Pharma 'endangered,' though 'huge opportunities' exist as the industry evolves

The pharmaceutical industry is not yet endangered, but it is challenged, said Graham Lewis, vice president, global pharma strategy, IQVIA.

What is endangered? The skill sets needed to “drive the industry successfully forward,”​ said Lewis, presenting at DCAT Week’s pharma industry outlook session.

As Lewis explained, the skills needed today are changing and will continue to develop rapidly in the future as the industry evolves.

Efficiency: The latest buzzword​

Productivity in research and development (R&D) has declined. “Where big pharma is concerned, the ‘R’ part of R&D is virtually over,”​ said Lewis, noting that the industry has in fact been incredibly innovative. However, in practice, innovation is focused on very small populations and at very high costs.

“Returns on innovation are declining and the costs of innovation are going up,”​ he said – with returns on innovation decreasing 23% from 2007 to 2017.

“Efficiency is now the latest buzzword,”​ explained Lewis, as some of the major players report “very disappointing sales growth.”​

Subsequently, companies are cutting operating expenses where they can, he said. Cost cutting has come in the form of early retirement programs and the discontinuing of research in certain therapeutic areas, among other initiatives.

To overcome these challenges, Lewis said the industry’s emphasis needs a shift from an internal focus to external opportunities.

“It’s time to look outside because outside is humming with experimentation and change,”​ he said. “There is more existing innovation happening outside pharma, with pharma looking on … and that’s a challenge that the industry has to face.”​

As part of this, there has also been a shift in the companies that discover drugs, Lewis explained.

Small companies now dominate discovery – and increasingly keep their assets through commercialization, he said. Last year 64% of drugs were discovered by small companies and 36% of these companies held onto their molecule through commercialization.

“Many of the successful drugs of the future start with small companies,”​ Lewis explained, which means the acquisition prices of these companies are going to increase – “and are going to go up significantly,”​ he said.

“What’s going to happen is if small companies want to hang on to their molecules? There is a price to be paid.”​

Innovation: The areas of potential growth​

Even though return on innovation has been declining, Lewis said there are several areas of opportunity. “Specialty is becoming very important,” ​he explained.

Yet specialty is not just about biologics, Lewis noted. “Small molecules are becoming increasingly important in the specialty field,”​ he said, with 47% of sales in the specialty sales coming from small molecules.

“The specialty business is clearly the place to have been and to be but it’s not just a biologics business,” ​Lewis added.

Additionally, there are still areas of significant unmet medical need, including Alzheimer’s, obesity, and depression. Pain also remains a large market and has been “starved of innovation for the past 20 years,”​ said Lewis. “This is a huge area for potential innovation.”​

Lewis added that there is also “a huge potential market”​ for basic molecules that are improved in terms of the way they are delivered.

“A part of the innovation continuum, it's not just discovery of new molecules … But it’s taking existing molecules and making them work harder,”​ he explained.

Additionally, there are “huge opportunities”​ to improve compliance.

“There are huge opportunities here to create a situation where patients are more likely to take the drug or not,”​ he said. “Packaging has a role to play in this context as well.”​

“I think you are going to see a revolution in packaging … especially in emerging markets,”​ added Lewis.