Bio Pharma 2015: Soaring to New Heights

Bio Pharma's ascendancy continues as the industry matures

By Steven E. Kuehn

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What’s the future of Bio Pharma? While no one’s crystal ball is clear enough to exactly predict where the industry is headed, it remains perfectly clear Bio Pharma is soaring, climbing to a new cruising altitude, flying higher than ever as it becomes the carrier of choice for the future of the pharmaceutical industry.

John J. Castellani, president and CEO of Pharmaceutical Research and Manufacturers of America (PhRMA) offered this in his letter introducing the association’s “2015 Biopharmaceutical Research Industry Profile:” Massive change continues across the United States and global health care systems driven by new health care policies, demographic shifts, changes in lifestyle, but — most of all — evolving, accelerating science.” His final remark, “evolving, accelerating science” succinctly describes the force from which Bio Pharma has and will continue to derive its lift. Research and development spending by its members, according to PhRMA, grew from $2 billion in 1980 to an estimated $51.6 billion in 2013. The percentage of sales that went to R&D in 2013 reached 23.4 percent of domestic sales. 

 Apparently a lot of that R&D money was spent by the Bio Pharma sector. The U.S. biopharmaceutical industry is one of the most research-intensive industries in the country, says PhRMA’s report, investing more than 13 times the amount of R&D per employee than manufacturing industries overall. According to the National Science Foundation, the U.S. biopharmaceutical sector accounts for the single largest share of all U.S. business R&D, representing about 1 in every 5 dollars spent on domestic R&D by U.S. businesses.

Of the billions of dollars spent on R&D each year by the biopharmaceutical industry, the vast majority is spent on clinical research, says PhRMA’s report, accounting for roughly 90 percent of all spending on clinical trials of medicines and devices in the United States. In 2013, PhRMA says the biopharmaceutical industry sponsored an impressive 6,199 clinical trials.

Everyone knows developing biopharmaceutical drugs is expensive. Average time to develop a new drug is more than 10 years, and the percentage of drugs entering clinical trials resulting in an approved medicine equal less than 12 percent. Current estimates peg the cost to successfully develop and bring to market a new drug at more than $2.6 billion. PhRMA notes rapid changes in molecular science have ushered in a new era of innovative biopharmaceuticals and their rise has been spectacular, especially over the last 10 years. From the first angiogenic medicine for Cancer in 2004 to oral treatments for Hepatitis, 17 new drugs for rare diseases and 7,000 medicines in development in 2014, Bio Pharma has truly ascended to a new level.

MONEY WELL SPENT
Forbes Magazine contributor Bernard Munos notes in a recent article that 2014 was a great year for pharmaceutical innovation for both New Chemical Entities (NCEs) and New Biological Entities (NBEs): “The best, in fact, since the industry’s all-time record of 1996.” Munos says in 2014 the FDA approved a total of 44 drugs, 39 by CDER, and 5 by CBER. Explaining that the total excludes imaging agents and includes only the biologicals drugs that are of rDNA origin, Munos reported that biologicals captured “a total of 16 approvals (35 percent) — a big hike from 2013 when they garnered 22 percent. Seventeen of these drugs (39 percent) featured novel modes of action, as in 2013 (37 percent).”

Munos says that compared to innovation during the pre-2010 decade that was dominated by mediocre, overpriced drugs, “we are now seeing cure rates (hepatitis) or remission rates (cancer) that are nothing short of stunning.” Regarding biopharmaceutical innovation, Munos says the industry is “witnessing rapid progress with a range of new technologies such as CAR T-cell, gene editing, synthetic biology, biochips, bioprinting, and tissue engineering that promise to transform treatments for entire therapeutic areas — such as rare diseases — as well as produce tools that will speed drug R&D and lower its costs.”

TO COME: HYPER INNOVATION
Munos notes that far from running out of innovation, “we are actually on the cusp of a hyper-innovation age that will see treatment options expand from small molecules, monoclonals and peptides to a whole range of new and more effective therapies.” But this innovation won’t be free from challenges or a fair measure of risk, and companies that will emerge as leaders will need to be more aggressive, less conservative and push past their comfort zones to succeed. “These innovation champions,” says Munos, “include Novartis, J&J, GlaxoSmithKline, as well as recent converts such as AstraZeneca that are working hard at restoring a vibrant culture of innovation to their R&D operations.”

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