Biotech segment: Moving ahead of pharma industry

The biotech industry has been truly outpacing the pharma industry. A bulk of new medications approved in 2004 originated in small biotech companies, says Dr Krishan Maggon

The year 2004 was a difficult year for the research-based pharmaceutical industry. Once again, high R&D costs with low productivity, looming patent expiry, patent challenges, high prices of new medicines and product injury litigation, drug withdrawals and tough new regulatory requirements for safer drugs hit the industry hard. The demand for new and better medicines will remain strong.

At present, only about one third of the over 35,000 human diseases have some treatment options available. The biotechnology industry outpaced the pharmaceutical industry. The increasing dependence of big pharma on small biotech was evident by the increasing number of licensing and R&D funding deals. A bulk of new medications approved in 2004 originated in small biotech companies.

The Food and Drug Administration (FDA) approved 118 new medicines in 2004, which included 38 new molecular entities seven biological and biotechnology products. The FDA was very active along with the European agency European Medicines Evaluation Agency (EMEA) in speeding approval of breakthrough medicines like Macugen for age-related macular degeneration, Avastin and Erbitux for cancer. If EMEA approvals are included, 17 new biotechnology drugs were introduced in 2004. On the other hand, patient safety and comfort was given priority by the black box warning for increased cardiovascular risks with Cox II inhibitors and antidepressants and suicidal behaviour in children. The FDA imposed the requirements for long term safety data for new coxibs and carcinogenicity data prior to phase III trials for PPAR agonists. Worldwide, around 6,500 to 7,000 new treatments were in development for various human diseases and the industry R&D expenses were near $70 billion.

Several companies spend over $five billion on R&D in 2004 for a portfolio of 150 projects with 100 in clinical development. In general, out of the NCE, only about 30 per cent are truly innovative, the rest are me-too NCEs. About 30-40 per cent of the projects of big pharma are licensed in from other sources. The share of the top ten global R&D companies in the innovative first in the class type of new molecular entities has steadily decreased over the past decade. It now takes 10-15 years to bring a product from discovery to markets at a cost of $1.5 billion.

The success rate has decreased over the years and out of a million compounds screened in highly automated computerised systems (HTS), only 250 advance to development candidates for additional testing. IMS data estimated the global pharmaceutical market at $550 billion, biotechnology products at $55 billion and generic drugs at $62 billion.

Biotechnology products or therapeutic proteins accounted for 10 percent of the global pharmaceutical market (14 per cent of US market) and the 15 top products listed in Tables 1 and 2 contributed 74 per cent sales of total biotech market. There were 197 approved biotech products, 100 under regulatory review and another 800 in advanced clinical trials for 200 diseases.

Several brands of EPO, Interferon, GCSF and insulin had sales of over billion dollars each in 2004. Since several companies market erythropoietins, interferon, insulins, granulocyte colony stimulating factor and human growth hormone under different brand names, these proteins rarely make bestsellers lists in commercial databases, unless taken together (Table 1).

Erythropoietins have been the best selling human medicine for the past three years and the only one with over $11 billion sales. Similarly interferons and insulins with over $6.8 billion and $5.6 billion sales in 2004 were the third and fourth best selling products after EPO and Lipitor (table 1).

Interferon alpha in combination with ribavarin for the treatment of hepatitis C was a commercial success. The top five best selling human medicines included three biotechnology drugs by sales in 2004.

The biotech industry had its once promising drugs failing in clinical trials and drug withdrawal by Biogen and Elan of Tysbari (natalizumab) for multiple sclerosis due to deaths of some patients due to a rare brain infection. The association of Roche with five of the top ten biotech products is a tribute to its success in acquiring Genentech, investment in biotechnology and its alliances with biotech companies.

Genentech market cap is now more than Wyeth, BMS or Schering Plough and doubled in the last 12 months based on positive news about its new cancer drugs Terceva in lung cancer and Avastin in colon cancer. Three humanised monoclonal antibodies have made the blockbuster list in Table 1 and will be joined by Synagis, Rebif, Avastin and Erbitux this year. The biologicals for cancer, rare and other life threatening diseases also rank as the most expansive treatment.

The average price of new cancer treatments and for rare diseases has increased from $20000-25000 range in the past to $100000-280000 per year of treatment. If two or three new drugs were to be combined for treatment of colon cancer like Eloxatin, Erbitux and Avastin, the yearly cost could easily reach 0.5-1 million dollars per patient.

The current regulatory requirements mandate extensive testing of all biological products even with small differences. Demonstrating that a biogeneric product is as safe and effective as the originators is a difficult task. The USA represents the major market for generics, in the case of biogenerics; Europe has taken the lead by establishing a legal framework for authorization of biogenerics. Sandoz generic human growth hormone received a positive opinion from the CPMP in June 2003 but was rejected by EMEA due to filing irregularities.

Amgen’s EPO patents in Europe expired in 2004. Numerous players are striving to dominate this market, including, among others, Amgen, J&J, Roche, Chugai, TKT, Genetics Institute, Kirin and Elanex. Teva, Sandoz, Stada, Cangene, Microbix and Gene Medix have generic versions of human growth hormone, erythropoietin and colony stimulating factor in development.

The blockbuster sales and high cost of biotechnology products, patent expiry of first generation products, biogeneric provide an attractive opportunity for established generic companies. Despite strong opposition from the biotechnology industry, regulatory authorities in USA/Europe are expected to establish approval pathways for biogenerics or follow on biologicals in the next few years.

References

Maggon K. The ten billion dollar molecule. Pharmaceutical Executive. 2003; 23: 60-68. www.pharmexec.com
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2004; 24: 60-70. www.pharmexec.com
Maggon K. The future of the research based pharmaceutical industry.
Express Pharma Pulse. January 29, 2004. www.expresspharmapulse.com
Biobusiness. Sales of recombinant drugs.
www.i-s-b.net/business/recombinant—f.htm
Maggon K. Rise of biologicals. Express Pharma Pulse. February 5, 2004. http://www.expresspharmapulse.com/20040205/editorial02.shtml
Maggon K. Best Selling Human Medicines 2002-2004.
Drug Discovery Today. June 2005 in Press.

The writer is pharma biotech R&D advisor. E-mail: maggonk@yahoo.com