Overview of the Pharmaceutical Industry

Overview of the Pharmaceutical Industry
11/15/2018 Overview of The Pharmaceutical Industry Dale Hartupee, Ph.D. Overview of the Pharmaceutical Industry

11/15/2018 Agenda Introductions Lecture Goals Pharmaceutical Industry - Overall Goals & Objectives Introduction to the Pharmaceutical Industry Functions in a Pharmaceutical Company Manufacturing Overview Commercial Overview Research and Development (R&D) A Scientist in the Pharmaceutical Industry Interactions in a Pharmaceutical Company What to Look at in a Pharmaceutical Company Why Do Drugs Cost What They Do? The Future of the Pharmaceutical Industry Related Industries

Pharmaceutical Industry Goals and Objectives
“Devoted to inventing medicines that allow patients to liver longer, healthier and more productive lives”*. These medicines increase the quality of life around the world, as well as reduce the overall cost of health care and the cost to society. For every $1 spent on: Diabetes medicines $7.10 savings Cholesterol medicines $5.10 savings Blood Pressure drugs $4.00 savings Create financial value for company shareholders – Pharmaceutical companies are for-profit *Source: Pharmaceutical Research and Manufacturers of America

Introduction to the Pharmaceutical Industry
Overview of the Pharmaceutical Industry 11/15/2018 Introduction to the Pharmaceutical Industry Discover, develop, register, manufacture and market products Highly competitive industry Companies race to develop and launch products to maximize market share and sales Geographically concentrated in Northeast U.S., Europe and West Coast U.S. (biotech). Development of new pharmaceutical products is driven by: Patient needs Unmet medical needs Demographics (e.g. an aging population) Evolving disease profiles (e.g. increase in chronic conditions) Business needs Meeting shareholder expectations Growing the business Maximizing market share, sales, profits, and ROI Addressing increasing competition

Introduction to the Pharmaceutical Industry- cont’d
Three major functions Research and Development Manufacturing Commercial Research and Development (R&D) Discovery Development Interaction with other Departments Clinical Studies Marketed Products Product Launch Product Marketing Sales

Introduction to the Pharmaceutical Industry- cont’d
High Risk Industry Success Rates Times and Costs R&D Investment Regulatory Agency Interactions FDA Ex-US Regulatory Agencies ICH Collaborations Discovery – academic collaborations Compounds in Development Marketing Products

Therapeutic Areas A majority of R&D activities focused on these therapeutic areas: Cancer Infectious Diseases Cardiovascular Diseases CNS Disorders Psychological Disorders Vaccines Gastrointestinal Problems Respiratory Problems Blood Disorders Dermatological Disorders Diabetes & Obesity AIDS

Top Global Therapeutic Areas
Source: Pharmaceutical Executive, May 2012

Top Global Products (2011 sales)
Overview of the Pharmaceutical Industry 11/15/2018 Top Global Products (2011 sales) Lipitor (cholesterol reduction, Pfizer): $12.5 billion (-3.3%) Plavix (coronary therapy, Sanofi-Aventis/BMS): $9.3 billion (+3.7%) Serentide/Advair (asthma, GSK): $8.7 billion (+0.04%) Crestor (cholesterol reduction, AstraZeneca): $8.0 billion (+14.4%) Nexium (GERD, AstraZeneca): $7.9 billion (-6.2%) Seroquel (antipsychotic, AstraZeneca): $7.6 billion (+9.5%) Humira (rheumatoid arthritis, Abbott): $7.3 billion (+17.8%) Enbrel (rheumatoid arthritis, Amgen): $6.8 billion (+6.7%) Remicade (rheumatoid arthritis, J&J/Schering): $6.8 billion (+8.4%) Abilify (schizophrenia/depression, BMS/Otsuka): $6.3 billion (+14.3%) Source: Pharmaceutical Executive, May 2012

Top US Products (2011 sales)
Overview of the Pharmaceutical Industry 11/15/2018 Top US Products (2011 sales) Lipitor (cholesterol reduction, Pfizer): $7.7 billion (+5.5%) Plavix (coronary therapy, Sanofi-Aventis/BMS): $6.8 billion (+11.5%) Nexium (GERD, AstraZeneca): $6.2 billion (-1.6%) Abilify (schizophrenia/depression, BMS/Otsuka): $5.2 billion (+13.0%) Advair Diskus (asthma, GSK): $4.6 billion (-2.1%) Seroquel (antipsychotic, AstraZeneca): $4.6 billion (+4.6%) Singular (asthma, Merck $ Co): $4.6 billion (+12.2%) Crestor (cholesterol reductions, Astra Zeneca) $4.4 billion (+15.8%) Cymbalta (depression/chronic pain, Lily): $3.7 billion (+15.6%) Humira (rheumatoid arthritis, Abbott): $3.5 billion (+20.7%) Source: Pharmaceutical Executive, May 2012

Comparison of Top Global and US Products
Top 2011 Global Products Top 2011 US Products Lipitor (cholesterol reduction, Pfizer): $12.5B Plavix (coronary therapy, Sanofi- Aventis/BMS): $9.3B Serentide/Advair (asthma, GSK): $8.7B Crestor (cholesterol reduction, AstraZeneca): $8.0B Nexium (GERD, AstraZeneca): $7.9B Seroquel (antipsychotic, AstraZeneca): $7.6B Humira (rheumatoid arthritis, Abbott): $7.3B Enbrel (rheumatoid arthritis, Amgen): $6.8B Remicade (rheumatoid arthritis, J&J/Schering): $6.8B Abilify (schizophrenia/depression, BMS/Otsucka): $6.3B Lipitor (cholesterol reduction, Pfizer): $7.7B Plavix (coronary therapy, Sanofi- Aventis/BMS): $6.8B Nexium (GERD, AstraZeneca): $6.2B Abilify (schizophrenia/depression, BMS/Otsucka): $6.3B Advair Diskus (asthma, GSK): $4.6B Seroquel (antipsychotic, AstraZeneca): $4.6B Singular (asthma, Merck $ Co): $4.6B Crestor (cholesterol reductions, Astra Zeneca) $4.4B Cymbalta (depression/chronic pain, Lily): $3.7B Humira (rheumatoid arthritis, Abbott): $3.5B

2010 World Pharmaceutical Market of Top 50 Companies: $791 Billion
$42 bn $86 bn $335 bn $98 bn $231 bn Source: Pharmaceutical Executive, May 2011

2011 Revenues and R&D Spend: Top 10 Pharmaceutical Companies
Company Global Pharma Sales ($B) R&D Spend ($B) R&D Spend (%) R&D Spend Rank Pfizer $57.7 $9.1 15.8% 1 Novartis $54.0 16.8% Merck $41.3 $8.5 20.5% 2 Sanofi $37.0 $6.0 16.2% 4 Roche $34.9 $7.9 22.6% 3 GlaxoSmithKline $34.4 $5.8 16.9% 5 Astra Zeneca $33.6 $5.0 14.9% 7 Johnson & Johnson $24.4 $5.1 20.9% 6 Abbott $22.4 $4.1 18.3% 8 Eli Lilly $21.9 22.8% Source: Pharmaceutical Executive, May 2012

Functions in a Pharmaceutical Company

Organization of a Pharmaceutical Company
Corporate Executive Management Legal Aspects Patents Research & Development Discover Drugs Animal Studies Develop Drugs Clinical Studies Formulations Regulatory Interactions Manufacturing Make Drugs for Clinical Studies Produce Drugs for Sale Shipment of Drugs Regulatory Interactions Commercial Launch Drugs Market Drugs Sell Drugs Phase 4 Studies Call Center Science Liaisons Regulatory Interactions Overlap Large vs Small Pharmaceutical Company

Manufacturing

Manufacturing Manufacture and deliver drug product Manufacturing
Chemical Synthesis – Small Molecules Biotechnology – Vaccines and biopharma products For Clinical Studies For Marketed Products Ensure manufacturing processes for drug substance and drug product are robust and optimized Manage costs and improve productivity Demonstrate readiness for registration Assure API, drug product and packaging in compliance and prepared for inspections

Commercial

Commercial Product Launch Product Marketing Sales
Crucial input during development Provides customer-focused approach to drug development Unmet Medical Needs Target audiences Differentiation vs. competition Major input into Target Product Profile (TPP) Establishes important clinical attributes Drives clinical plans Reflects the anticipated label Guides decision-making Serves as the basis for positioning Determine value proposition (4th hurdle)

Research and Development

Product Flow MARKET PLACE PHASES Generate Ideas
Phase I Phase II Phase III Registration Discovery Research Generate Ideas Synthesize and Test Compounds Non-human Safety Testing Preliminary ADME Safety Testing in Healthy Subjects PK/PD Safety Testing in Patients, POC, Dose Pivotal Efficacy Studies in Patients Submissions to Regulatory Agencies

Drug Development – Stages
Discovery (2-10 years) Pre-clinical Testing Laboratory and animal testing Phase healthy volunteers used to determine safety and dosage Phase 2 patient volunteers used to look for efficacy (POC) and side effects Phase 3 3,000-5,000 patient volunteers used to monitor adverse reactions to long-term use FDA Review/ Approval Additional Post-marketing Testing 16 14 12 10 8 6 4 2 Source: PhRMA, based on data from Center for the Study of Drug Development, Tufts University. 1995 Years

Drug Development – Stages & Success Rates
Discovery (2-10 years) Pre-clinical Testing Laboratory and animal testing Phase healthy volunteers used to determine safety and dosage Phase 2 patient volunteers used to look for efficacy (POC) and side effects Phase 3 3,000-5,000 patient volunteers used to monitor adverse reactions to long-term use FDA Review/ Approval Additional Post-marketing Testing 16 14 12 10 8 6 4 2 Source: PhRMA, based on data from Center for the Study of Drug Development, Tufts University. 1995 Years Compound Success Rates by Stage 5, ,000 Screened 250 Enter Preclinical Testing 5 Enter Clinical Testing 1 Approved by the FDA

Regulatory Affairs

Regulatory Affairs Interactions with regulatory agencies US Ex-US
Canada, Europe, Japan, South America, Asia-Pacific CMC focus Chemistry Manufacturing Drug development Pre-clinical activities Clinical trials Marketed products Post approval requirements

Regulatory Interactions US and EU
Pre-IND/CTA Toxicology Post Marketing Commitments Pre-Approval Inspection End of Phase 2 - Chemistry, Manufacturing & Controls End of Phase 2 Discovery Pre-clinical Testing Phase 1 Phase 2 Phase 3 FDA/EU Review/ Approval Additional Post-marketing Testing 16 14 12 10 8 6 4 2 Years Pre-IND/CTA End of Phase 1 Phase 2a Carcinogenicity Assessment Committee Pediatric Pre-NDA/MAA Labeling CHMP Scientific Advice

Navigating the Regulatory Road
Overview of the Pharmaceutical Industry 11/15/2018 Navigating the Regulatory Road Major markets had many redundant conflicting or divergent and unnecessary regulatory requirements…..

International Conference on Harmonization Collaboration
Principals Observers

A Scientist in the Pharmaceutical Industry

Scientific Breadth and Depth
Resource needs change constantly and staff must have the ability to change with the needs Extensive course work; including physical sciences, math and statistics Study as many of the biomedical sciences as possible Study related fields Chemistry, Biochemistry, Physical Chemistry, Statistics, Kinetics, Molecular Biology Genetics/Genomics, “Systems Biology” Grades can be important Scientific breadth; Avoid the temptation to become too highly specialized The broader the background and the more rounded the skill sets, the more valuable the employee is in the long run Avoid the mistake of becoming an expert in a technique or technology; they become obsolete quickly Develop some expertise in, and a working knowledge of, different disciplines: In Vitro In Vivo Different Therapeutic Areas (e.g., Cardiovascular, Neurosciences, etc) From the gene to the intact animal

Life in the Pharmaceutical Industry
Science is more directed Scientists are held accountable Failure is the norm; one needs to be able to cope with failure Change is the norm; one must become comfortable with change Competition (for research money and positions) is keen

Communication & Teamwork Paramount
Written Must communicate your results to others in the company Must publish your results Feasibility Study Proposals Why should we fund your idea as opposed to somebody else’s? Verbal Public Presentations Internal Presentations The Power of Persuasion Many scientists have good ideas, but there is a limited amount of money Collaboration Must be able to collaborate and work well on a team

Career Opportunities for Scientists
What types of jobs are available? Drug Discovery Pharmaceutical Development - Synthetic Chemistry - Formulations - Manufacturing Chemistry Manufacturing - Supervision of manufacturing - Quality control Drug metabolism - In vitro metabolism - In vivo metabolism Animals Humans Toxicology - In vitro - In vivo - animals

Career Opportunities for Scientists-cont’d.
Clinical Research - Clinical studies Operations Statistician Data Clinical Writing Compliance Project Management - Development - All other departments Regulatory Affairs Deal with regulatory authorities in all countries Development CMC Marketed Products Commercial - Sales experience - MBA

Interactions in Pharmaceutical Companies

Interactions in a Pharmaceutical Company
Corporate CEO Legal (incl. Patents) HR Diversity Etc. Research & Development Discovery Clinical (HO, Medical Affairs) Regulatory Affairs Project Management Drug Safety Drug Metabolism Pharm. Development (Formulations) Safety Surveillance Epidemiology R&D Operations Manufacturing Packaging Distribution Supply Chain Etc. Commercial Medical Affairs (P4) Launch Marketing Sales Marketing Research Advertising Managed Care Etc.

Complex and Challenging Interactions in a Pharmaceutical Company
Complex interactions required within R&D for Drug Development Development process requires coordinated interaction between all R&D Departments Interactions between R&D and Manufacturing Pharmaceutical Development and Manufacturing Tech transfer Interactions between R&D and Commercial Commercial input into Development Medical Affairs Portfolio Management Process Licensing - Interactions between R&D and Commercial

Commercial Input into R&D

Target Product Profile
Developed between R&D and Commercial (also Manufacturing) Describes targeted attributes of the compound Establishes important and necessary attributes (e.g. efficacy, safety, formulation, dosing, metabolic, etc.) of the compound Reflects the anticipated label Serves as a basis for developing clinical plans Guides decision-making throughout the development process

Commercial Perspective in Drug Development
Commercial needs to be involved early and often Target Product Profile (TTP) Establish a strong commercial rationale What is the unmet medical need? How is it met by this product? Identify sustainable differentiating features to drive success in the market Determine value proposition (4th hurdle)

Drug Development Process
Drug Development Teams Drug Product Team Pre- development Phase 0 Phase 1 Phase 2 Phase 3 Clinical IND Life Cycle Strategy Discovery Submission Development Track Registration Clin & Comm Supply Strategy Pre -Clinical POC & Dose Decision Point

Drug Development Process
Drug Development Teams Drug Product Team Decision Point TPP Pre- development Phase 0 Phase 1 Phase 2 Phase 3 IND Life Cycle Strategy Discovery Submission Development Track Registration POC

Examples of Interaction Between R&D and Commercial
Life Cycle Management Project New formulation Commercial needs R&D needs Communication Novel Indication Project From Discovery Market/Indication development Development dependent on Commercial

Medical Affairs

Interactions of Medical Affairs and R&D
Overview of the Pharmaceutical Industry 11/15/2018 Interactions of Medical Affairs and R&D Medical and Marketing support the claim Advisory Boards Standard Response Letters Scientific Liaisons Call Center Abstract Presentations Patient Programs Symposia Journal Publications Product Label Change Phase IV Program Discovery, Clinical and Health Outcomes lead the drug to launch Patients get the benefit

More Information on the Pharmaceutical Industry

What to Look at in a Pharmaceutical Company
Revenues Vs. the top companies Number of products Growth R&D Spending Pipeline Compounds in all Phases NMEs vs. LCMs Back up compounds Intellectual property Patents Generics Therapeutic areas Unmet medical need Marketed products vs. Pipeline Pipeline Technology Platforms Small molecules Proteins (biotech) Vaccines (antibodies) Innovation First in class Best in class

2011 Revenues and R&D Spend: Top 10 Pharmaceutical Companies
Company Global Pharma Sales ($B) R&D Spend ($B) R&D Spend (%) Pfizer $57.7 $9.1 15.8% Novartis $54.0 16.8% Merck $41.3 $8.5 20.5% Sanofi $37.0 $6.0 16.2% Roche $34.9 $7.9 22.6% GlaxoSmithKline $34.4 $5.8 16.9% Astra Zeneca $33.6 $5.0 14.9% Johnson & Johnson $24.4 $5.1 20.9% Abbott $22.4 $4.1 18.3% Eli Lilly $21.9 22.8% Source: Pharmaceutical Executive, May 2011

2006 R&D Expenditures (billions)
Number of Products Company 2006 Revenues (billions) # Employees 2006 R&D Expenditures (billions) # Compounds/ % Pharma Sales Pfizer $45.6 98,000 $7.6 2 / 40% GlaxoSmithKline $36.9 102,695 $6.9 10 / 60% Novartis $31.5 100,735 $5.3 10 / 45% Sanofi-Aventis $31.1 100,289 $6.5 10 / 55% Johnson & Johnson $27.6 122,200 $7.1 10 / 70% AstraZeneca $27.5 66,800 $3.9 2 / 38% Merck $25.1 60,000 $4.8 2 / 85% Roche $23.5 74,372 $6.0 Abbott $17.8 66,663 $2.3 10/ 62% Amgen $16.2 20,050 $3.4 2 / 56% Ref: IMS Health Knowledge LInk

11/15/2018 R&D Pipeline Example Phase 0 Phase I Phase II Phase III Registration Recently Approved/ Launched ABC-123 DEF-456 GHI-789 JKL-123 MNO-456 PQR-789 STU-123 VWX-456 YZA-789 BCD-123 EFG-456 Small Molecules Proteins Vaccines

Effective Product Exclusivity
Compound Patent Appl’n filed Appl’n granted 20 yr. Patent term NDA Approval 1st generic Challenge Effective Exclusivity = 5 to 7 years plus extensions

Prozac Total Rxs 12 months prior to generic to present
Overview of the Pharmaceutical Industry 11/15/2018 Prozac Total Rxs 12 months prior to generic to present

Patent Expirations 2011 & 2012 (US & Ex-US)
Overview of the Pharmaceutical Industry 11/15/2018 Patent Expirations 2011 & (US & Ex-US) 2011 US 2012 US 2012 Ex-US Lipitor (Pfizer) $7.2B Plavix (BMS/Sanofi) $6.8B Advair Diskus (GSK) $4.7B Seroquel (Astra Zeneca) $4.6B Zyprexa (Eli Lilly)$3.0B Singulair (Merck) $4.6B Japan, UK, Germany Levaquin (Ortho-McNeil) $1.5B Crestor (AstraZeneca) $4.4B UK, France Concerta (Johnson & Johnson) $929M Actos (Takeda) $3.4B Xalatan (Pfizer) $711M Enbrel (Amgen) $3.5B Protonix (Pfizer) $690M Lexapro (Forest Labs) $2.9B Femara (Novartis) $682M Viagra (Pfizer) $2.0B Source: Pharmaceutical Executive, May 2011; Daily Finance, Feb. 2011

Technology Platforms (marketed products)
Pharmaceutical Co. Pfizer Small Molecules Proteins Vaccines Wyeth Merck Schering-Plough Lilly Roche J&J Novartis Amgen Biogen idec Icos Biotechnology Co. Gilead

Why Do Drugs Cost What They Do?

Overall Health Care Spending and Drug Costs

2010 Total Health Care Spending (% GDP)
Source: OECD Health Data 2012

Total US Health Care Spending (% GDP)

Total US Health Care Spending (per capita)
Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: /data en (Accessed on 14 February 2011). Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted. Break in series: CAN(1995); SWE(1993, 2001); SWI(1995); UK (1997). Numbers are PPP adjusted. Estimates for Canada and Switzerland in 2008.

Projected Health Care Spending as % GDP
Source: Congressional Budget Office. Note: Amounts for Medicare are net of beneficiaries’ premiums. Amounts for Medicaid are federal spending only.

How the Healthcare Dollar Is Spent
Home Health & Nursing Home Care 8% Hospital Care 32% Administration 7% Other 2% Rx Drugs 10% Physician & Clinical 21% PhRMA, Key Industry Facts About PhRMA, 2012

Why Do Drugs Cost What They Do?
Risks are very high Costs are escalating at an unsustainable rate Increasing complexity of clinical trials Negative impact of mergers and acquisitions (M&A) on R&D output Molecular targets are more difficult and the science is more innovative Success rates are decreasing Development times are increasing Regulatory burden Lack of international regulatory harmonization Shift in risk/benefit ratio: expectations for safety are becoming unrealistic/unachievable Limited time of patent exclusivity Product liability But drugs can actually reduce health care costs

Price Differentials Among the US, Canada, EU and Japan
The Pharmaceutical Industry does not charge more in the US than in Canada, Europe or Japan The Pharmaceutical Industry only sets prices in the US The Pharmaceutical Industry requests the same price in all other countries, but have no pricing authority; prices are usually set by the governments (outside the US) The situation becomes worse when EU countries subsequently lower prices, and Japan has mandatory price reductions every two years

The Pharmaceutical Industry Outspends the NIH on Biomedical Research
Expenditures (Billions of Dollars) PhRMA NIH *Estimated Ref: PhRMA, “What Goes Into the Cost of Prescription Drugs?” & AAAS, OMB Data FY2006 and Pharmaceutical Executive May 2012

Costs of Discovering and Developing a New Drug
Dollars (millions) Source: Pharmaceutical Executive, May 2012

Increasing Complexity of Clinical Trials
Parameter 1999 2005 % change Unique Procedures per Protocol 24 35 +46% Total Procedures per Protocol 96 158 +65% Clinical Trial Staff Work Burden (work-effort units) 21 +67% Length of Clinical Trial (days) 460 780 +70% Clinical Trial Participant Enrollment Rate (% meeting eligibility criteria) 75% 59% -21 % Clinical Trial Participant Retention Rate 69% 26% -30% Source: Pharmaceutical Executive, May 2009

The Future of the Pharmaceutical Industry

Future of the Pharmaceutical Industry
Consolidation in the Pharmaceutical Industry Merck and Schering Plough Pfizer and Wyeth Patent expirations Anticipated Changes in Pharmaceutical Companies

Consolidation in the Pharmaceutical Industry

Merger & Acquisitions 2005 – # mergers relatively constant (~44 mergers/yr, $51 B) 2009 – # decreased and value increased (Pfizer/Wyeth, Merck/Schering Plough, total 29 mergers, $126.5 B) Date Acquirer Target Value ($mil) 10/25/09 Pfizer Wyeth 67,007 11/3/09 Merck & Co. Schering-Plough 41,000 7/22/09 GlaxoSmithKline Stiefel Labs 2,900 10/30/09 Warner Chilcott Procter & Gamble Pharmaceuticals 3,200 10/20/09 Dainippon Sumitomo Sepracor 2,572 3/12/09 Sanofi-Aventis Sentiva 1,560 12/2/09 Watson Pharmaceuticals Arrow Group 1,750 4/17/09 Gilead Sciences CV Therapeutics 1,309 9/24/09 Novartis Speciality Genetics, EEBEWE Pharma 1,300 3/19/09 Lundbeck Ovation 900 Source: Pharmaceutical Executive, May 2010

Industry Consolidation (1) 1980-2003
SK&F Allegan Beckman SKB Beecham DPS Sterling GSK Glaxo Wellcome GW Affymax B-M Mead Johnson Westwood Dupont BMS Zimmer Squibb GlaxoSmithKline Bristol-Myers Squibb

Ciba Geigy Ciba/ Sandoz Food & Beverage Lek Sygenta Novartis BASF Generics

Pfizer Pharmacia AB UpJohn Monsanto (Ag) PHA G.D. Searle Sugen PFE Warner- Hudnut Lambert Pharmaceutical Parke- Davis Esperion

Synofi-Synthelabo-Aventis Marion Merrell Richardson Hoechst Aventis Centeon Dow Roussel Uclaf Behring Institut Merieux Rhône- Poulenc Union Carbide Ag Rorer Animal Nutrition Crop Sciences -Bayer Pasteur Connaught Sanofi- Synthelabo Sterling Winthrop Kodak Elf Aquitaine Sanofi

Ayerst Praxis Lederle-Praxis WYETH Lederle (MRD) American Cyanamid Genetics Institute Ag Products Robins Apollon Immunex Ives Whitehall Ft Dodge Wyeth Solgar Sherwood- Davis & Geck Foods Storz Quinton Amgen AHP

Risk: Industry Consolidation
For the 6 illustrated competitor companies 47 precedent companies collapsed to just 6 companies in 20 years: a lot of risk It takes 8 significant pharmaceutical companies to make 1 current pharmaceutical company This represents an approximate 90% collapse in the number of pharmaceutical companies

These Mergers Have Not Been Good For R&D: R&D Can Be Disrupted for >3 Years
After a merger, performance is less than the sum of the two companies Sources: Cambridge Healthtech Advisors, Centre Watch Branca, A.F., Key Forces Driving the Pharmaceutical Industry into 2004, Cambridge Healthtech Advisors, January 2004

Anticipated Changes in the Pharmaceutical Industry

Anticipated Changes in the Pharmaceutical Industry
Continued reduction in employees More reliance on contractors and outsourcing Increased outsourcing Increasing number of CROs Diversity of focus of CROs Shift in NCE to India and China* Increased concentration on Biotech and NBEs in US* * Nick Roelofs,Ph.D., VP and General Manager, Life Sciences Solutions Unit, Agilent Technologies, Opening Keynote Speech, Bioscience Business Roundtable, August 12, 2009

Functions in a Pharmaceutical Company
(Regulatory Interactions) Manufacture Drugs MAJOR PHARMACEUTICAL COMPANY Discover Drugs Develop Drugs Launch & Market Drugs * Nick Roelofs,Ph.D., VP and General Manager, Life Sciences Solutions Unit, Agilent Technologies, Opening Keynote Speech, Bioscience Business Roundtable, August 12, 2009 Smaller pharmaceuticl companies - partial CROs, contractors, etc. - additional support Biotech companies – NBE

Future Pharmaceutical Industry?
Small molecules (NCE) New biologics (NBE) Manufacture Drugs Universities & Research Centers (incubators) Designated Biotech Firm Major Pharmaceutical Companies Discover Drugs Develop Drugs (Clinical Studies) Launch & Market Drugs * Nick Roelofs,Ph.D., VP and General Manager, Life Sciences Solutions Unit, Agilent Technologies, Opening Keynote Speech, Bioscience Business Roundtable, August 12, 2009

Related Industries

11/15/2018 Related Industries Biotechnology Companies Medical Device and Diagnostic Companies Generic Drug Companies Service Providers Consulting Companies Contract Research Organizations (CROs) Site Management Organizations (SMOs) Marketing Research Companies Contract Sales Organizations (CSOs) Advertising Agencies Education and Training

Biotechnology Companies
Overview of the Pharmaceutical Industry 11/15/2018 Biotechnology Companies Develop drugs, diagnostics, other therapeutic products from genomics- and proteomics-research related data. Biotechnology also have agricultural, environmental and industrial applications. The biotechnology industry is regulated by the FDA, EPA and US Dept. of Agriculture (USDA). In 1982, recombinant human insulin became the first biotech therapy to earn FDA approval (developed by Genentech and Eli Lilly and Co.) Biotechnology has created 250 new therapies and vaccines, including products to treat cancer, diabetes, HIV/AIDS and autoimmune diseases. As of Dec. 31, 2006, there were 1,452 biotech companies in the US, 336 were publically held. The biotech industry employed 180,000 people in the US in 2006 Revenues for the biotech industry increased from $8 billion in 1992 to $58.8 billion in 2006 US publicly traded biotech companies spent $27.1 billion on R&D in 2006. Some biotech companies are completely independent (e.g., Amgen, Biogen) while others serve as sources of new technology/products for other, larger companies. In 2007, biotech companies signed 417 new partnerships with pharmaceutical companies and 473 deals with fellow biotech companies. Source: Biotechnology Industry Organization web site,

More Than 900 Biotechnology Drugs in Development in 2011

Biotechnology Companies*
Overview of the Pharmaceutical Industry 11/15/2018 Biotechnology Companies* Amgen (Thousand Oaks, CA) $17.6 billion Genentech (San Francisco, CA) $2.4 billion (wholly owned subsidiary of Roche) Merck Serono (Geneva Switzerland) (subsidiary of German Merck KBaA) Biogen IDEC (Cambridge, MA) $5.0 billion Millennium Pharmaceuticals (Cambridge, MA) $120 million, (wholly owned subsidiary of Takeda) Centocor (Horsham, PA) (Johnson & Johnson) ViroPharma (Exton, PA) $544 million * Based on 2011 sales Source: Hoover’s Business Profiles

Medical Device and Diagnostic Companies
Overview of the Pharmaceutical Industry 11/15/2018 Medical Device and Diagnostic Companies Manufacture products and/or offer therapies and services that extend or enhance lives (e.g., pacemakers, artificial heart, spinal implants, anesthesia, hip and knee replacements, mammography, surgical products) or aid in diagnosis (e.g., bone density, imaging agents, radiopharmaceuticals) More than 240 companies -- both privately and publicly held -- across the U.S. Sales at these companies range from under $500,000 to more than $5 billion

Medical Device Companies*
Overview of the Pharmaceutical Industry 11/15/2018 Medical Device Companies* Medtronic (Minneapolis, MN) $16.2 billion (2012) Siemens Healthcare (Erlangen, Germany), $13.1 billion (2012) Tyco Healthcare (subsidiary of Tyco International) GE Healthcare (Chalfont St. Giles, UK) $16.9 billion (2012) Smith & Nephew (London UK) $4.3 billion (2012) Therakos Inc. (Johnson & Johnson, Exton, PA) Medtronic -- cardiac pacing products Siemens -- MRI/imaging systems Mallinckrodt -- respiratory devices (e.g., ventilators) and imaging agents Amersham -- diagnostic imaging, x-ray, ultrasound, MRI, radiopharmaceuticals Smith & Nephew -- joint and bone repair; tissue repair substances * Based on sales for indicated years Source: Hoover’s Business Profiles, company web sites

Generic Drug Manufacturers
Overview of the Pharmaceutical Industry 11/15/2018 Generic Drug Manufacturers Generally do not conduct R&D; only submit an Abbreviated New Drug Application (ANDA) Introduce generic version of branded product after patent has expired or after successful challenge to patent Average price of a prescription dispensed with a brand name drug in 2006 was $111.02 Average price of a prescription dispensed with a generic drug in 2006 was $32.23 Source: GenericAccess web site,

Generic Drug Manufacturers*
Overview of the Pharmaceutical Industry 11/15/2018 Generic Drug Manufacturers* Teva (Petach Tikvah, Israel; North Wales, PA) Generic and branded $18.3 billion (acquired Barr late 2008) King Pharmaceuticals (Bristol, TN) Generic and branded, $1.8 billion (acquired Alpharma late 2008) (2009) Watson Pharmaceuticals (Corona, CA) Generic and branded, $4.6 billion Mylan (Cannonsburgh, PA) $6.1 billion Sandoz (Novartis subsidiary, Princeton, NJ) $277 million * Based on 2012 annual sales Source: Hoover’s Business Profiles, company web sites

11/15/2018 Consulting Companies Primarily called upon for expertise not resident within the pharmaceutical company and/or to address projects of a limited time frame for which it would not be effective to develop and/or utilize internal resources Pharmaceutical companies utilize consulting companies to perform a variety of services including: Strategy development Organizational process and design Process improvement Technology assessment and implementation Training Mergers and acquisitions

Consulting Companies*
Accenture Barnett International Boston Consulting Group Deloitte Consulting First Consulting Group PriceWaterhouse Coopers ProMetrics (Healthcare management and internet) * Sales figures not available; firms do not separately report pharmaceutical practice sales from overall business

Contract Research Organizations (CROs)
Overview of the Pharmaceutical Industry 11/15/2018 Contract Research Organizations (CROs) Conduct all or part of the clinical and/or pre-clinical studies involved in the product development process Provide a range of clinical services including: Preclinical studies in drug discovery, toxicology, safety pharmacology, etc. An estimated $3.3 billion was spent on CRO services in 2000 in the U.S. Clinical monitoring Data management Investigator and patient recruitment Protocol development Regulatory advice Site selection Study design

Contract Research Organizations
Overview of the Pharmaceutical Industry 11/15/2018 Contract Research Organizations Quintiles Covance PPD PAREXEL Kendle International ICON Clinical Research Absorption Systems (Technical and scientific research) Puresyn (Biotech research) Progenra (Drug discovery) Accugenix, Inc. (Microbial ID) Reaction Biology (Biotech research) Life Sensors Inc (Biomedical research)

Site Management Organizations (SMOs)
Overview of the Pharmaceutical Industry 11/15/2018 Site Management Organizations (SMOs) Centrally managed groups of multiple clincial investigators Work on behalf of CROs or pharmaceutical/biotechnology companies Provide sets of clinical investigators Focus is on patient recruitment/enrollment and site initiation 30-40 SMOs in the U.S., mostly privately held

Marketing Research Companies
Provide qualitative and quantitative market research products and services to help pharmaceutical companies: Assess market demand Determine sales force productivity Forecast market potential Identify target audiences Position new products Support product launch Track market share and uptake

Marketing Research Companies
IMS Health NDC Health Migliara Kaplan NOP World Health Scott-Levin

Contract Sales Organizations (CSOs)
Provide sales resources to supplement pharmaceutical companies’ own sales organization(s) Often utilized to help pharmaceutical companies meet their sales and marketing objectives by: Bolstering sales organizations during pre launch and/or product launch phases Focusing on specific physician specialties Promoting older, “back of the line” products

Contract Sales Organizations
Innovex Nelson Professional Sales Professional Detailing, Inc. Ventiv Health

11/15/2018 Advertising Agencies Help pharmaceutical companies develop and implement marketing and sales strategies to maximize market share, sales and profits Must understand and respond to the changing marketplace Services provided by advertising agencies to pharmaceutical companies include: New product launch plans Journal ad campaigns Direct mail campaigns Sales strategies and sales support tools Professional promotions Direct-to-consumer advertising

Advertising Agencies Nelson Communications CommonHealth
Lowe Healthcare Oglivy Healthworld Grey Healthcare

Education and Training Companies
Educate pharmaceutical personnel on a variety of topics in Commercial and R&D: Good Clinical Practices (GCP) Good Manufacturing Practices (GMP) Drug Development Process Emerging and industry issues Regulatory requirements Selling skills Therapeutic categories Leadership Skills Provide training in various formats: Computer-based training (CBT) Industry conferences Instructor-led classroom training Live, over the internet training

Educations and Training Companies
Barnett International Drug Information Association (DIA) Institute for International Research Pharmaceutical Education & Research Institute SRI International

QUESTIONS

More Than 3,000 Drugs in Development in 2011
Medicines in Development in 2011 for Selected Conditions Source: Adis R&D Database and PhRMA

Drug Development – Stages & Success Rates
Developing a New Drug Takes an Average of years

Pharmaceutical Lifecycle
New pharmaceutical medicines face competition after a relative short period on the market Composition of matter patent

Overview of the Pharmaceutical Industry

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Overview of the Pharmaceutical Industry

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Presentation on theme: "Overview of the Pharmaceutical Industry"— Presentation transcript:

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About project

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