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Can collaboration revitalise Europe's pharmaceutical sector?
Europe's pharmaceutical sector is losing its competitiveness. A joint initiative has been launched to overcome some of the worst bottlenecks in the drug discovery process, in order to help revitalise European biomedical science. But its success requires that strong competitors learn to collaborate effectively. What can others learn from the way they have approached doing so?
The global pharmaceutical industry faces challenging times. Rising development costs, a slowing product pipeline, demands for increased safety and efficacy at lower costs, and a poor image are making it difficult for drug companies to deliver new treatments and earn the profits that sustain their work and satisfy their shareholders.
"It's still a huge industry that does an enormous amount of basic research and employs an enormous number of people, but the best days are behind us," said Dr Ian Ragan, a distinguished scientist and research manager in the sector who now advises the European Federation of Pharmaceutical Industries and Associations (EFPIA). "It's no longer as fashionable as it was and it doesn't have the cachet it used to.
"The costs of getting a drug to market are rising and clinical trials are getting more complex. There are greater demands for safety and efficacy, so the process is getting longer and the failure rates are very high. The rise of generics [copies of off-patent drugs made by companies that did not invent them] also means that our past successes have become our current enemies. We have created the seeds of our own difficulties.
"It just isn't adding up. The investment in research isn't delivering effective new drugs."
Running the numbers
How bad is the problem? EFPIA estimates that in a drug discovery program that starts with 10,000 candidate compounds, only one or two will make it to market. Of five compounds approved for testing in humans, only one will make it to market. It will take an average of 12 to 13 years from the initial synthesis of a compound to it being marketed as a drug for patient use. Development costs will average €625m ($930m in 2006), plus at least a further €75m ($111m) for post-approval R&D, according to the latest estimates by the Tufts Center for the Study of Drug Development at Tufts University, Massachusetts, which analyses the global industry. And that only gets you US Food and Drug Administration approval – other regions have regulatory bodies that have to be satisfied.
Ragan says that although the pharmaceutical sector's profitability is not poor, companies are contracting to preserve their profitability. This means staff cuts, some restructuring of the industry and greater investment outside the US and Europe in China, India and Singapore.
The science is getting harder, too. According to Karen Strandgaard of the research director's group at EFPIA, which represents 32 national pharmaceutical industry associations and 44 leading pharmaceutical companies, the number of new drugs making it to market is declining.
"A lot of the current technologies used for drug development have become saturated," she said. According to Ragan, research in his specialisation of diseases of the central nervous system (CNS), such as Alzheimer's and Parkinson's, is slowing down because it is such a difficult problem.
"CNS research is decreasing in favour of other areas, because the work is very high risk," he said. "The industry has been seduced by the huge clinical needs, but efforts to find medicines have been a disaster. It's proved to be a very tough nut to crack. CNS drug researchers are now waiting for some major new science."
Even when the science goes well, the end result can still turn out badly.
"What we have learnt in trying to find entirely new drugs is that you can get breakthroughs which are very innovative but don't offer a huge therapeutic advantage. Innovation should be defined by patient benefit," said Ragan.
And then there's the issue of exploiting your discoveries. Strandgaard says that with patents being granted for 20 years, "depending on when you patent a new molecule you may have just 10 or 12 years of protection for a successful drug before it becomes a generic. So the pharmaceutical companies have to weigh how long they dare wait to patent their discoveries against how long they will be protected in the market."
The result is that the industry is increasingly relying on trying to develop 'blockbuster' drugs with few short- or long-term side effects and few interactions with other therapies, which work well in a broad spectrum of patients living in countries that can afford to prescribe them. Ideally these drugs should move through trials quickly and be patented late in the discovery process, so they are on the market for as possible before facing generic competitors.
"It's like trying to win the lottery as a way of making a living," said Ragan.
More pressure
The industry also faces political, social and reputational issues. Since pharmaceutical companies make drugs that can save people's lives, they are immediately in a difficult position when it comes to charging for them. With ageing populations, even developed countries are finding it difficult to work out how to meet an increasing demand for sophisticated drugs from a declining taxpayer base. The controversy over issues such as the provision of HIV medication to the developing world is even more acute – yet the pharmaceutical companies still need to make profits to satisfy the shareholders who made the initial R&D possible and who will pay for the next round of discovery.
As if these issues were not difficult enough, drug companies are also being pressed to address major social issues such as so-called orphan diseases, which are rare or which mainly afflict those living in the third world; the environment; bio-terrorism; and antibiotic resistance.
And then there's the industry's reputation, which has been an issue in the past and seems to be compounding its current woes. In January this year the European Commission raided the offices of several leading pharmaceutical companies because it believed that "competition in pharmaceutical markets in Europe may not be working well: fewer new pharmaceuticals are being brought to market, and the entry of generic pharmaceuticals sometimes seems to be delayed".
The Commission's inquiry will examine whether agreements between pharmaceutical companies, such as settlements in patent disputes, infringe the EC Treaty's prohibition on restrictive business practice. It will also consider whether companies have created artificial barriers to entry, through the misuse of patent rights, and whether such practices infringe the EC Treaty's ban on the abuse of dominant market positions.
Neelie Kroes, competition commissioner, said on the day of the raids: "Individuals and governments want a strong pharmaceuticals sector that delivers better products and value for money. But if innovative products are not being produced, and cheaper generic alternatives to existing products are in some cases being delayed, then we need to find out why and, if necessary, take action."
Europe's woes
The European research-based pharmaceutical industry has its own issues. Since the early 1990s, it has been losing competitiveness with respect to the US. According to EFPIA, R&D investment in the US grew 4.6 times between 1990 and 2005 while in Europe it only grew 2.8 times. Similarly, the US market grew by 12.5% a year between 1994 and 2004, well ahead of Europe's average annual growth of 7%.
This has benefited US-based companies, which have increased their share of the development and sales of new medicines. In 2005 North America accounted for 47% of world pharmaceutical sales, compared with 30% for Europe. According to market analysts IMS Health, the US market accounts for 66% of the sales of medicines launched since 2001, compared with 24% from Europe. The US also dominates biopharmaceuticals, accounting for three-quarters of global biotechnology revenues and R&D spending.
The European Association says that a number of factors have contributed to Europe's relative decline as a venue for pharmaceutical R&D, including the economic and regulatory framework, the science base, investment conditions, and social attitudes towards new technologies.
Europe also faces growing competition for the investment of an industry that wants scientific excellence, value for money and speed. This has led to the loss of 18 pharmaceutical R&D centres over the past five years, according to an EFPIA survey. The US offers quality, volume, diversity and intensity in basic, clinical, pharmaceutical and biotechnology research. China, India and Singapore offer cost effectiveness in chemistry, IT, and increasingly in biology. India could become the best place on the planet to run clinical trials because it offers access to a large number of patients who can be enrolled quickly, and are often free of the conflicting treatment histories that complicate the analysis of trials with Western subjects.
On the positive side, Europe does have advantages for pharmaceutical researchers. It still has the technical capacity and capability to do the work, often in long-established and globally respected institutions. It has educated citizens who get involved in well-informed patient organisations. There's a highly developed sense of social justice, reflected in the socialised medicine systems of many European countries, whose patient records could be a goldmine for researchers if they can be shared in a socially acceptable way. Europe also has mechanisms to apply public funding to strategically important projects. And it has the combination of wealth and demand, especially from an ageing population, that can fuel innovation.
"Europe has a lot of resources in terms of safety data and patient data," said Ragan, "What we would like to do is use it as much as possible. It's time to start sharing information which doesn't compromise competitive advantage."
The response
Global recognition of the problems of drug discovery has led to the formation of a number of collaborative initiatives to address the issue.
Just before Christmas 2007 the European Union gave the go-ahead for the Innovation Medicines Initiative (IMI), one of a number of joint technology initiatives that are part of the seventh Framework Programme (FP7). The US has a number of programmes, including the Critical Path Initiative, the Safe and Innovative Medicines scheme, and the Biomarker Initiative. Japan is investing in a Toxicogenomics Project, a Proteome Factory Consortium and a Center for Biomedical Innovation.
Dr Karima Boubekeur, head of external research and innovation environment for Roche, has been working on the development of the IMI. She says that it has been designed to complement, rather than compete with, initiatives in the US and Asia.
"We're being driven to create the IMI by the realisation that the innovation and R&D in the pharma companies is huge," she said. "We know a lot of things but we don't know enough. Opportunities such as the human genome and improved information technology have made it clear that although we have these new tools and information, there's too much for any single company to do alone."
The IMI is also a response to the desire for better drugs.
"We want to look at drug efficacy in a totally different way now," said Boubekeur. "We want to understand diseases and understand which patients will respond well to a particular drug. But we don't know how to do that now for all diseases. There are examples of targeted medicines on the market today but we would like to understand more about the pathophysiology [how symptoms relate to the underlying abnormalities] of diseases, in order to develop more of these medicines.
"Benefits always come with a risk and the idea under the IMI is to better manage the balance between risk and benefit. The demands for safety are increasing enormously and the industry believes it can benefit by collaborating to face this pressure."
Four pillars of the IMI
The IMI's overall goal is simple - to support faster development of better medicines for patients and so enhance Europe's competitiveness in biopharmaceuticals. The plan is to get competing pharmaceutical companies to work together to overcome bottlenecks in drug research. The IMI is also meant to create much broader collaborations by drawing in industry, academia, regulators, health-care professionals and patients.
IMI will run patient-centred projects to address the main bottlenecks in today's biomedical R&D process, which are predicting safety, predicting efficacy, gaps in knowledge management, and gaps in education and training.
A strategic research agenda has been developed by IMI stakeholders to define work that addresses these bottlenecks, and organise it into four strategic 'pillars'.
The first of these is improving the predictions made during safety evaluations. Nine recommendations have been made, including the creation of a European Centre of Drug Safety Research, and establishing a framework to develop biomarkers that are relevant to humans and useful to regulators.
Ragan said: "If you can just reduce failure rates a bit it will transform the financial situation of the pharmaceutical companies."
Boubekeur said: "The IMI will sponsor research projects in private/public partnerships, with the idea that people from universities, industry, the patient population and the regulators will define the research projects together. The idea is to involve regulators from the beginning in research projects to accelerate our ability to evaluate the safety of new drugs.
"Patients have a very different point of view in terms of efficacy and risk. Working in a public-private partnership will be an ideal set-up because not only industry but patients, the universities, regulators, biotech companies and small to medium-sized enterprises will get involved as well. This makes for a very broad stakeholder environment.
"Amongst others, we are planning one project on improving our ability to measure the progress of chronic obstructive pulmonary disease (COPD) with patients. At the moment it is very difficult to measure the progress of COPD. In the US they are already validating a tool to measure exacerbations of COPD. Working with patients, we want to develop a Europe-wide definition of these exacerbations and innovative tools to measure activity level and breathlessness."
The underlying principle is to start designing drugs, procedures and monitoring schemes around the patient's needs, rather than around the expected needs of an idealised patient.
"If we don't ask patients how they live with their disease, we can't design the right drugs for them," Boubekeur said.
The second pillar of the IMI is work on predicting the efficacy of new treatments. The strategic research agenda includes five recommendations for each of five priority disease areas, based on unmet medical need. These include creating disease-specific European imaging networks, developing regional centres of excellence, creating disease-specific European centres to validate new biomarkers, and enhancing collaborations with patients and regulatory authorities.
"Efficacy has been defined as the effects of a drug in a patient group," said Strandgaard. "No drug works in 100% of the population. If you can understand which drug will work in which patient, it's a huge efficiency gain."
Sharing and learning
The third pillar of the IMI is improving knowledge management, so that project members know what they know, and can share it freely. Fifteen recommendations have already been made through the strategic research agenda, including establishing a knowledge management team to share the learning from the first two pillar projects and translate it between disciplines, and creating a knowledge management platform to develop effective data integration and analysis tools.
According to Strandgaard, there's still a question of whether the IMI will establish a common technology platform for sharing knowledge, and whether it might be necessary to create a common way of describing the project data and a federated database to hold it. Neither idea is among the projects in the first call, though.
The fourth pillar of the IMI is dedicated to education and training, and may include the establishment of a European Medicines Research Academy, and multi-disciplinary programmes to develop skills in integrating biology and medical expertise.
"There's a tradition in drug development that people work in silos, for example with the people working on the pre-clinical studies being separate from those working on the clinical studies," said Strandgaard. "Under the IMI there will be an increased focus on translational medicine, which will need people to have more interdisciplinary skills to understand the wider implications."
Structuring IMI
The IMI was approved on 20 December 2007 and has become a community body within the European Union, as a partnership between the EFPIA and the Union. According to Strandgaard the IMI team is now working towards a first call for proposals in April this year, but is still sorting out the IMI's financial and legal infrastructure. Once this has happened the first call for projects can be launched, drawing on the priorities set in the strategic research agenda formulated within EFPIA.
"We sent the strategic research agendas to all those involved and interested in participating in the IMI and asked them 'what is your scientific priority?'" said Strandgaard. "We plan to make calls for proposals on any of these priorities that have been named by eight or more participating companies.
"We hope to run the call process so that the research projects can start in early 2009. In the first year there will be €250m of funding, with €125m of that being in kind [providing people, tools, facilities and services] from the participating companies."
Intellectual property issues for the project have already been addressed by a working group of industry, academia and Commission people.
"We decided that projects cannot start unless they have an IPR policy in place which is clear and transparent upfront and doesn't present a bottleneck later," said Strandgaard. Many other collaborations use the approach adopted for the IMI: the background IP that members bring to the project remains their property, but any IP developed during the project is shared by its participants.
Can the IMI work?
The pharmaceutical industry is a high-pressure, high-stakes game in which companies compete intensely to create blockbuster drugs. The IMI can only succeed if these competitors work out how to collaborate effectively with each other, and with a wider group of stakeholders that includes patients, academics, regulators and others, and are allowed to do so. It's a substantial challenge.
"We have been working really hard with the European Commission to take IMI where it is today," said Boubekeur. "We started in May 2004 within the industry's trade association and now we have a strategic research agenda that was created with the involvement of more than 400 people.
"Can it work? Yes, but only if we continue with the same spirit of collaboration, transparency and openness that helped define the Initiative."
Strandgaard points out that the IMI can be seen as a precompetitive process improvement project. It's not developing new drugs, but trying to create a series of better tools and technologies to support drug development.
"If you look at biomarkers, visible indications of disease or the effect of a medicine, for example high blood pressure, these can be useful in drug discovery," she said. "Drugs have to go through a big approval cycle and biomarkers will have to do the same. So it's not valuable to have a biomarker unless it has been recognised by the regulators.
"The idea is that everyone needs new biomarkers so badly that there's more value in co-operating to find them than in competing. That's the challenge here – finding the right balance.
"It's not the core business of pharmaceutical companies to develop technology, but to develop drugs. This is why they have the interest in collaboration, so they can share risks of that technology development as partners."
Ragan suggests that there is little other choice for the pharmaceutical industry but to collaborate.
"I don't think there's any alternative – and that always helps," he said. "You can pick certain areas and see that it's the only way it could work."
Ragan says there has been a small initial barrier to the project's approach, but that working through the industry's research organisations is helping overcome it since they are more open to collaboration.
"There's tremendous enthusiasm among the industry partners. Anyone outside the industry would be very surprised at how much collaboration there is," he added.
There are already examples of successful collaboration in the industry, including the International Hapmap Project that looks at variations in the human genome. There are also projects under the sixth Framework Programme, such as the Innovative Medicines for Europe (InnoMed) project, which are being regarded as a pilot for the work of the IMI. InnoMed involves 16 biopharmaceutical companies collaborating with 14 universities and eight small and medium-sized enterprises to address bottlenecks in the development of medicines.
IMI – what it teaches us about collaboration
The IMI consortium has recognised that if it is to succeed, the people and groups involved will have to change their thinking. A new balance between cooperation and competition is being used as route to achieving the necessary regulatory change, public understanding and patient involvement. This will demand more openness, for example in the publication of clinical trial data, and greater honesty about animal experimentation. Organisations will also have to turn their focus outwards, rather than just focusing on what they do, as well as recognising that they may gain more from outsourcing than through relentless pursuit of self sufficiency. It will be a big change in outlook for some.
"One of the exciting things in the project is the coherence between companies and their strong willingness to collaborate," said Strandgaard. "When you have the right project, collaboration becomes easy."
Boubekeur added: "From the beginning, the attitude of the R&D directors within EFPIA has been extremely collaborative. Everyone gets together four times a year in a friendly, open and equal way to discuss what should be done. In effect we have decided for the last three years not to compete in the creation of this type of knowledge, but to collaborate.
"The beauty of the IMI is that it is Europe-wide and a very conscious effort for Europe to regain its competitiveness in the pharmaceuticals sector. I really feel we can get our global position back."
That remains to be seen. Even as Europe's pharmaceutical companies sign up to revive their sector, they are also increasing their R&D spending outside the region. At best, through initiatives such as IMI, companies and other stakeholders will learn to work together so effectively that Europe becomes the best place in the world to do the highest value pharmaceutical research. These newfound skills can enable researchers based in Europe to get the most out of working with lower-cost offshore facilities, which in turn will thrive on what they learn from the partnership. The resultant techniques will speed drug development as well as increasing safety and efficacy, while the strong links between European labs and those in the developing world will ensure that orphan diseases are addressed.
But the challenge of improving effectiveness in ways that provide sustainable competitive advantage cannot be understated. As one region takes a lead in a vital aspect of the innovation process, such as large-scale collaboration, other regions will copy the lessons learned and companies will seek to replicate the successes in other locations. If the IMI fails to provide a distinctive breakthrough in terms of drug discovery or research effectiveness, investment will continue to move on around the globe with little more than a regretful glance backwards.