Approaching the abyss

For years, pharma pundits have been issuing increasingly dire warnings about the lack of new drugs

For at least the last five years, pharma pundits have been issuing increasingly dire warnings about the lack of new drugs to replace the significant number of blockbusters that are due to come off patent imminently.

Hilary Ayshford

But many years of in-licensing, out-licensing, outsourcing and shifting operations from one side of the world to the other, combined with the global economic recession, mean that most pharma companies no longer have the resources within their own organisations to fill the innovation gap.

Acquisition is one way to make up the shortfall, and economic recovery means an upturn in m&a activity is likely. The difficulty could be finding the right match – when times are hard, the suitors are looking for a substantial dowry rather than high-maintenance brides from impoverished backgrounds.

Another way of covering the gap in the pipeline – and therefore the deficit in revenues – is to extend the patent life of existing drugs. Research by IP group Marks & Clerk found that 97% of those questioned believe that the industry’s reliance on supplementary protection certificates (SPCs) in Europe will continue or intensify as blockbusters near the end of their patent life.

In the EU, at least, this is far from a guarantee of surviving the lean times ahead. Almost 90% of the respondents in the survey believe that SPCs should be granted for secondary, follow-on drug formulations and three-quarters claim that there is not enough recognition for the role played in advancing medicines by incremental innovation.

In contrast, optimism rules on the other side of the Atlantic. According to Marks & Clerk, a majority reject the idea that healthcare reform will harm drug innovation in the US. Almost two-thirds believe that margin reduction will be offset by higher sales or that the reforms could benefit innovation in the long run.

At a time when pharma companies in the EU need help to revitalise their r&d, the authorities are failing to respond to the changing needs of the industry. In fact, the recent changes to the patent application system will come down hardest on the smaller companies that are the innovators of tomorrow.

It would be regrettable from a European point of view if the balance of power in pharma r&d moves back to the US – but perhaps not that much of a surprise.