Pharmaceutical companies stand to earn high rewards through innovative development strategies
With the cost of bringing a single novel drug to market estimated to be $2.6bn in 2015, pharmaceutical companies are increasingly looking towards developing first-in-class treatments to maximise revenue and stay ahead of competition, according to business intelligence provider GBI Research.
The company’s latest report states that the growth in drug research and development (R&D) costs appears to stem from an increased clinical failure rate and emphasis on proving superiority over comparator drugs in technology assessments, as well as an increasing level of sophistication from payers when assessing the cost-effectiveness of drugs.
Dominic Trewartha, Managing Analyst for GBI Research, explains: ‘Owing to the inherently limited lifecycle of a patented drug and growing R&D costs as a percentage of net sales, the pharmaceutical industry has the highest R&D expenditure of all industries. As such, imperatives for pharmaceutical companies include reducing product development costs, maximising the annual product revenue, and optimising the lifecycle of a drug, primarily by minimising the impact of the entry of generics. Together, these factors favour the inclusion of first-in-class pipeline products within a balanced pipeline portfolio.’
Higher-risk programmes for innovative first-in-class products remain attractive and have led to some of the most clinically and commercially successful products during the past decade, and the 4964 first-in-class products currently in development represent 37.9% of pharmaceutical pipeline products with a disclosed molecular target.
Overall, ‘me-too’ drugs, which are structurally very similar to already established drugs, have traditionally been highly commercially and clinically successful. These products continue to provide a well-established pathway for promising product developments based on a lower risk profile based on safer and more cost-effective incremental innovation.
Trewartha adds, however: ‘Some of the most successful products of the previous 10 years have been first-in-class therapies, including Avastin (bevacizumab), Rituxan (rituximab), Herceptin (trastuzumab) and Gleevec (imatinib). Additionally, when 2015 FDA approvals are analysed, first-in-class products have far higher average projected sales than non-first-in-class products, indicating that this trend is set to continue in the future.’
‘GBI Research believes that despite the high risks involved in developing first-in-class products, pharmaceutical companies stand to earn high rewards through innovative development strategies,’ he concludes.