The pharmaceutical industry is evolving to respond to its well-documented challenges, with an increase in outsourced activity and a greater focus on early phase research.
The travails of the major pharmaceutical companies over the last few years have been well documented; falling numbers of new drugs, mergers, site closures and hundreds of thousands of job losses suggest an industry in steep decline. However, this is not an industry that has been overcome by technological superiority, such as when sail gave way to steam. Nor is it the case that the customer base has disappeared; there are still millions of patients suffering as yet untreatable diseases, and an ageing population that will increasingly require medication for cancer, cardiovascular disease, arthritis and so on. What we see is an industry coming to terms with a changing regulatory landscape, where proving a new medicine is safe and efficacious is no longer enough; new candidates must now be safe, efficacious and ‘superior’ to existing treatments.
A paucity of well-characterised new targets to address and an increasing cost of development is magnified by the risk of exploring novel targets, and shareholders accustomed to high dividends. Under these pressures Big Pharma is undergoing a painful evolution, moving from competition to collaboration, from one-size-fits-all to more tailored approaches, and a longer-term view of basic research.
Big Pharma Responds
The initial response from Big Pharma to patent expirations and declining research output has been a series of mergers and acquisitions. While this perhaps provided a temporary uplift to their late-stage product pipeline and revenues, it is not clear that the overhead of merging companies and the impact on productivity provides a long-term benefit or solution. In addition, the acquisition of smaller companies may actually eliminate some of the more creative and innovative organisations. More recently we have seen a further series of costcutting measures by Big Pharma with site closures and redundancies; it has been estimated that the major pharmaceutical companies have cut nearly 300,000 jobs in the last decade (1).
One should not underestimate the personal trauma to individuals caused by redundancies, but one potential benefit is that many of these well trained and highly qualified scientists are moving into contract research organisations (CROs), small start-ups and academic groups. These individuals provide a wealth of experience that can only enhance their new employers.
It was hoped that the closure of the pharma sites at GSK, Merck, AstraZeneca and Pfizer might lead to spin out companies, but to date this has had only limited success. A regular comment is that the environment in Big Pharma does not engender an entrepreneurial spirit. In the UK new start-ups are usually based on providing services, such as XenoGesis (DMPK), BAST Inc (model-based drug development), Genios (clinical research), Cangenix (biophysical methods including X-ray), and Selcia (a CRO that has also developed a proprietary fragment screening methodology). There is little evidence for new drug discovery efforts, potentially highlighting the difficulties in funding exploratory drug discovery. The exception is Convergence, a small company formed as a spin-out from GSK, where the focus is the treatment of chronic pain by targeting ion channels.
In addition to layoffs, large pharmaceutical companies have tried to improve internal productivity by implementing business management strategies that have been successful in manufacturing. Analysis of the drug discovery process has in a number of cases led to the fragmented approach of independent hit identification, lead identification and lead optimisation teams, with the performance of each team assessed by specific and easily measured metrics. The problem is that they don’t have ownership of the real metric, which is to find a drug, and there is little evidence that this approach has actually increased the number of drugs discovered. It could be argued that compartmentalising roles leads to a loss of passion in discovery, with scientists feeling like merely a cog within a machine. This sentiment is compounded by the move towards marketing drugs as consumer products.
By contrast, small startups don’t have the internal resources to support all the aspects of a drug discovery programme and have to outsource many key components, potentially leading to time delays and inefficiencies. It does appear that there is a ‘sweet spot’ where a research group of 300-400 people has the capacity to handle most of the tasks involved in a drug discovery project, while at the same time maintain passion, ownership and responsibility for the whole process. This needs to link to a rewards programme that recognises that real success can only be judged 10 years down the line when the drug has finally been marketed. Another benefit of the smaller site is the socalled ‘Medici Effect’, which suggests that innovation and creativity is best fostered in an environment in which people of different disciplines can interact in a regular and informal manner (2).
One of the other consequences of the ‘industrialisation’ of the drug discovery process is that in order to meet the metrics, assays are chosen for capacity, reliability and throughput. This reductionist approach from whole animal, to organs, to recombinant protein assays certainly increases capacity; however, it may be inadequate for the study of more complex diseases. Diseases that do not have a welldefined single molecular target, such as psychiatric disorders, then become much less attractive, and it is notable that a number of companies have reduced their commitment to diseases of the central nervous system.
The pre-existing CROs have also expanded their operations by employing people from the closure of Big Pharma sites. Many now offer end-to-end services for drug discovery, pharmaceutical and clinical development. I’ve discussed with several of the larger CROs the possibility of them starting their own internal drug discovery efforts, but while the potential rewards are attractive the risk is deemed too high for them to undertake on their own. Almac have initiated their own discovery arm aligned to their biomarker efforts, partly funded by a Northern Ireland Regional Development Fund.
Whilst mergers and licensing may have a positive impact on latestage efforts, the real challenge has been to find means to support early stage drug discovery research. Grant funding agencies such as the Wellcome Trust have programmes designed “to facilitate early-stage small-molecule drug discovery. The awards help applicants with a potential drug target or new chemistry embark on a programme of compound discovery and/or lead optimisation”. In addition, there are a number of disease-specific charities, such as the Alzheimer’s Drug Discovery Foundation and Cancer Research UK. There is also increasing support for neglected and tropical diseases that afflict many of the poorest countries. However, there is still a significant funding gap between the initial idea and clinical candidate, and the long timeline between discovery and marketplace is unattractive to most short-term investors.
One strategy followed by a number of the major pharmaceutical companies is to conduct more research outside the company, taking advantage of the innovative science being carried out in many academic labs. However, a major concern regarding the in licensing of compounds from startups and academic labs is the high rate of attrition with this approach. While hard numbers are difficult to come by recent articles have underlined the issue. A blog entry by Bruce Roth suggested that 50 per cent of published academic studies cannot be repeated, while an analysis by Bayer found that only in around 20-25 per cent of the projects were the relevant published data completely supported by in-house findings (3,4). This perhaps highlights a fundamental difference between drug discovery and academic research; in drug discovery if you don’t get a molecule to market you have essentially failed, while in the academic arena success is judged by the number of publications, citations and so on. Perhaps the influx of ex-pharma personnel will improve the critical analysis of possible novel drug targets; as it stands, lack of efficacy in the clinic remains the major cause for attrition in drug development.
While having more expertise in small start-ups, academic labs and CROs is a real bonus in the short-term, there is a potential downside to this fragmentation. Scientists used to be rapidly exposed to all aspects of drug discovery in what was regarded a seamless process from basic research to development. With the fragmentation of the process, outsourced drug metabolism and pharmacokinetics, and the use of CROs for screens, ADMET and so on, do people coming into the industry get the right sort of training? The separation of the different tasks perhaps makes managing and measuring metrics easier in a large organisation, undoubtedly driven by process analysis, but do we end up with a work force that lacks an understanding of the overall process? Informal discussions perusing the latest set of results that used to take place over coffee seem to have been replaced by late-night teleconferences that only selected scientists might attend, and we are starting to see scientists locked into a specific phase of drug discovery.
The Ripple Effect
The consequences of these changes are also being felt outside the pharmaceutical industry; in IT support we are seeing major changes. Start-ups and academics often don’t have traditional IT infrastructures and require simpler turnkey solutions running in consumer hardware. Rather than the monolithic installations in Big Pharma, there is a move towards web-based and cloud computing technologies, where the scientist can access all the relevant information and collaborate with others on desktop, laptop, tablet, smartphone with little more than a web browser. Companies like Dotmatics have been leading the way with simple platform agnostic tools. “As discovery research within the pharmaceutical industry becomes less centered upon Big Pharma and concentrates in small organisations such as startups, CROs and universities, the IT needs of the industry are similarly changing,” commented Stephen Gallagher, President and CEO of Dotmatics. “The conventional emphasis upon heavily supported, company-specific IT infrastructures is making way for a flexible, agile model which is in tune with the collaborative nature of modern drug discovery. Web-based systems that collate data from disparate sources, are platform independent, and have low maintenance requirements are increasingly being adopted by those wishing to adapt to this new environment.”
We are also seeing the emergence of innovative informal collaboration tools. A recent example is Open Drug Discovery Teams (ODDT), which provides a flipboard-style interface to collated information primarily regarding research into cures for rare and neglected diseases, allowing scientists to exchange or highlight information in an open framework (see Figure 1). The smaller organisations also embrace open-source tools such as KNIME for integration of computational tools into their workflow, and most of the major scientific software vendors now provide KNIME nodes.
The publishing industry is also feeling the consequences of these changes, as access to the existing major journals becomes too expensive for smaller companies. Moreover, now that more research is being publicly funded, there is push for more easily accessible content. Sir Mark Walport, director of the Wellcome Trust, said that his organisation is in the final stages of launching a high-calibre, free-to-view scientific journal called eLife, in collaboration with the Max Planck Gesellschaft and the Howard Hughes Medical Institute.
Changes in the pharma landscape are being felt elsewhere; a number of universities are now offering fee-for-service deals for access to expensive scientific instruments, and compound suppliers report increased interest in fragments presumably driven by smaller organisations who don’t have access to high-throughput screening.
There are perhaps two main paths for Big Pharma to follow; one would see a move towards managed healthcare where the company evolves into a provider of development resources and medicines, but also diagnostics, health foods, hospitals, clinical services, perhaps even health insurance. An alternative evolutionary path would lead to smaller research-focused organisations, developing novel medicines possibly funded in a shared risk model with support from disease-specific charities and academic funding bodies in addition to government and private investment funds and large pharma companies. These smaller organisations could provide a particularly exciting environment for scientists aiming for a career in drug discovery.
- Visit: www.forbes.com/ sites/matthewherper/2011/04/13/a-decade-in-drugindustry- layoffs
- Johansson F, The Medici Effect: breakthrough insights at the intersection of ideas, concepts, and cultures, Harvard Business Review Press, 1 September, 2004
- Visit: http://lifescivc.com/2011/03/ academic-bias-biotech-failures/#0_ undefined
- Visit: www.nature.com/nrd/journal/ v10/n9/full/nrd3439-c1.html