Pharmacogenomics will alter the balance of power in the way drugs are developed, tested, marketed and prescribed during the next decade, and the blockbuster business model of big pharmaceutical companies will eventually give way to a more targeted approach.
These are findings in a new report released today which analyses the business model of drug development and distribution that dominates the pharmaceutical industry and forecasts how pharmacogenomics will alter the dynamics among the life sciences, pharmaceutical, payer, and provider sectors.
Pharmacogenomics is the study of how genes affect the way an individual responds to drugs. It refers to products that use biomarkers for diagnosis, prescription and patient treatment. Pharmacogenomics has the potential to aid physicians and patient decisions regarding therapies for serious diseases and diagnose diseases earlier in their development.
As power shifts, life sciences firms are expected to gain in negotiations with Pharma companies and will assume a greater role in drug development, accelerating the pipeline of potentially more clinically effective drugs based upon individual genetic makeup.
The established business model pursued by the $250 billion (€189 billion) US pharmaceutical industry carries high risks and high costs, and the industry is under pressure from payers, providers, regulators and consumers to contain costs and ensure safety.
The pharmaceutical sector has seen many setbacks within the last 12 months concerning many of its bestselling drugs. This has not only raised questions about patient safety but also issues concerning clinical practice and the interpretation of trial data.
Blockbuster drugs, those with peak annual global sales of $1 billion and prescribed for general population use, can cost upwards of $800 million to develop, according to some industry experts, and take between 8 and 12 years to advance from the lab to the pharmacy. Yet these drugs are typically effective in only 40 to 60 per cent of the patient population.
The report said it was confident that pharmacogenomic technology was coming of age. The breakthrough in the mapping of the human genome in 2001 did not bring about the advances expected particular by investors, but it marked the beginning of a new era in bio-information technology and diagnostic device development.
Expanded capabilities and decreasing costs of genomics sequencing and bioinformatics analysis has created momentum in the gathering of data that is expected to bring major advances to research.
"Pharmacogenomics would enable drug marketers and physicians to target therapies to smaller patients populations, those for whom they know the drug would actually work. It will have implications in healthcare delivery over the next ten years," said Tracy Lefteroff, global managing partner, Life Sciences Industry Services for PricewaterhouseCoopers.
She added: "The blockbuster approach simply doesn't work long-term given intensifying pressure on pharmaceutical companies to reduce costs and at the same time accelerate development of new therapies to treat ever-more complex diseases."
The current business model that pharma currently works to has come under scrutiny in recent times with questions raised about its sustainability of double-digit growth. Bringing a new drug to market is a massive undertaking that requires exhaustive clinical trials with thousands of participants and an enormous marketing and distribution infrastructure. Pharmaceutical companies could justify high development costs if they result in new blockbuster drugs, yet three-quarters of approved drugs never or barely meet their research and development costs.
Estimates suggest that only one-third of the 415 new drugs approved between 1998 and 2002, were new molecular entities, and only 14 percent were considered by the FDA to be a "significant improvement" over existing products
The report, Personalised Medicine: The Emerging Pharmacogenomics Revolution, released by PricewaterhouseCoopers , identified the role biotechnology is to play in the pharmaceutical arena. So far biotechnology has played only a supporting role in the blockbuster market.
With the exception of a few of the largest biotech firms, life sciences start-ups have not had the funding to move into full-scale drug development. Today, biotechnology-pharmaceutical agreements already are trending toward a 50/50 cost and profit split. This trend could conceivably continue with pharmaceutical companies moving out of the R&D business altogether.
The move would give life sciences companies a bigger share of the scientific-based revenues, and the pharmaceutical giants could potentially evolve into full-time brokers, marketers and distributors, areas in which they already dominate globally.
The presumption that big pharma is resistant to targeted drug development because such patient-specific cures could narrow the market is false. "Targeted therapies" are set to increase as pharmacogenomics could expand markets and revenues. This can be achieved by defining new uses for existing drugs, "rescuing" drugs in development, managing product life cycles, and dominating niche markets. Better- targeted drugs also could reduce the massive marketing costs vital to blockbuster drugs.
The authors of the report were keen to stress that pharmacogenomics, for all its promise, is not an immediate substitute for the existing blockbuster model. Not all therapy areas are well suited to pharmacogenomics products, and products that are safe and inexpensive will continue to perform well.
Still, virtually all participants in the pharmaceutical industry are preparing for the entry of pharmaceogenomic products into mainstream medical care.
Pharmacogenomics will require fundamental changes in the regulatory, clinical and reimbursement landscape. The current regulatory and reimbursement frameworks in the US are built around the blockbuster approach, yet new structures are being explored.
The FDA has approved a handful of existing pharmacogenomic products and is preparing guidelines for future products. Large third-party payers also are staying abreast of pharmacogenomic developments and are drafting policies to guide reimbursement structures.