Pharmaceutical Industry - ABS Initiative

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Access and Benefit Sharing Key Points for Policy-Makers

THE PHARMACEUTICAL INDUSTRY

Sarah A. Laird November 2015

SUMMARY OF KEY POINTS

MARKETS, COMPANIES AND PRODUCTS Revenues have increased steadily over the last 30 years, but in recent years growth has slowed in developed country markets while in ‘pharmerging’ markets it has increased. The world’s largest pharmaceutical companies are located in developed countries. Their earnings make them some of the wealthiest companies in the world. The pharmaceutical industry has undergone significant consolidation over the last 30 years in order to increase growth and acquire new technologies, expertise and novel drug candidates. Many of the industry’s top-selling drugs have gone off-patent, resulting in reduced revenues in recent years. Patent expiries on small molecule products will reduce brand spending in developed markets by $113 billion through 2017. A top-selling pharmaceutical product can now generate more than $5 billion in sales a year. Specific disease areas and products differ significantly between developed and pharmerging markets.

TRENDS IN RESEARCH AND DEVELOPMENT Spending on R&D has increased over the last few decades but productivity has gone down. The number of new drugs coming on the market each year has held roughly steady or declined since 1981. Government contributions to pharmaceutical R&D remain high across the globe. In the US, for example, government funding contributed to 48% of all drugs approved by the FDA and 65% of drugs that received priority review between 1988-2005. Drug discovery, including that on natural products, is increasingly done in smaller start-up companies, academia and government laboratories, with large companies undertaking development and marketing.

2

NATURAL PRODUCTS RESEARCH Although support for natural products research in large companies has declined, the contribution of natural products to the development of new drugs continues, and between 19812013 an average of 31% of all new drugs annually were natural products. Natural products research has undergone dramatic changes in the last 50 years, with significant implications for the speed, scale and focus of R&D, and the design of effective ABS measures. Traditional knowledge, once the primary lead for the discovery of new medicines, is no longer a significant part of industry R&D.

INDUSTRY AND ABS The pharmaceutical industry is more aware of the Convention on Biological Diversity than many other sectors, although this is more the case with large companies than with small. However, many concerns persist within industry about legal certainty and the need for new measures drafted to implement the Nagoya Protocol to reflect the scientific, business and legal realities of natural products research today.

MARKETS, COMPANIES AND PRODUCTS Global growth rates 1 200

7%

800

$989 billion of global spending on medicines

29% ASIA / AUSTRALIA

600 400

2%

200 0 2008

2012

Pharmerging markets Other emerging markets

4% 24%

Other developed markets

AFRICA / MIDDLE EAST

Top 8 mature markets

EUROPE

The world’s largest pharmaceutical companies are located in developed countries. Their earnings make them some of the wealthiest companies in the world. NORTH AMERICA

2017 (F)

CAGR* 2012-2017

Between 2012 and 2017, Pharmerging markets have growth rates far higher than in mature markets. *CAGR (Compound Annual Growth Rate)

EUROPE 2013 SALES (USD million)

2013 R&D SPENDING (USD million)

1

$46,017

$9,360

Gleevec ($4,693) Diovan ($3,524) Lucentis ($2,383)

3

$39,143

$8,294

Rituxan ($7,503) Avastin ($6,751) Herceptin ($6,562)

4

$37,701

$6,117

Lantus ($7,592) Plavix ($2,460) Lovenox ($2,262)

6

$33,055

$5,041

Seretide / Advair ($8,251) Pediarix ($1,349) Avodart ($1,341)

RANK

COMPANY

COUNTRY

2013 TOP-SELLING DRUGS (USD million)

2013 SALES (USD million)

2013 R&D SPENDING (USD million)

2

$45,011

$6,254

Lyrica (4,595) Prevnar ($3,974) Enbrel ($3,774)

5

$37,519

$7,123

Januvia ($4,004) Zetia ($2,658) Remicade ($2,271)

7

$26,475

$5,810

Remicade ($5,334) Zytiga ($1,698) Prezista ($1,673)

8

$24,523

$4,269

Crestor ($5,622) Nexium ($3,872) Symbicort ($3,483)

9

$20,119

$5,316

Cymbalta ($5,084) Alimta ($2,703) Humalog ($2,611)

13

$15,594

$2,710

Kogenate ($1,597)

10

$18,790

$2,831

Humira ($10,659) AndroGel ($1,035) Kaletra ($962)

14

$14,886

$2,090

NovoRapid ($3,001)

11

$18,192

$3,941

Enbrel ($4,551)

15

$14,468

$3,247

Spiriva ($4,719)

17

$12,306

$3,715

Reyataz ($1,551)

18

$10,804

$2,056

Atripla ($3,648)

2013 SALES (USD million)

2013 R&D SPENDING (USD million)

16

$13,591

$3,352

Biopress ($1,256)

2013 SALES (USD million)

2013 R&D SPENDING (USD million)

19

$10,431

$2,132

Prograf ($1,755)

$17,563

$1,422

20

$10,268

$1,926

Benicar ($2,116)

RANK

Top Companies

13% 7% 2%

1 000

LATIN AMERICA USD billion

Revenues have increased steadily over the last 30 years, but in recent years growth has slowed in developed country markets while in ‘pharmerging’ markets it has increased.

37% NORTH AMERICA

COMPANY

COUNTRY

2013 TOP-SELLING DRUGS (USD million)

AFRICA / MIDDLE EAST RANK

12

COMPANY

COUNTRY

2013 TOP-SELLING DRUGS (USD million)

Copaxone ($4,328)

ASIA / AUSTRALIA RANK

COMPANY

COUNTRY

2013 TOP-SELLING DRUGS (USD million)

3

The pharmaceutical industry has undergone significant consolidation over the last 30 years in order to increase growth and acquire new technologies, expertise and novel drug candidates.

Schering-Plough

Hoffman

Hoescht Roussel

Squibb

Sandoz

Glaxo

Pfizer

Genentech

Marion Merril Dow

Bristol Myers

Ciba-Geigy

Wellcome

Parke-Davis

Rhone Poulenc

DuPont Pharma

Burroughs

Warner Lambert

Sanofi

Merck DuPont

Smith Kline & French

Monsanto

Beecham

Searle

Organon

Synthelabo

Upjohn

Consolidation has been a continuing process

Pharmacia A H Robbins Lederle (AHP) Wyeth

H-LaRoche Syntex

Hoescht

Squibb

Sandoz

Genentech

Sanofi/ Synthelabo

Bristol Meyers

Ciba-Geigy

SmithKline Beecham

Pfizer

Developed markets patent expiry 2008-2017 60

$149 billion

20 0

Monsanto Searle

Marion Merril Dow

Pharmacia Upjohn

-60

Bristol-Meyers Squibb

SmithKline Beecham

Pfizer

Sanofi/ Synthelabo

BurroughsWellcome

Pharmacia

RhonePoulenc & Fisons

Glaxo

Lederle(AHP)

2013

2014

Wyeth

2015 Merck

Hoffman LaRoche

4

Roche

Sanofi-Aventis

Wyeth Pfizer

Bristol-Meyers Squibb

Novartis

Glaxo SmithKline

Pfizer

9

2010

GlaxoSmith Kline

Sanofi/ Synthelabo

Schering-Plough

Merck

Aventis

26.9

28.4

50.3

19.1

31.7

28.8

20.3

22.6

-18.5

-15.3

-21.5

-22.6

-43.6

-32.1

-17.2

-26.2

-22.5

-15.9

-$121 billion

2016

-$113 billion

Lower brand spending 2008

Protection expiry year

Wyeth

Hoescht Roussel

22.3

-40

2012

Lederle (AHP)

21.0

-20

Warner Lambert

RhonePoulenc & Fisons

$123 billion

Pre-expiry spending

40 SPENDING US BILLION

Merck

No. Companies: (including Amgen and Johnson and Johnson) 33

1980

Many of the industry’s top-selling drugs have gone off-patent, resulting in reduced revenues in recent years. Patent expiries on small molecule products will reduce brand spending in developed markets by $113 billion through 2017.

2009

2010

2011

2012

2013

2014

2015

2016

2017

US

Japan

UK

France

Germany

Plavix Seroquel Singulair Actos Lexapro Diovan Diovan HCT® Geodon Viagra Boniva

Nu Lotan Myslee Preminent Haigou Seroquel

Lipitor Amias Seroquel Aricept® Singulair

Tahor Singulair Pariet Ixprim Aprovel

Seroquel Atacand Atacand Plus Sortis Aricept

Oxycontin® Aciphex Zameta Xeloda Opana ER Asacol

Diovan Plavix Livalo Elplat

Viagra Xeloda

Seretide Coaprovel Xeloda Micardis Viagra

Viani Zometa Atmadisk Coaprovel Viagra

Nexium® Cymbalta Cerebrex Symbicort Lunesta Restasis Evista Sandostatin LAR Actonel

Prograf Glivec Abilify

Abilify Cipralex Risperdal Consta

Seroplex Abilify Ebixa Risperdal Consta LP

Axura Risperdal Consta Biopress Plus

Abilify Copaxone Gleevec Namenda Provigil Combivent Zyvox Prezista Avodart

Zyprexa Adoair Alimta Spiriva Symbicort

Spiriva Cymbalta Alimta

Alimta Spiriva Copaxone Protelos Cymbalta

Spiriva Copaxone Alimta Cymbalta

Crestor

Blopress Baraclude

Glivec Vfend

Glivec Cancidas Vfend

Glivec Zyvoxid Vfend

Benicar Benicar HCT Cubicin

A top-selling pharmaceutical product can now generate more than $5 billion in sales a year.

Top ten global products 2013

Specific disease areas and products differ significantly between developed and pharmerging markets.

Spending by therapy area (projected for 2017)

2013 sales (USD million)

DEVELOPED MARKETS 1

$9,851

2

$9,213

3

$8,149

4

5

6

7

8

$7,949

$7,935

$7,863

10

PHARMERGING MARKETS

Projected sales in 2017 (USD billion)

Oncology

$74-84 billion

Pain

$22-25 billion

Diabetes

$34-39 billion

Other CNS Drugs

$20-23 billion

Anti-TNFs

$32-37 billion

Antibiotics

$18-21 billion

Pain

$31-36 billion

Oncology

$17-20 billion

Asthma/COPD

$31-36 billion

Hypertension

$14-17 billion

Other CNS Drugs

$26-31 billion

Diabetes

$10-12 billion

Hypertension

$23-26 billion

Dermatology

$10-12 billion

Immunostimulants

$22-25 billion

Antiulcerants

$9-11 billion

HIV Antivirals

$22-25 billion

Cholesterol

$6-8 billion

Dermatology

$22-25 billion

Asthma/COPD

$3-5 billion

Antibiotics

$18-21 billion

Anti-Epileptics

$3-5 billion

Cholesterol

$16-19 billion

Antivirals excluding HIV

$3-5 billion

Anti-Epileptics

$15-18 billion

Immunosuppressents

$3-5 billion

Immunosuppressents

$15-18 billion

Allergy

$3-5 billion

Antipsychotics

$13-16 billion

Antidepressants

$3-5 billion

Antiulcerants

$12-14 billion

Antiplatelet

$3-5 billion

Antidepressants

$10-12 billion

Antipsychotics

$2-3 billion

Heparins

$1-2 billion

$7,832

$7,678

Antivirals excluding HIV 9

Projected sales in 2017 (USD billion)

$6,464

$8-10 billion

ADHD

$7-9 billion

Erectile Dysfunction

$1-2 billion

Interferons

$6-8 billion

Immunostimulants

$1-2 billion

$6,263

BRAND 67%

GENERIC 21%

OTHER 12%

BRAND 26%

GENERIC 63%

OTHER 11%

5

TRENDS IN RESEARCH AND DEVELOPMENT Revenues

Spending on R&D has increased over the last few decades but productivity has gone down. The number of new drugs coming on the market each year has held roughly steady or declined since 1981.

2013 2010

R&D expenditures, industry revenues and new chemical entities

R&D Expenditures

2000 1990 1980

R&D Productivity 1985

39 NCEs 10

Natural Products

45 NCEs 21

Natural Products

1995

39 NCEs 11

Natural Products

2005

38 NCEs

37 NCEs

11

33 NCEs

13

Natural Products

13

Natural Products

Natural Products

20 NCEs

New Chemical Entities (NCEs)

31 NCEs

10

5

Natural Products

Natural Products

$119.3

Government contributions to pharmaceutical R&D remain high across the globe. In the US, for example, government funding contributed to 48% of all drugs approved by the FDA and 65% of drugs that received priority review between 1988-2005.

6

Public and industry biomedical R&D expenditures, 2012 (USD billion)

$81.7 $37.1

$8.3 $5.3

$48.9

$6.1

$28.1 $9.5 $2.0

$3.3

$4.7

$2.0

$1.4

CANADA

AUSTRALIA

$6.3

$27.6

$53.6

$70.4

Public CHINA

JAPAN

EUROPE

USA

Industry

Drug discovery, including that on natural products, is increasingly done in smaller start-up companies, academia and government laboratories, with large companies undertaking development and marketing.

The ecosystem of life sciences R&D

Start-Ups

Genetic resources sourced from:

Venture Capital Nonprofits

Academic Research Institutions

• existing collections and libraries • electronic data/internet • limited field collections (mainly domestic)

Government Regulators

Government Research Institutes

Large Biopharma Research Companies

Clinical Research Organisations

Clinical Trial Sites

Drugs

Pharmacists, Providers and Health Systems



We can work here, and collect microorganisms from marine water and soil in our local environment. In any microenvironment the vast majority of bacteria are for the most part unknown. This wouldn’t apply to extreme environments that tend to select for very specific types of bacteria. When I worked at Lederle, anyone who went on a trip was given a plastic bag to collect soil samples. But now we know we can find spectacular microbial diversity here. This wouldn’t be true for plants, but it is definitely true for microorganisms. It would take us lifetimes to sort through what we can get our hands on from this region, so there is no need to collect overseas. – Chief Scientific Officer, small biotech company in the US



Collaborations provide a biotechnology company with money and resources while providing the pharmaceutical company access to cuttingedge technologies. In addition, by collaborating with multiple partners, pharmaceutical companies today decentralise parts of their R&D activities. This decentralisation provides a mechanism by which companies can (1) evaluate multiple new platform or product opportunities without increasing the size and cost of their own operations and (2) effectively increase the bandwidth of their operations. – Phil Kearney, Director of Licensing and External Research, Merck Sharp and Dohme

7

NATURAL PRODUCTS RESEARCH 70

The contribution of natural products to total drugs 60

Although support for natural products research in large companies has declined, the contribution of natural products to the development of new drugs continues, and between 1981-2013 an average of 31% of all new drugs annually were natural products.

Drugs approved world-wide

50

Natural products

40 30 20 10

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

0

58

44

Number of approved drugs world-wide (1981-2013)

KEY

27 19

21

30

17

5

S 20%

S/NM 9%

S* 9%

S*/NM 8%

V 2%

1

B 12%

N 14%

NB 0%

ND 26%

NATURAL PRODUCTS

8

S

Totally synthetic drug, often found by random screening/modification of an existing agent

S/NM

Totally synthetic drug/Natural Product mimic

S*

Made by total synthesis, but the pharmacophore is/was from a Natural Product

S*/NM

Made by total synthesis, but the pharmacophore is/was from a Natural Product/Natural Product mimic

V

Vaccine

B

Biological; usually a large (>45 residues) peptide or protein either isolated from an organism/cell line or produced by biotechnological means in a surrogate host

N

Natural Product

NB

Natural Product ‘Botanical’ (in general these have been recently approved)

ND

Derived from a Natural Product and is usually a semisynthetic modification

Source: Newman and Cragg, 2012

TRENDS IN NATURAL PRODUCT RESEARCH AND DRUG DISCOVERY

1965

1990

Natural products research has undergone dramatic changes in the last 50 years, with significant implications for the speed, scale and focus of R&D, and the design of effective ABS measures.

2015

TECHNOLOGIES

Natural products chemistry

• Automated biochemical screening • Modern analytical chemistry

Genomics-driven drug-discovery

MATERIALS STUDIED

“ NUMBERS OF COMPOUNDS ISOLATED AND STUDIED FROM A SAMPLE

=1–2

= 10 – 15

= 50 – 100

SIZE OF SAMPLES

Kilograms

Grams

Milligrams or less

TIME TO TEST A SAMPLE Months/years

Days

Hours

The approach we are using more and more, and now predominantly, is to leverage the biosynthetic pathways in microorganisms to address chemical problems in terms of drug discovery, and to find new compounds, or even old compounds, and then to use genetic engineering to change those compounds to make them better drug candidates. This is really the trend in natural product science… The days of going out and collecting things – whether sponges, plants, or soil samples for microorganisms – and searching for new chemicals for drug leads on a mass scale by turning the crank a lot, those days are behind us. There is still value there, but we need to be smarter about how we do this. Over the last 10-15 years the scientific community has come to realise that the real value in organisms is the genes that enable organisms to make the compounds that they do. Bioprospecting in the 1990s emphasised the organism, but it really isn’t the organism anymore, it is the genes, and we need to incorporate this into our models for benefit-sharing. – Head of Natural Products Unit, large pharmaceutical company

9

Traditional knowledge, once the primary lead for the discovery of new medicines, is no longer a significant part of industry R&D.

Use of traditional knowledge in drug development

1900

Ethnobotanical collections

Sources of traditional knowledge

Internet / databases

HIGH TECH

Literature

1960

TK- DERIVED DRUGS • Aspirin • Morphine • Quinine • Digitoxin • Pilocarpine

1990

TK- DERIVED DRUGS • Vincristine • Vinblastine • Galantamine

db

he ioc

to

te ma

Au

10

2000 ng

eni

re l sc

a

mic

LOW TECH

s-

mic

no Ge

rug

nd

e driv

ry

ove

c dis

TK- DERIVED DRUGS • Artemisin • Crofelemer (approved in 2012)

2015

INDUSTRY AND ABS

The pharmaceutical industry is more aware of the Convention on Biological Diversity than many other sectors, although this is more the case with larger companies than with smaller. However, many concerns persist within industry about legal certainty and the need for new measures drafted to implement the Nagoya Protocol to reflect the scientific, business and legal realities of natural products research today.



The CBD has had a cooling effect on natural products research, but it will not stop a company from going forward. There are ways to work with the treaty, the best being working directly with academic and other partners… Our collaborators do the work to get the agreements in place and so it isn’t too cumbersome and we came up with a good agreement. The real test of the agreement didn’t happen because we didn’t get a drug out of it…But we could operate, the research could continue.

SOURCES

Page 3

IMS Health, 2013. Pharmerging Markets: Picking a Pathway to Success; IMS, 2014. Global Outlook for Medicines through 2018; Pharmaceutical Executive, 2014. Pharma 50 Insight: The Accelerating Growth of Specialty Markets; Van Arnum, P. 2014. IMS Offers a Subdued Outlook for Global Pharmaceutical Industry at DCAT Week ’14. DCAT Connect, March 25; Datamonitor, 2009. Big Pharma Mega-Mergers 1995-2014; Baum, R. 2011. Changing Pharmaceutical Paradigms. Chemical and Engineering News, October 4; Kearney, P. 2011. What is the Future for the Big Pharma Model? AFG Venture Group Dispatches.

Page 4

Newman, D.J. 2015. pers. com.; IMS Health, 2013. Thought Leadership, September; IMS Health, 2014. Top 20 Global Products 2013; IMS Health, 2014. Global Outlook for Medicines through 2018; Kearney, P. 2011. What is the Future for the Big Pharma Model? AFG Venture Group Dispatches; Noor, W. 2014. The Long Tail. PharmExec. com; Pharma Voice, 2014. Specialty Drugs: An Evolving Commercial Model; Van Arnum, P. 2014. IMS Offers a Subdued Outlook for Global Pharmaceutical Industry at DCAT Week ’14. DCAT Connect, March 25.

Page 5

IMS Institute for Healthcare Informatics, 2013; www.drug.com, 2014; IMS Health, 2014; Staton, T. 2014. The Top 10 Patent Losses of 2015, FiercePharma, www.fiercepharma.com, December 17; Krishnan, A. 2011, Drug Patents Expiration in 2011 and 2012 – A Bumpy Ride Ahead for Big Pharma as Big Drugs Lose Patent Protection. IHS Healthcare, pharma blog; Alazraki, M. 2011. The 10 Biggest-Selling Drugs that Are About to Lose Their Patent, February, www.dailyfinance.com.

Page 6

PhRMA, 2015, www.phrma.org; Chakma, J., Sun, G.H., Steinberg, J.D., Sammut, S.M. and Jagsi, R. 2014. Asia’s Ascent – Global Trends in Biomedical R&D Expenditures. The New England Journal of Medicine 370(1):3–6; EFPIA, 2014. www.efpia.eu; Shah, A. 2014. Pfizer and AstraZeneca: Innovation Will Not Follow Acquisition. Seeking Alpha, May; Newman, D.J. and Cragg, G.M. 2012. Natural Products as Sources of New Drugs over the 30 Years from 1981 to 2010. Journal of Natural Products. www.pubs.acs.org/jnp.

Page 7

PhRMA, 2015. www.phrma.org; Kearney, P. 2011. What is the Future for the Big Pharma Model? AFG Venture Group Dispatches; Noor, W. 2014. Pharm Exec’s Pharma 50 in 2014. PharmExec.com, June 9.

Page 8

Newman, D.J. and Cragg, G.M. 2012. Natural Products as Sources of New Drugs over the 30 Years from 1981 to 2010. Journal of Natural Products. www.pubs.acs.org/jnp; Newman, D.J. and Cragg, G.M. in press.

– Head of Natural Products, large pharmaceutical company



I’ve always maintained that natural product drug discovery and development is an international collaborative effort – no one country is dominant. That is why I think if source countries can develop viable and not too restrictive policies this can be a win-win situation for everyone. If policies are too restrictive, particularly with microbes as a source of new chemistry and potential new drugs, companies will just study the microbial resources they have in their libraries or their own backyards. The microbial area makes protecting countries’ rights very tricky, since companies can find compounds discovered in microorganisms from one country in another – much more so than for plants. This is why NCI’s policy has always been that the place where the original collection and discovery was made is the one that should benefit, and this is even more important today. – Gordon Cragg, retired from Natural Products Branch, US National Cancer Institute

11

www.abs-initiative.info

www.bio-economy.org.za

The Access and Benefit-Sharing Key Points for Policy-Makers series has been produced to provide governments, companies, researchers, communities and others with background information to assist with the development of access and benefit-sharing measures to implement the Nagoya Protocol. The briefs are organised around central, key points on trends and practices in markets, research and development, and ABS. More detailed information on these sectors can be found at: www.bio-economy.org.za; www.abs-initiative.info; www.peopleandplants.org; CBD Bioscience at a Crossroads policy briefs: https://www.cbd.int/abs/policy-brief/default.shtml/; and in the upcoming book: http://www.routledge.com/books/details/9781138779099/

www.peopleandplants.org

Acknowledgements: Sincere thanks are due to the many individuals who contributed comments and insights to the pharmaceutical industry brief. In particular, we would like to thank Bruno David, Gordon Cragg, Frank Koehn, David Newman and Sheo Singh. Thanks are also due to Paula Wood for her design and Jaci van Niekerk for her support and assistance in this process. For further information please contact: [email protected]