The FDA approved 21 biopharmaceuticals in 2005, seven in 2006, and none as of this writing in 2007. A close look at the biologics license applications (BLAs) granted in 2006 shows that most were given to big pharma, which are better known for small-molecule development. As many small companies continue to pursue development of new biological entities (NBEs) and with current U.S. investor focus on companies with near-market products, the question remains: will funding be compromised for smaller biopharmas with important products that are years from regulatory review? Market Drivers Sustaining Biopharma Despite the BLA slowdown, most smaller firms are expected to compete effectively against — as well as remain independent of — big pharmaceutical companies in this new environment. Here’s why: • The cost of biopharmaceutical development and manufacturing will drop as small biotech companies begin to turn to aggressive, less costly contractors abroad in India and China. As a possible result, some biotech companies may be able to commercialize faster than larger competitors forced to utilize their infrastructure investments. • Faster, more cost-efficient development by pure-play biopharmaceutical companies may prove attractive to institutional investors and pension funds seeking growth possibilities such as those offered by big pharma companies in the 1990s. • Low productivity of big pharma R&D may drive earlier investment in small biopharma, in exchange for marketing rights, and this will encourage private investors. • Demand for new products may drive roll-up of many small firms by both big pharma and big biopharma; these acquisitions could promise sizeable returns for investors well before regulatory approvals. • India may drive development of new biopharma products for world markets as big basic-industry companies such as Tata, one of India’s oldest and largest business conglomerates, are providing capital to biotech and government labs and industry are sharing technology and talent. New collaborations, cross-licenses, technology transfers, marketing agreements, and even M&A will stimulate development as well as encourage investment in the United States and the subcontinent. Expanded Indications The most important industry driver during the decade, however, may be expanded indications for already marketed biopharmaceuticals. Two examples are Rituxan marketed by Genentech and Biogen-Idec, and Enbrel marketed by Amgen and Wyeth. Rituxan is now approved for four different non-Hodgkin’s lymphoma applications and, in combination with methotrexate, for rheumatoid arthritis (RA); additionally, it is in clinical trials for both relapsing and primary progressive multiple sclerosis and lupus. Off-label uses include chronic inflammatory polyneuropathy, cryoglobulinemia, idiopathic autoimmune hemolytic anemia, thrombotic thrombocytopenic purpura, and other conditions. Enbrel is approved for treatment of RA, juvenile RA, psoriatic arthritis, ankylosing spondylitis (AS), and psoriasis. Off-label uses include inflammatory bowel disease, chronic heart failure, Sjogren’s syndrome, Wegener’s granulomatosis, ocular sarcoidosis, and inclusion-body myositis. There are several factors driving this proliferation of expanded indications, including: • A better understanding of the common antigens in different diseases. For example, RA and psoriasis, non-Hodgkin’s lymphoma and MS. • A dearth of effective medications for many antigenically similar conditions, which maximizes the probability of high reimbursement when approved years from now, and minimizes the risk of loss to a class generic. • Collegial relationships between biopharma science and marketing which have led to a focus on indications that are most likely to be rewarded by clinicians and managed care. • Each new indication, no matter how narrow, helps picket-fence a drug’s core patents. All of these market drivers ensure that biopharma and its agencies face a bright future. It will be exciting to see the industry unfold, as the world is truly biopharma’s oyster. There are many market drivers that ensure that biopharma and its agencies face a bright future. It will be exciting to see the industry unfold, as the world is truly biopharma’s oyster. Factors That Will Ensure Biopharma Remains Independent and Sustains Growth Ellen G. Miller, Managing Partner Industry Drivers April 2007 VIEW on Biotechnology
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Factors That Will Ensure Biopharma Remains Independent and Sustains Growth
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