QVA149 has the potential to become the “new standard of care for COPD”.

But within its oncology business is where the greatest growth is expected within the next five years. Novartis points towards its robust late-stage pipeline, which includes 13 new chemical entities and 19 new indications, to combat the upcoming patent expiry on Glivec.

These late-stage products are expected to contribute more than $1bn in sales by 2017, with Afinitor predicted to earn revenues of around $2bn in sales in advanced breast cancer alone in the same period.

As the era of blockbuster drugs draws to an end, the pharmaceutical industry is looking to fresh markets and new models of drug development while facing legislative changes as well as economic threats. Sarah Hanson looks at what lies ahead for the industry in 2012.

2012 looks set to be the year when pharmaceutical companies face their scariest outlook: peering over the brink of a patent cliff. Major pharmaceutical companies are realising that they can no longer rely on a broken business model that is dependent on blockbuster drugs, and are looking for alternative ways to maintain profits and cover the loss of revenues due to patent expiry. This throws up a host of commercial, legal and regulatory challenges.

Entering new markets
Major structural shifts are taking place in R&D and how intellectual property is financed, meaning that the life sciences sector is providing a rare bright spot in the pervading economic gloom. Over the last decade, there has been almost US$700bn worth of deals in the pharmaceutical sector, which remains one of the prime industries in terms of M&A activity. Now we are likely to be at the start of a fresh cycle of M&A activity in the industry, with a particular focus on emerging markets (BRIC, South-East Europe and Turkey) where the portfolios of many pharma companies remain weak.

Japan has enjoyed a particularly busy year in terms of pharmaceutical M&A: across all sectors, cross-border acquisitions by Japanese companies nearly tripled relative to 2010. Liquidity among Japanese pharma companies remains strong, as does demand for prescription medicines from an ageing population, enabling Japanese companies to enter into deals at a time of intense competition for intellectual property in the industry. In 2011 Takeda, the largest Japanese pharmaceutical company, completed its €9.6bn (debt-free, cash-free) acquisition of Swiss drug company Nycomed. On the back of this transformative deal, we expect the industry to undertake more M&A activity in Japan in 2012. Factors such as the economic climate, demography and the state of R&D pipelines should see more Asian acquisitions of European patented drugs.

Emerging markets also continue to receive significant life science private equity (PE) investment, with China and India gaining the most. Historically, the risk involved in R&D has led PE firms to avoid large pharma companies and the biopharma industry in general. However, recently some small deals have linked PE and venture capital with biotechnology, and we are seeing investment in a number of diverse projects in different life science areas. This growing trend is already playing out in Europe – according to the European Private Equity and Venture Capital Association, the total investment in life sciences in Europe increased from €3.4bn in 2009 to €5.7bn in 2010, while the total venture investment in life sciences accounted for 30% of the total investment in Europe in 2010. Such funding is likely to increase as the cash-rich life sciences sector is seen to be ’recession proof’.

A helping hand for R&D
Pharmaceutical companies looking to weather the storm of patent expiry on key products are also looking to diversify their pipelines and develop replacement products. With most companies struggling to make a return on high R&D costs pumped into prospective pipelines, additional support is vital.

In the UK, the Government hopes its new Patent Box legislation will give a welcome boost to research and development. When it comes into force in April 2013, the Patent Box will reduce UK corporation tax on patent profits to 10%, encouraging R&D activity and providing incentives for companies to retain intellectual property in the UK. This will make the UK competitive with other European countries such as Ireland, Switzerland and Hungary, which have had similar systems in place for years. While the existing system of R&D tax credits has given some relief for R&D expenditure, there has until now been no similar incentive for businesses to retain their IP in the UK once it has been created.

Legislation such as Supplementary Protection Certificates (SPCs) will also play a significant role in assisting companies facing the expiry of major patent portfolios and provide more protection for companies investing heavily in R&D. EU patent offices have long been able to grant SPCs where there has been a large gap for a company between filing a patent application and getting authorisation to market a drug. However, legal issues surround how SPCs apply to medicines that contain more than one active ingredient. In a landmark case in November 2011, the Court of Justice of the EU said that there is no reason why an SPC may not be granted for a single active ingredient that is specified in a patent where the marketing authorisation also contains other active ingredients. This (and other recent cases regarding SPCs) is likely to have further ramifications in battles between generic and pharmaceutical companies into 2012.

New legislation: help or hindrance?
New legislation coming into force will also have an impact on the pharma industry in the year ahead. Whether the expected IP and regulatory legislation will help or hinder pharmaceutical companies in this challenging climate remains to be seen.

A number of significant regulatory issues are being debated in Europe. A Directive is being developed to improve the EU pharmacovigilance system, simplify regulatory decision-making, provide a legal basis for more proactive pharmacovigilance by both regulatory authorities and the industry, and involve patients more closely in reporting adverse drug reactions. Though it was adopted in 2010, compliance is not compulsory until 2012. The legislation will bring about the most profound change to the legal framework since 1995, when the EMA was set up. The European Commission, EMA and Member States have been carrying out work to implement the legislation, but companies still lack clarity on many of the new obligations. It is likely that the new requirements will be introduced in phases beyond the original July 2012 implementation deadline.

At a time when social networking continues to grow and become part of the daily routine of many working lives, pharmacovigilance is particularly important. The pharma industry must recognise that social networking and reporting are taking on a rapidly-increasing significance in the marketing, discussion and exchange of information concerning drugs. There are pharmacovigilance obligations at all stages of the life cycle of a medicine and the process of drug monitoring; the pharmacovigilance system will need to take account of this, not least because the increasing use of social media also poses interesting questions around geographical legal jurisdiction.

Discussions continue about the introduction of a Directive that would require substantial changes to the regulation of clinical trials. In March 2010, the Chancellor of the Exchequer announced that the Government would review the UK’s implementation of the Clinical Trials Directive in order to reduce perceived gold-plating and to increase the proportionality of the system. The MHRA has stated that it intends to wait for the outcome of the European negotiations before reviewing and amending the UK legislation.
2012 may also herald significant changes in the way drugs are marketed. EFPIA in particular will be under the spotlight this year as the implications of amendments to the advertising of medicines become apparent. Currently, the advertisement for a medicine must be in line with the product’s Summary of Product Characteristics (SmPC). Hence off-label promotion is not allowed. EFPIA has approved an amended Code of Practice on the promotion of prescription-only medicines to, and interactions with, healthcare professionals.

The changes to the Code make allowance, for example, for the provision of a limited number of samples to healthcare professionals for a limited time (Art. 16).  Previously, following EU Directive 2001/83/CE, the provision of samples was not allowed (due to concern over inducement); but in accordance with national and/or EU laws and regulations, a limited number of medical samples may now be supplied on an exceptional basis and for a limited period. A reasonable interpretation of this provision is that each health professional should receive, per year, not more than four medical samples of a particular medicine that he/she is qualified to prescribe for two years after he/she first requests samples of that particular medicine.

A landmark year
Last year saw significant developments for the pharma industry – and for lawyers – which look set to continue through 2012. With deals such as Takeda’s acquisition of Nycomed in 2011, we expect the trend of commercial and economic power shifting eastward to continue. Increased diversification, coupled with regulatory hurdles, will set a challenge for the pharma industry. Whether companies will survive and thrive on this challenge remains to be seen as the year unfolds, but the structural upheaval felt as a result of life beyond the patent cliff is already being witnessed.

Sarah Hanson is a partner at CMS Cameron McKenna: the UK branch of CMS, a leading European provider of legal and tax advice.

As the industry adjusts to life after the patent cliff, Maxine Vaccine suggests it may be time to abandon the ‘blockbuster’ mentality and look to a new model of integrated care.

Sometimes the pharmaceutical industry needs a voice. And – regardless of rhyming slang – we could do worse than the ABPI’s Stephen Whitehead. His speech to the trade association’s annual conference this week fired a resounding shot over the bows of the austerity-fixated NHS.

In a week when we learned that the coalition’s austerity policies have plunged the UK economy back into recession, Whitehead commented that the NHS is altogether too smug about its ability to save £3 billion per year by switching wholesale to generics. That’s all well and good, he said, but what happens to that money? If it simply disappears from the NHS budget instead of being reinvested in innovative new treatments, the NHS will be a snake eating its own tail – with the pharmaceutical industry frozen out of the austerity circle.

Then he delivered the payoff: “Generic medicines do save us money, but it is innovation that saves lives. We have to be careful not to focus on cost saving when we should be focusing on patients. The effective use of innovative new medicines can often reduce costs elsewhere in the healthcare system by reducing the need for expensive primary and secondary care.

“In fact, with diseases like Alzheimer’s placing an increasing burden on NHS resources, the development of new medicines by the pharmaceutical industry will be pivotal in not only fighting disease but ensuring the financial burden they impose doesn’t cripple the healthcare system.”

This statement challenges the NHS and other health systems to match the industry’s commitment to beating the recession through innovative drug development – echoing the recent statements by GSK’s Andrew Witty and Lilly’s John Lechleiter that only robust pipeline development, not austerity measures, can ensure a strong future for their companies.

Whitehead called for more effective partnership between the industry and the NHS to ensure that innovative medicines are seen as part of the solution for a health system struggling with increasing demand and shrinking budgets.

In the same week, the BMJ published an article covering new research that suggests the clinical case for widespread antidepressant use has been overstated by suppliers and clinicians alike. Researchers at Canada’s McMaster University argue that while the therapeutic benefits of long-term antidepressant use are slight, the cumulative evidence of systemic damage is conclusive. Long-term side-effects include increased risk of stroke in the elderly, sexual dysfunction and digestive problems such as IBS.

Prozac was the blockbuster drug par excellence: a ‘happy pill’ promoted as a universal panacea for depression, and prescribed to millions. Side-effects were routinely dismissed as a small price to pay for the correction of a ‘chemical imbalance’ that could not be treated in any other way.

Except that wasn’t true. As another BMJ article explained in 2010, SSRIs do not restore biochemical normality: they create a drug-induced state, comparable to being mildly stoned, in which the symptoms of depression are masked. These days, few doctors persist in the delusion that any drug is an adequate monotherapy for a complex and chronic mental health condition. Medication can be useful for crisis management, but improvement of the patient’s systemic health through behavioural changes, lifestyle management and other medical interventions is the only adequate long-term strategy. The evidence that antidepressants can have lasting and serious side-effects strengthens the case for treating the patient, not the symptoms.

Whitehead’s speech and the debunking of the Prozac myth are two sides of the same coin. The era of the blockbuster drug is over. Innovation is not about seeking the ‘magic bullet’ that treats as many patients as possible. It’s about working with healthcare providers to build complex, flexible solutions for the patient – who is viewed not just as a composite of symptoms but as a living system that changes profoundly over the limited but unique interval we call a human lifetime.

Maxine’s views are not necessarily those of Pharmaceutical Field.

The FDA has delayed making a decision on whether to approve the use of Eliquis (apixaban) for the prevention of stroke and systemic embolism in patients with atrial fibrillation.

Further data supplied by Pfizer and Bristol-Myers Squibb on patient trials after the original application will take an additional three months to review, the Agency has said.

Pfizer and BMS said in a joint statement they will continue to work closely with FDA during the review period.

Eliquis is not yet approved in any country for the prevention of stroke and systemic embolism in patients with atrial fibrillation.

It faces competition from Boehringer’s Pradaxa (dabigatran) and J&J’s Xarelto (rivaroxaban) for the indication.

Industry analysts predict all three have the potential to become ‘blockbuster’ brands as doctors and patients search for an alternative to warfarin.

Eliquis was approved in May 2011 by the European Union as a treatment option for the prevention of blood clots in patients who have undergone hip or knee replacement surgery.

BernsteinResearch analyst Dr Timothy Anderson forecasts total sales of Eliquis to reach $395 million this year, rising to $2.5 billion in 2015 and $3.7 billion by 2020.

Novartis’ Galvus (vildagliptin) has been approved for use by the European Commission for patients with type 2 diabetes who cannot take metformin, the current standard treatment.

The approval is based on data from clinical trials which assessed the drug as a monotherapy and found the treatment delivered improvements in glycaemic control, was generally well-tolerated and associated with a low risk of hypoglycaemia.

David Epstein, Head of Novartis, expects the brand to develop into a “blockbuster, we believe, quite soon”.

Galvus is already approved in the EU as an add-on treatment to metformin, sulphonylureas and thiazolidinediones. Towards the end of 2011, it received approval for patients with type 2 diabetes and moderate or severe renal impairment.

Last year it recorded sales of $677 million, an impressive increase of 66%, despite not being available in the USA. But it is the latest approval which has caused excitement at Novartis. The company estimates that more than 47 million Europeans have type 2 diabetes. It estimates this total will rise to 57 million people by 2030, with a quarter of these people unable to take metformin due to intolerance or contraindications.

Merck (MSD outside the US) topped the job-cutting charts in 2011 as the industry witnessed another year of workforce reductions after a series of cost-cutting measures from a number of pharma giants.

Merck revealed plans in July to reduce its workforce by 12,000 to 13,000 following its merger in 2009 and to realign expenses with the expected reduction in revenue when Singulair loses its exclusivity in August, in an attempt to save $1.5billion.

Pfizer followed Merck after it after cut thousands of jobs after planning to close R&D plants in Sandwich, Kent, at a cost of around 2,400 jobs and in Connecticut accounting for a further 1,100 positions. An additional 500 employees in Germany and 220 in Spain have also reportedly been axed.

The world’s largest research-based pharma company aims to cut its R&D budget by $1.5 billion after realigning its investigational priorities and following the loss of exclusivity on its blockbuster drug Lipitor.

Novartis came third when wielding the axe after it revealed plans to reduce its workforce by 2,000 in an attempt to save $200 million a year. Workers were relieved of their duties at sites across Europe and reportedly in New Jersey. However, the company did invest somewhere in the region of $600 on a new R&D facility in Cambridge, Massachusetts.

Abbott Laboratories followed in fourth position after it revealed at the start of last year that it would tackle the challenging regulatory environment by cutting 1,900 employees, or 6% of its staff. Further upheaval is also expected in 2012 when the company completes its breakup of the company into one focused pharmaceutical business and one solely for medical products.

AstraZeneca completed the top-five after it shed more than 1,500 positions in the US and Europe last year as it braced itself for the expiration of patents on brands on Seroquel by reducing its American sales team by nearly a quarter. The London-based company did however increase its presence in the emerging Chinese market.

Teva Pharmaceuticals, Sanofi, Johnson & Johnson, Eisai and Bayer Healthcare completed the top-ten companies for job losses as the industry struggled to compensate for major brand patent expiries, a challenging healthcare environment and a need to align expenses with growth targets.

Sanofi is expected to overthrow Pfizer’s nine-year reign as the world’s biggest drug maker, according to new research.

The French pharmaceutical company is expected to retain the top spot until at least 2016, with Pfizer falling to third place behind Novartis due to the loss of Lipitor’s US patent protection, according to EvaluatePharma (see figure one).

The report says that Sanofi’s numerous acquisitions over the last decade have contributed largely to the company’s success, gaining $20 billion after it bought out Genzyme.

Sanofi’s mergers over the last decade have contributed a great deal to its current position, starting with its $30 billion deal with Synthélabo in 1999.

It is expected that the company will retain its top position until at least 2016, mainly thanks to sales of enzyme replacement therapies through its acquisition of Genzyme.

Also, the company’s addition of Cerezyme and Myozyme blockbuster drugs will help fill the gap left by Lovenox, Taxotere, and Plavix, which loses US patent protection in 2012.

Pfizer’s $68 billion buyout of Wyeth in 2009 helped fill the gap left by Lipitor, but it will be difficult to replace the drug’s global sales figure of $13.4 billion seen in 2008, which set the record as the biggest selling medicine.

Following its loss of US patent protection in November 2011, Lipitor sales are estimated to shrink to $2 billion by 2016.

However, pipeline products such as rheumatoid arthritis (RA) pills tofacitinib and Eliquis are expected to boost Pfizer’s drug sales after 2016, which will help retain the company’s position in the top-five pharmaceutical companies.

Merck’s four-year outlook is seen as bleak despite its takeover of Schering-Plough for $41 billion in 2009, with only 1% annual sales growth predicted, conceding to European companies GlaxoSmithKline and Roche to overtake the company.

EvaluatePharma predicts that Johnson & Johnson’s recent pipeline successes will benefit the company in the coming years, despite its drugs arm being substantially smaller than the five biggest pharma companies.

It is thought that Novartis will be Sanofi’s closest competition over the next few years, with strong sales growth from Gilenya and Tasigna due to Diovan’s loss of patent protection next year.

Figure 1:

Generic versions of some of the world’s most popular medicines are set to enter the market and heavily reduce the cost of drugs when several ‘blockbuster’ brands come off patent, a new report says.

EvaluatePharma’s World Preview 2016 “Beyond the Patent Cliff” notes that seven of the world’s 20 best-selling drugs will lose patent protection within the next 14 months, including the top-two: Lipitor and Plavix.

Anthony Raeside, Head of Research, EvaluatePharma, says $54bn of sales will be lost to cheaper generics, with 2011 and 2012 “forecast to be the worst years” for pharma companies.

Between now and 2016, manufacturers of blockbuster brands will lose around $225bn in global sales, the report reveals.

Generic alternatives will result in sales dropping for more expensive branded drugs and slash the cost of medicines to patients and payers.

Copycat products typically cost anywhere between 20% and 80% less than brand names. Although only one generic version is permitted to be sold for the first six months after a drug has lost its patent protection, several other generic options often enter the market after this period.

As a result, blockbuster drugs will lose 90% of their revenue within two years, although Ben Weintraub, a Research Director at Wolters Kluwer Pharma Solutions, says it’s not uncommon for this to happen within as little as 12 months.

But pharma is aiming to combat the lost billions in revenue by increasing prices towards the end of a drug’s patent. Companies have also organised contracts with generic manufacturers for ‘authorised generics’ which entitle them to a share of future sales. Other tactics include reducing the number of jobs, merging with other companies and stabilising future sales by adding more sales representatives in emerging markets.

According to the Generic Pharmaceutical Association, generics saved the US healthcare system more than $824 billion between 2000 and 2009, and now save about $1 billion every three days.

With ‘blockbuster’ patents expiring and the branded drugs market slowing Victoria Buyer reveals the special relationship set to reinvigorate pharma’s winning formulae.

In 2011 the brand is king. In the words of Amazon founder and retail billionaire Jeff Bezos: “A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.” Put in a pharma context, “doing the hard things” translates into innovation – developing a product that meets previously unmet needs, or doing it better than competitors. But as the proportion of unchartered territory in the pharma world dwindles, sustaining innovation will demand lateral thinking, creativity and, a fresh approach to collaboration.

Big pharma relies on the ability to develop a succession of original solutions to the world’s physiological ills and quickly establish brand loyalty before patents run out. Evidence has shown this approach pays and blockbusters in the drug stakes, Pfizer’s cholesterol drug Lipitor and the anti-clotting medication Plavix from sanofi aventis, both generated collective sales of more than £13 billion.

But 2011’s ‘patent cliff’ is fast approaching as some of the biggest brands come off patent and generic alternatives waiting in the wings will enter the market. With Lipitor’s patent due to expire in June this year, with a looming predicted loss of $10 billion per year and Plavix following close behind in 2011, the two medication mega-brands are challenged to go back to the drawing board and come up with the next big thing to sustain profits, share values and brand equity.

Changing times

For now, branded drugs remain on top, but trend-watchers agree it’s unlikely to last. Datamonitor reported in January this year that growth in the UK branded drugs market would slow to just 1.3% between now and 2015, in contrast with a 7.1% CAGR between ’03 and ’09. Datamonitor analyst Simon King hit the nail on the head: “The difficulty in developing new products, particularly those that can generate sufficient sales to compensate for blockbuster expiries, has compounded this problem [of patent expiry].”

The declining cost: value ratio associated with developing new drugs is evident, with the world’s big drug brands reducing investment in R&D – highlighted by Pfizer’s announcement to close its R&D facility in Sandwich. To some extent, pharma’s success is also the cause of the current challenge. In a crowded area of the market where choice abounds, regulators can crack down on new and ‘popular’ drugs’ side effects, safe in the knowledge that prescribers have an alternative. Pharma has successfully mined the lucrative ‘easy wins’ in new product development (NPD) – those drugs designed for broad use to treat common, less life-threatening conditions, but arguably more susceptible to recalls. In contrast, ‘niche’ drugs, which are prescribed to treat less common and/or more serious conditions, come with specific restrictions on their use.

This puts in place greater control and arguably meets a more critical medical need, making recalls less likely. As a result of the rising cost of innovation in the competitive mainstream market and a higher risk of recall with blockbuster drugs, the old adage ‘speculate to accumulate’ is becoming less appealing to the executive board.

The need for a niche

Much as in the FMCG world, a bespoke approach will rule in pharma in the coming years. Specials are enjoying a steady increase in sales volume, a trend set to continue as the ageing population grows. Commonly, swallowing difficulties, which are widespread among the elderly, are the reason behind patients’ need for specials. With the population living longer on average, thanks to the sophistication of drugs at our disposal, the specials market is one to watch. Interestingly, the success of mainstream pharma is ensuring the longevity of its unlicensed ‘little sister’ sector.

But as the population’s lifespan grows, how can the pharma industry secure its own longevity? One solution is to form development partnerships. Targeted collaboration with other links in the supply chain such as specials manufacturers to develop a niche offering will help boost pharma’s financial health twofold; put simply, it’s a way of making more and spending less.

Why reinvent the wheel?

With the R&D investment strangling returns in some therapeutic areas such as cardiology, which requires extensive clinical trials, developing a brand new drug independently will become less and less financially viable. However, reformulating existing drugs to change the delivery system, even before the patent elapses, offers pharma firms an opportunity to innovate without reinventing the wheel. It’s a trend that has proven both lucrative and effective by increasing compliance, such as with the development of nicotine patches as opposed to gum or tablets.

The specials industry is built on taking clinically effective branded products and ‘adjusting’ the format or formulation for patients for whom ‘one size fits all’ doesn’t work. While much of specials manufacturing is bespoke, there are clear trends that mainstream pharma companies could capitalise on. For instance, Quantum Pharmaceutical receives an average of 32 requests per month for Lipitor Oral suspension Atorvastatin, a demand that could be satisfied by pharma and specials manufacturers working in partnership. Clearly, demand for unlicensed or niche medicines is driven first and foremost by a clinical need diagnosed by an approved medical practitioner. However, patient choice also plays a role as compliance becomes more and more crucial.

Sharing risk and reward

Even reformulating a branded product to create a liquid equivalent incurs a heavy R&D cost. But pharma manufacturers have the option of collaborating with a specials manufacturer or supplier who is already familiar with the process. This would make R&D more economical and increase speed to market, and with the prospect of a commercial incentive such as an exclusive supplier agreement in return. In essence, the opportunity exists for a specials manufacturer to reformulate a licensed product on behalf of the brand owner, before passing it back to the brand to extend its licence.

Cutting the cost of creativity

In the past few years, exclusivity has been the order of the day for pharma companies looking to distribute their products. In 2007, Pfizer opted to supply its products only via Unichem, creating a ripple of discontent among customers who were concerned about the risk of product shortages and the threat of monopolistic price hikes.

Although considered anti-competitive by many, the perks for Pfizer were clear; major savings on distribution and export costs by dealing with a single wholesaler, a reduction in re-wholesaling that could dilute standards of service and brand value. Above all, the promise of a one-stop shop offering customers seamless service, easy ordering and traceability.

Well connected specials suppliers like Quantum Pharmaceutical offer an equally attractive proposition for manufacturers looking to simplify their supply chain without impacting accessibility. Partnering with unlicensed medicine manufacturers is an as-yet untapped opportunity for pharma to take advantage of long standing loyalty from pharmacists and ensure a personal, trackable and single source of supply.

Fringe benefits

There are few parallels to be found between pharma and the ailing public sector, but the impetus to save is common to both. With 11 out of 43 branded pharma companies predicted to experience negative growth in the next four years, the motivation to trim the fat is clear. And for pharma and the public sector alike, sticking to what they do best and outsourcing the rest is a proven formula for increased profitability.

In the pharma context, compounding products in small quantities is both costly – in terms of maintaining the required aseptic facilities – and time consuming, be it for the purpose of clinical trial activity, or in order to change a formulation for improved efficacy when gaining licence to use a patented product off-label. Specials suppliers however, are designed specifically to small batches of product, and so offer pharma companies a cost-effective alternative to doing this all in-house.

A winning formula

The NPD cycle is a roller coaster ride for the pharma industry. But gone are the days when lows were automatically followed by highs. Pfizer and Roche each have two products in the top-sellers leader board, but how long can the same formula continue to create strong returns?

Continued innovation is only sustainable if brands are willing to diversify and establish development partners to add value and gain every drop of success from each innovation. Rather than being on the outside looking in, the unlicensed medicine industry is an untapped asset for pharma as it adapts to the new NPD agenda. Strategic collaboration is the route to creating tomorrow’s blockbuster drug and securing brands’ continued success.

Victoria Buyer is the Commercial Director for Quantum Pharmaceutical, a UK-based firm supplying pharmacies, chemists, dispensing doctors and hospitals with tailor-made medicines to meet individual needs.