Is the pipeline getting thin?

RISING CLINICAL DEVELOPMENT costs, coupled with declining drug discovery success rates, are causing productivity levels in the global pharmaceutical industry to fall. The imminent patent expiry of several major blockbuster drugs and the related rise of cheaper generic alternatives are further exacerbating the situation. Despite this, the global pharmaceutical industry offers significant growth opportunities for companies that can develop new strategic business models for a changing market.
Estimated at USD 554 billion in 2004, the global pharmaceuticals market is forecast to register an annual growth rate of 8.2% from 2004 to 2011, reaching USD 967 billion. This forecast can only come true, however, if pharmaceutical companies are able to adapt to changes in the patient population, targeting diseases where there is an unmet medical need in order to maximise their revenue potential.
For example, an ageing global population will increase the need for ways to treat conditions such as macular degeneration and Alzheimer’s disease. Drugs that address rising multifactorial disorders such as cancer, as well as lifestyle-related disorders such as obesity, are also likely to experience strong revenue growth.
A broader scope
Moreover, as patient groups become more fragmented and diagnostic methods improve, the demand for personalised treatments based on the evidence of individual case histories is likely to increase. “It is essential for major pharmaceutical companies to move from the blockbuster model and adopt new strategies that cater to specific disease areas and populations,” notes Frost & Sullivan (http://healthcare.frost.com) healthcare analyst Phil Webster. “To grow in this new era of evidence-based personalised medicine, companies should generate a sustainable product pipeline characterised by improved productivity and diversity.”
Pharma companies need to replace their dependence on a limited number of highly lucrative drugs with a more comprehensive and diverse product portfolio. Innovative products that focus on areas of unmet medical need and cover a broad range of disease indications are likely to underpin a stronger, more sustainable product pipeline. Furthermore, companies need to examine possible reformulations and investigate new indications for existing ‘blockbuster’ drugs.
Marked to succeed
At the same time, the use of computer modelling and biomarker discovery to aid the discovery of promising drug candidates is likely to facilitate an enhanced understanding of the clinical development process, and thus help pharmaceutical companies to make better-informed investment decisions.
“Less investment will be lost through late stage drug candidate failures as more compounds succeed in the clinical development process,” explains Mr. Webster. “More novel techniques to identify toxic or ineffective drugs early in the development process, such as the use of biological models, bioinformatics and biomarkers, will drive down development costs, increase revenues and improve overall industry productivity.”
As large pharmaceutical companies try to enhance their drug development pipelines, mergers, acquisitions and licensing agreements for individual compounds are likely to gain appeal. Mergers and strategic collaborations to invest in existing leads are also likely to diffuse the cost of potential failures, thereby preventing the draining away of company resources.

The future is now

If you are interested in an overview and analysis of world clinical development pipelines in the pharmaceutical industry, send an e-mail to ‘Katja Feick – Corporate Communications’ at katja.feick@frost.com with the following information: full name, company name, title, contact phone number, e-mail. Upon receipt of this information, an overview will be e-mailed to you.
Frost & Sullivan, a global growth consulting company, has worked with clients to develop innovative strategies for more than 40 years. The company’s expertise combines growth consulting, growth partnership services and corporate management training.
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