Scrip 100 Scrip’s analysis of the ’s performance and prospects 2009

ODT and

Tel: +41 91 935 5110 Tel: Email: [email protected] www.alpex.com Web:

ablets

isintegrating T Emesis; disease; and Parkinson’s (MS). (ALS)/multiple sclerosis lateral sclerosis Amyotrophic No stirring required for tablet disintegration; No stirring required formula; and Sugar-free Safe for diabetics. formula (safe for diabetics); Sugar-free matrix; Highly hydrophilic Highly soluble matrix; Suitable for those who dislike swallowing tablets, and the elderly; such as children Ideal for acute conditions; and hay including allergies migraine, treat to used be Can disease, pain. reux diarrhoea, gastro-oesophageal fever, Administration at onset of symptoms; faster onset; Perceived Patient hydration: 150-200 ml of water required; (APIs) in suspension/solution; Active ingredients Potential faster adsorption; for tablet disintegration; Stirring required formula; and Sugar-free Safe for diabetics. formula (safe for diabetics); Sugar-free matrix; Highly hydrophilic Highly soluble matrix; can be adsorbed avoiding stomach degradation; and Ideal for acute conditions. r r r r r r r r r r r r r r r r r r r r r r r r r Alpex Pharma SA 6805 Mezzovico Switzerland These products are also ideal for conditions in which are These products Buccal tablets proprietary patented this to according formulated Tablets able to dissolve in the oral technology are INFORMATION CONTACT Granular in sachets containing moisture Granular in sachets containing moisture sensitive products can be formulated with the Products following claims: Orally D to this pat- formulated according Tablets able to dis- technology are ented proprietary solve rapidly on contact with saliva releasing a highly soluble matrix. the from include: features Product including: swallowing is compromised, the buccal the drug to be absorbed through cavity releasing include: features mucosa. Product

chewable – products products –

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the company can carry out

moisture-proof packaging such moisture-proof CO

. The predominant focus for Alpex is the development The predominant focus for .

O 2 (heat) - + H 3

Administration at onset of symptoms; faster onset; Perceived Patient hydration: 150-200 ml of water required; (APIs) in suspension/solution (this can Active ingredients in better absorption); result of CO2; solution because of presence Buffered of gastric mucosa; Protection Potential faster adsorption; Fizzy solution (taste improvement); Manufacturing of solid dosage forms include orally disintegrating tablets (ODT), Packaging of products – Packaging of products as aluminium-aluminium blisters, aluminium-aluminium strips, aluminium-aluminium sachets, plastic tubes and plastic bottles with desiccant in the cap. Development capability – compatibility studies on actives and excipients, formula- analytical tion work including taste masking capability, development and validation, scale-up, stability studies, of bio-batches, validation of manufacturing preparation batches – all in GMP-compliant environments. tablets, effervescent tablets, buccal tablets, effervescent granular in sachets, granular in sachets and moisture- tablets. sensitive regular Fast release technology from Switzerland from technology release Fast HCO

H Effervescent Tablets. The Effervescent predominant focus Tablets. for Alpex is the development of solid dosage Alpex Pharma Alpex r r r r r r r r t t t summarised as below: granular in sachets of the residual is characterised by strict control The reaction in the ambient and produced present amount of moisture as well as on the nal dosage form. during the process, form can be The advantages of an effervescent Effervescent products are characterised by a are products Effervescent of chemical incompatibility between a source CO2 (normally sodium bicarbonate) and an acid (e.g. citric, tartaric or malic acid). organic catalysed This is an autocatalytic reaction, of water and heat, which by the presence generates CO2 in solution: PRODUCT CHARACTERISTICS tablets and effervescent Effervescent PRODUCTS/SERVICES COMPANY DESCRIPTION COMPANY Alpex Pharma is a Swiss drug delivery company specialising and production in the formulation, development, registration in water of solid dosage forms characterised by rapid release Alpex Pharma collaborates with in the oral cavity. or directly its of distribution the for companies medium-sized and large in various markets. products

For more information, please contact: of the solid dosage forms to deliver drugs directly into the oral cavity in order of the solid dosage forms to deliver of drugs and at the same time, to potentially improve the bioavailability and convenience. improve the patient compliance formulation development team cient 1985, has an effi established in The company, track record. site with an excellent cGMP and a well experienced manufacturing pipe-line Alpex products are marketed worldwide and has a consistent of new formulations for the European and the US market. of Lugano Its state-of-the-art facility is conveniently located in the north and packaging and houses two independent dedicated plants for manufacturing pharmaceutical and nutraceutical products. Effervescent Tablets Effervescent Alpex Pharma SA Alpex Pharma is an independent Swiss drug delivery company specialised in the is an independent Swiss drug delivery Alpex Pharma of proprietary solid dosage forms such as development and manufacture Via Cantonale, Via CH-6805 Mezzovico (Lugano) Switzerland +41 (0)91 935 51 10 Tel: Fax: +41 (0)91 935 51 20 Email: [email protected] www.alpex.com Website:

the environment makes the difference! Melting… Melting… is not a novelty….

the environment makes the difference! Melting… Melting… is not a novelty…. Alpex Pharma SA – Via Cantonale CH-6805 Mezzovico (Lugano), Switzerland +41 (0) 91 Tel: 935 51 10 Fax: +41 (0) 91 935 51 20 Email: [email protected] Website: www.alpex.com For more information, please contact: Its state-of-the-art facility is conveniently located in north of Lugano and houses two independent dedicated plants for pharmaceutical and nutraceutical products. Alpex products are marketed worldwide and has a consistent pipe-line of new formulations for the formulationsfor new of pipe-line consistent a has and worldwide marketed are products Alpex European and the US market. Alpex has an efficient formulation development team and a manufacturing site with an excellent cGMP track record. The company, established in 1985, was managed from 1992 by Elan established Corporation as in Elan 1985, Pharmawas managed from The company, SA. It became independent in 2004. forms forms to deliver drugs directly into the oral cavity in drugs order and at the same to time, improve the patient compliance potentially and convenience. improve the bioavailability of Alpex Pharma is an independent Swiss drug delivery company specialized in the development and manufacture of proprietary solid Tablets and dosage forms such as Orally Disintegrating Tablets, Buccal                                             

 

16813 KENDLE Scrip PCT Nov08 FP AW.indd 1 14/10/08 14:30:34 Contents

SALES & MARKETING 30 The latest buzz in sales force effectiveness How sales teams stand to gain from network intelligence and new web-based detailing approaches R&D 33 Innervation or enervation in pharma? Reports abound about pharma’s productivity crisis, but is the industry really in such a bad way? 38 40 Stem cells continue to excite Controversial and emotive, yet stem cell research Introduction is still capturing the imagination of the R&D All eyes on oncology community Industry’s most explored therapy area 5 witnesses both high-profile successes and Restructuring is the name 44 of the game in 2008 failures in 2008 Japanese approvals marked by high-need Given current turmoil in the financial markets, products should we be worried about a failure in the Initiatives aimed at bringing Japan’s therapeutic pharmaceutical sector? offerings more in line with other developed markets begin to bear fruit THE SCRIP 100 46 8 US NME approvals: cancer no longer Pfizer clings to top spot reigns supreme The US giant continues to reign, but competition Cancer and HIV therapies take a back seat to among the other heavyweights hots up constipation and hypertension in 2008 12 48 Life after M&A EU drug approvals roundup How two perfectly matched CROs merged to Generics and biosimilars join innovative drugs in form a global player the queue of products going through the EU’s centralised procedure BUSINESS 50 15 Empowerment through IT The next challenge for big pharma’s Pharma needs tools to track and report on clinical Mr Fix-it data and the IT community is evolving to respond Schering-Plough boss Fred Hassan mulls over the 18 to that US election and outlines his personable approach to doing business M&A: activity continues DRUG DELIVERY apace within pharma 23 Large buyouts capture the headlines while 53 Destination Moscow… Deals define drug delivery space in 2008 numerous smaller-scale transactions target Merck & Co’s head of global pharmaceuticals Dealmaking continues apace in the drug delivery Adam Schechter explains why he clocks up so biologics, generics and the speciality space with sector with players cashing in on new and many air miles the promise of business model diversification innovative technologies 25 2008 stock tracker: how robust is pharma? Scrip 100 sponsor Biopharmaceutical share prices held fast against extreme market volatility in 2008, but who were the winners and losers? 28 Sponsors How to spend it Pharma through the eyes of a global private equity player

www.scripnews.com/supplements Scrip 100 3 Contents

POLICY & REGULATION EMERGING MARKETS 60 92 89 US grapples with paying for pricey drugs Latin America: ripe for clinical research? What’s ruffling US seniors’ feathers? As the high-growth economies of Latin America become increasingly attractive, its largest markets are looking to align their regulatory systems with 63 those of the west Biosimilars regulation finds its feet Europe remains the only major market with a biosimilars regulatory pathway, but the US might 94 soon catch up Ranbaxy buyout heats up Indian M&A Daiichi Sankyo plunges headlong into the Indian 65 market, buying up domestic champion Ranbaxy, The view from Canary Wharf but who will follow? Thomas Lönngren, head of the EMEA, muses on improving the efficiency of drug development, as 98 well as that of his own organisation Enter the ‘pharmerging’ markets As expansion in the world’s major markets slows, Will live up to its pharma already has its eye on a handful of new 68 growth drivers innovative potential? Japan’s PMDA puts its house in order The Japanese regulator squares up to one of its OUTSOURCING Not content with its status as a generics and biggest challenges: the country’s ‘drug lag’ problem antibiotics manufacturer, China is hoping to transform its domestic pharma industry into a 101 70 Exit task in-sourcing, enter comprehensive powerhouse of innovative R&D The expert third party outsourcing A group of scientists who decided that working for The key to optimising clinical trials management: the regulators wasn’t a job for life outsourcing larger, more comprehensive pieces of CLINICAL TRIALS work 106 73 Joined up thinking Safety issues to the fore Why clinical supplies and supply chain management The US FDA flexes its newfound drug safety muscle Scrip 100 are rising up pharma’s agenda through the FDAAA, while risk management A supplement to Scrip World initiatives gather pace in the EU Pharmaceutical News 109 77 The CRO turns transaction trendsetter Editor: Pete Chan Europe’s watershed year for paediatric What’s whetting clinical outsourcing providers’ Managing Editor: medicines appetite for M&A deals? John Davis The EU now has its first drug developed specifically Sales Managers: for children, with the prospect of many more to 112 Fergus Gregory, come On the crest of the middle tier Jennifer Cheng These are high times for CROs driven by pharma’s Designers: 80 push for cost-containment Paul Pancham, Trial starts signal industry’s best bets Myriam Lengliné, Analysis of recently initiated clinical trials points to 115 Nathan Bentley, the future direction of pharmaceutical R&D Risk: assessment, aversion and denial Paul Wilkinson How globalisation has become a bugbear for the Front cover image: fine chemicals community Mark Frost 86 Cognition mission Head of Production: Lee Spencer How assessment of cognitive processes can support Production Editor: Zoë Dann 118 safety and efficacy testing in clinical research Chemistry class Advertising Production: Tony Dixon Companies might consolidate to deliver larger, more Publisher: Phil Jarvis sophisticated contracts, but not at the expense of Head office: Informa Pharma, Telephone House, their reactive edge 69-77 Paul Street, London, EC2A 4LQ, UK Tel: +44 (0)20 7017 5000 CAREERS & PEOPLE © Informa UK Ltd 2008 All rights reserved. Full terms and conditions available on request. 121 Knowing your unknowns The views expressed in this supplement are the views of the authors but not necessarily those of Scrip. While Neglecting to ensure employees fully understand information is compiled with all due care, Informa UK their jobs is setting pharma up for considerable risk Ltd will not be liable for the consequences of anyone acting or refraining from acting in reliance on any information. Printed by Newman Thomson, Burgess Hill, West Sussex, RH15 9TL, UK Yes Obama can, but what www.scripnews.com/supplements change for pharma? Is the new US President a friend 57 of innovators? Published December 2008

4 www.scripnews.com/supplements Scrip 100 Introduction

Restructuring is the name of the game in 2008 In the current economic climate, has anyone considered the repercussions of a major pharmaceutical company, generics rm or wholesaler collapsing, asks John Davis

ith most branded medicines being particular therapeutic areas. Dainippon marketed by a relatively small Sumitomo has entered a research alliance Wnumber of innovative companies, with Osaka University to discover new and the majority of everyday drugs coming therapies for schizophrenia and depression. from a handful of multinational generics firms, The idea is that these collaborations are not is it reasonable to be worried about a failure technology transfer or licensing arrangements in the pharmaceuticals sector? – they are a much more integral part of a There is no evidence of such problems company’s research. among major companies, and to raise the Another way to transform a company’s possibility of this happening could be seen as R&D is to outsource major functions. Lilly, unnecessary scaremongering. After all, the for example, has entered into a laboratory pharmaceutical industry is, hopefully, fully services contract with Covance in a aware of its societal responsibilities. $1.6 billion deal. Other functions are being But among smaller companies and the outsourced too. Amgen has forged a biotech sector, financial survival is a very real $500 million, five-year deal with IBM for the concern. Early in 2008, numerous biotech supply of information systems infrastructure, firms started cutting back on their headcounts. electronic messaging, helpdesk support and Nitromed, Pharmexa, Vernalis, Vaxgen, server hosting. Neurogen and Kosan Biosciences were just a few of the many companies announcing such redundancies moves. Costs are being reduced across the board in Perhaps the most surprising For big pharma, the main concerns major pharmaceutical companies, with sales continue to be the declining numbers of new forces being a prime target. During the past outcome of this current round products coming through the R&D pipeline, 12 months, Wyeth, Schering-Plough and of change is that a company’s longer and more stringent regulatory Merck & Co have all said they will cut more own R&D function is no longer processes, low revenue growth due to than 1,000 sales jobs. Other companies increasing competition and patent expiry, and announcing cutbacks included Lilly, UCB, considered untouchable greater pressure on pricing from healthcare Sanofi-Aventis, AstraZeneca and GSK. providers and health technology assessment The range of research is also being bodies. narrowed, even at the large companies like These issues are discussed in depth in this Pfizer, where cardiovascular research has taken year’s Scrip 100. As the publication shows, a back seat. Schering-Plough, like several they are being addressed in a variety of ways, others, is to concentrate on oncology and with “restructuring” being very much the Alzheimer’s disease research, while Novo activity of the moment. Nordisk says it is exiting cancer. Antibacterial Perhaps the most surprising outcome of R&D may be unfashionable in some quarters, this current round of change is that a but Merck & Co and Orchid Chemicals and company’s own R&D function is no longer Pharmaceuticals have entered into a considered untouchable. Dainippon Sumitomo $100 million partnership to develop new Pharma, GlaxoSmithKline and Pfizer, for bacterial and fungal infection agents. example, have established deeper relationships with academic centres, and may partly replace M&A still hot their own in-house research with a new Are mergers and acquisitions now old hat? model of company-academic co-operation. You might not think so, looking at the activity Pfizer has signed a $15 million partnership in the marketplace over the past 12 months. with the University of Pennsylvania, and GSK Roche has offered $44 billion for the has set up a collaboration with Harvard remainder of Genentech that it does not own. University, while also indicating that it wants to Novartis is attempting to acquire Alcon in a form smaller research units focused on $38 billion two-step process. And Lilly has

www.scripnews.com/supplements Scrip 100 5 Introduction

paid $6.5 billion for ImClone Systems. Major Astellas concluded a deal worth up to The repercussions will be with the industry pharma companies have also continued to $760 million with the private US firm for some time to come. The oversight of snap up smaller firms with promising products Comentis, which has a beta-secretase contract manufacture by end-users and – Roche paid $175 million for the UK firm inhibiting compound, while Pfizer forged a regulatory authorities will be tightened, and Piramed, Pfizer shelled out $195 million for $700 million agreement with Medivation to concerns about counterfeiting are likely to be Encysive Pharmaceuticals, and Sanofi-Pasteur develop the latter’s lead product Dimebon for amplified. Existing initiatives such as the has bought the UK firm Acambis. Alzheimer’s and Huntington’s diseases. WHO’s IMPACT are likely to be BTG has said it will acquire Protherics for complemented by a proposed international £218 million in an all-share offer, and a step- new executives treaty, the anti-counterfeiting trade agreement by-step process is envisaged by Boehringer The road ahead is expected to be rocky, and (ACTA), and similar plans from the European Ingelheim in its acquisition of Actimis for several major pharmaceutical companies have Commission. around $515 million. GSK snapped up Sirtris appointed new executives to lead them Trust in the industry seems to be in short Pharmaceuticals for $720 million in cash, to through these difficult times. supply at the moment, particularly when gain access to products which may be of use has been appointed GSK’s other events over the past 12 months are in age-related diseases. CEO to succeed Dr Jean-Pierre Garnier, and considered. At the beginning of 2008, the The Japanese industry has instigated a wave Sanofi-Aventis has appointed Chris Viehbacher European Commission kicked off a of consolidation while at the same time CEO, replacing Dr Gerard Le Fur. pharmaceutical sector inquiry with a series of targeting the acquisition of US firms – one of Mr Viebacher, who was president of GSK’s dawn raids at a number of pharma firms. The the largest deals being Takeda’s $8.8 billion North American pharmaceutical operations, aim was to see whether potential anti- cash takeover of Millennium Pharmaceuticals. missed out on the top slot at GSK when competitive behaviour was one of the reasons Takeda also completed the buyout of Abbott Dr Garnier stepped down. In September, for the lack of new medicines and delays in from TAP Pharmaceutical Products, creating a Dr Garnier was appointed general manager at the entry of generics. More raids have since business which will be among the top 15 the French firm Pierre Fabre. followed. pharma companies in the US. Johnson & Johnson has announced that Trust was an issue in the UK in March During the year Eisai completed its Christine Poon, its worldwide chairman of when the regulator, the MHRA, condemned acquisition of MGI Pharma for $3.9 billion in pharmaceuticals, is to step down in March GSK for not being quicker in the past with its cash and Fujifilm bought Toyama Chemical for 2009, when she will be succeeded by Sheri side-effect reporting in children taking the ¥136 billion. Kirin Brewery completed its McCoy, who was leading the firm’s surgical antidepressant Seroxat (). The purchase of Kyowa Hakko in October and care group. Dr Robert Ruffolo has retired as company had not broken any laws, but the Daiichi Sankyo paid €150 million for the president of Wyeth Research and as a senior agency believed it had abused its position of private German firm U3 Pharma. In vice-president at the company. trust. September, Shionogi said it would buy the US In February, James Cornelius, CEO of Adding to the negative sentiment are some firm Sciele Pharma for $1.4 billion. Bristol-Myers Squibb, was appointed to the rather large payments by companies to settle In the generics sector, Daiichi Sankyo made additional position of chairman. Wyeth disputes in the US. Lilly said recently that it a stunning move on the Indian firm Ranbaxy appointed Bernard Poussot chairman, was setting aside $1.4 billion to settle long- valued finally at $4.5 billion, while Teva has said replacing Robert Essner, who has retired. standing federal and state investigations of its it will buy the US generics firm Barr Over at Lilly, president and CEO Dr John marketing for its schizophrenia therapy Pharmaceuticals for $7.5 billion. Teva also paid Lechleiter will become chairman on January Zyprexa (olanzapine). And Pfizer agreed to $400 million for Cogenesys to make it a 1st, 2009, when Sidney Taurel retires from the pay $894 million to resolve most of the legal leader in the biogenerics market and struck a company and the board. claims surrounding its COX-2 inhibitors, joint venture deal with Kowa to move into Elsewhere, Dr Janet Woodcock has been Celebrex (celecoxib) and Bextra (valdecoxib). the Japanese market. In April, Alpharma named director of the US FDA’s Center for divested its API business to 3i for $395 million, Drug Evaluation and Research, and Dr Harvey new product cheer and in November finally accepted a Bale stepped down as director-general of the But there was some good news on the new $1.6 billion takeover bid from King International Federation of Pharmaceutical product front. Two novel oral anticoagulants Pharmaceuticals. In turn, Sanofi-Aventis has Manufacturers and Associations, after 11 years were approved during the year: Boehringer been bidding for the eastern European in the post. Ingelheim’s Pradaxa (dabigatran etexilate) and branded generics company Zentiva. Bayer Schering/Johnson & Johnson’s Xarelto And the large transformational deal is not counterfeiting on the rise (rivaroxaban), which may, along with other dead either. Regulus Therapeutics signed one Counterfeit medicines have been a source of new products, eventually replace the use of potentially worth $600 million with GSK, to growing unease over the past few years, and intravenous heparin and oral warfarin. develop microRNA therapeutics for immuno- the problem came into even sharper focus at Two new thrombopoietin , Amgen’s inflammatory diseases. Valeant entered into a the start of 2008 with the heparin scandal. Nplate (romiplostim) and GSK’s Promacta $820 million deal with GSK to develop the At the beginning of February, Baxter in the (), were also approved, as were anti-epilepsy drug , a first-in-class US suspended its heparin multidose vials after GSK/Adolor’s Entereg (alvimopan) for post- neuronal potassium . GSK also an increasing number of reports of possible operative ileus, Wyeth/Progenics’ Relistor struck a $840 million deal with Cellzome to allergic reactions. It later emerged, after (methylnaltrexone bromide) for - discover and develop novel kinase-targeted considerable detective work, that the product induced constipation, and Regeneron therapeutics against inflammatory diseases, contained a contaminant, over-sulfated Pharmaceutical’s interleukin-1 inhibitor, believed to be one of the largest preclinical chondroitin sulfate, thought to have been Arcalyst (rilonacept), for cryopyrin-associated deals. Merck Serono signed up to a deal illicitly introduced during its contract periodic syndromes. worth more than €300 million with Ablynx manufacture in China. Recalls of heparin and involving the Belgian firm’s Nanobodies low-molecular-weight heparin products were John Davis is the managing editor of Scrip World technology. instituted throughout the world. Pharmaceutical News.

6 www.scripnews.com/supplements Scrip 100

Scrip 100

P zer clings to top spot 2007 saw very little change to the ranking of the top companies, although there are signs that competition for the number one spot is hotting up, reports Dr Peter Charlish

espite a 1.5% dip in its competition to its older products, with sales of company not only had to contend with generic pharmaceutical sales, Pfizer managed Norvasc (the antihypertensive, competition to the likes of Flonase (the Dto hold on to the top spot in the besylate) and Zoloft (the antidepressant, intranasal rhinitis treatment, Scrip 100 list of top pharmaceutical sertraline) alone falling by $3.44 billion in the propionate), Wellbutrin XL (the antidepressant, companies for 2007, which ranks firms full year. Sales of Lipitor (the hypolipaemic, ), Zofran (the anti-emetic according to their sales of prescription atorvastatin) were impacted by the appearance ) and Coreg IR (the alpha/beta- pharmaceutical products. Pfizer’s of generic versions of its main competitor, blocking agent ), but it also pharmaceutical sales for 2007 stood at Merck & Co’s Zocor (simvastatin), although in suffered a 22% decrease in global sales of its $44.42 billion. But the gap between Pfizer this case the impact was somewhat cushioned diabetes drug Avandia ( maleate) and its main rival for the number one by the weakness of the US dollar, which following an article in The New England Journal position, GlaxoSmithKline, narrowed as GSK inflated foreign sales. And, of course, Pfizer was of Medicine that suggested there may be a reported a 4.0% rise in sales to $38.5 billion. also hit by the decision to terminate its inhaled cardiovascular risk associated with its use. The The decline in Pfizer’s pharmaceutical sales insulin product, Exubera, in October 2007. Not impact of these factors is likely to continue to was largely the result of growing generic that 2007 was an easy year for GSK. The be felt in 2008.

8 www.scripnews.com/supplements Scrip 100 Scrip 100

Although GSK managed to increase its company’s generics unit, were up by 20% at challenges, including the acceleration of pharmaceutical sales by 4% in 2007, this was $7.17 billion. candidates currently in Phase II (it has 48 at still way below the average 8.2% increase Somewhere in the middle in terms of the time of writing) to Phase III, and becoming among the top 10 companies as a whole. revenue growth was Sanofi-Aventis, which saw a top-tier company in biotherapeutics. Indeed, some of the top 10 exceeded this its pharmaceutical sales increase by 7.9% to The next most prolific spender was average by a wide margin: Lilly, for instance, $38.45 billion. A number of factors GlaxoSmithKline, which spent a comparatively reported a 19% increase in its pharmaceutical contributed to Sanofi-Aventis’s growth, modest $6.66 billion on pharma R&D in 2007 sales, to $17.64 billion. Dr John Lechleiter, including a 14.5% increase in net vaccine sales; (17.3% of pharma sales). The company Lilly’s president and CEO, described 2007 as a 29% increase in sales of Lantus, which reported a good year for its R&D team, with “one of the strongest years we have had in became the first insulin brand to exceed 34 “key assets” in Phase III or preregistration, some time”. €2 billion of sales; and a marked decline in three NCEs and one new vaccine approved, Lilly’s strong performance was underpinned selling and general expenses. The strong 10 new products filed with regulators, and by sales of its newer products in particular. growth in Lantus sales was aided by the wide nine new Phase III programmes started. Products launched this decade accounted for availability of the SoloSTAR disposable pen in Snapping at GSK’s heels was Roche, whose one-third of sales in 2007, compared with most European countries as well as the US, $6.34 billion spending on pharma R&D one-quarter in 2006. Lilly faces the prospect and during 2007 the company presented data represented a 20.4% increase compared with of increasing generic competition: its top- to show that insulin therapy with Lantus is 2006. Roche initiated a major reorganisation selling product, the antipsychotic Zyprexa associated with a lower incidence of of its R&D activities in mid-2007, with research (olanzapine), will go off-patent early next subsequent myocardial infarction, compared now built around five Disease Biology Areas: decade. Undeterred, the company is hoping to with NPH insulin. Another product showing oncology, virology, inflammation, metabolism maintain its current momentum, indicating that relatively strong growth was the multiple and CNS. By the beginning of 2008, Roche’s it wants to launch six new NME or NME-like sclerosis treatment Copaxone (glatiramer pipeline comprised 115 clinical projects, molecules by 2011, and to have at least 10 acetate). including 57 new molecular entities: 34 of new promising molecules in Phase III by the As in previous years, M&A activity has these are currently in Phase I, 19 in Phase II end of that period. resulted in some companies disappearing and four in Phase III or filed for regulatory Also reporting strong growth was Roche. completely from the Scrip 100 list, while review. The company’s pharmaceuticals division, which others have moved up the rankings on the Among the top players, the company comprises Roche Pharmaceuticals and back of their newly enlarged businesses. Akzo spending the biggest proportion of its majority shareholdings in Genentech and Nobel, which stood at number 29 last year, revenues on R&D was Schering-Plough, Chugai, reported sales up by 15.4% at sold its Organon BioSciences business to allocating 28.8% of its pharmaceutical sales to $30.69 billion. As well as robust sales of the Schering-Plough in November 2007. It is no R&D in 2007. This amounted to almost company’s key products in the oncology, longer classed as a pharmaceutical company $3 billion spread across a range of areas transplantation, metabolism/bone and virology and therefore is absent from the table. including cancer, infectious diseases, acute and therapy areas, a major driving force behind this Organon’s results are only included in the chronic respiratory conditions, inflammatory performance was sales of Genentech’s macular Schering-Plough accounts for the period diseases, cardiovascular and metabolic diseases, degeneration treatment, Lucentis subsequent to the acquisition date, and and neurodegenerative diseases. Schering- (ranibizumab). therefore only had a marginal effect on Plough currently has 11 products in Phase III Looking ahead, Roche sees strength in its Schering-Plough’s overall pharma sales figure trials, as well as two awaiting approval (one of broad product portfolio – it has nine for 2007 (which nevertheless showed a which was acquired with Organon pharmaceutical products producing more than healthy 18.8% increase). The 2008 results, BioSciences). Also spending a well-above CHF1 billion a year in revenues – and the fact however, will contain a full year’s contribution average proportion of its sales revenues on that, with one exception, none of its major from Organon. R&D was Merck & Co, which allocated products is facing patent expiry over the next Another name to disappear was Altana, $4.88 billion of its $20.1 billion pharmaceutical few years. So there is every chance that next which is now part of Nycomed (the acquisition sales revenues to research. year will see Roche move even higher up the has resulted in Nycomed moving up the Barring unforeseen events, next year’s rankings. rankings), while Serono became part of Merck league tables will probably see very little The other Swiss giant, Novartis, reported Serono at the beginning of 2007. Later in the change from the picture today. GSK still has pharmaceutical sales of $31.19 billion for 2007 year, MedImmune was acquired by AstraZeneca, some way to go to catch up with Pfizer at the which, at 9.3%, grew slightly faster than the thus disappearing from the rankings, and Tanabe top of the sales league, but could itself be average for its top-10 peer group. While Seiyaku merged with Mitsubishi Pharma to form overtaken by Sanofi-Aventis. The French Europe, Latin America and key emerging Mitsubishi Tanabe Pharma, which entered the company’s sales in 2007 were a mere whisker markets generated double-digit growth, and rankings at number 37. behind those of GSK, but they seem to be many products strengthened their leading growing at a faster rate. In its turn, Novartis is positions, business in the US was impacted by R&D spending still some way behind Sanofi-Aventis. But the generic competition and the suspension of the There are no surprises when it comes to fact that the top four companies report their irritable bowel treatment Zelnorm (tegaserod which companies spent the most on results in four different currencies should also maleate) in March 2007. Novartis pharmaceutical R&D in 2007. The biggest add a bit of spice to the contest for the top subsequently initiated a restricted access spender by some way was Pfizer, which spot. programme for the product, but in April 2008 committed $8.09 billion to pharma R&D, or suspended that programme. The effect of the 18.2% of pharmaceutical sales, slightly below Zelnorm suspension is therefore likely to be the average for the 10 top-spending felt in 2008 as well. companies. Pfizer has long had a reputation for There was also good news for Novartis in having one of the best R&D pipelines in the Dr Peter Charlish is a the area, where net sales increased to industry; the company currently has almost principal analyst for Informa $1.45 billion, driven by vaccines for tick-borne 180 projects at various stages of development, Pharma. encephalitis, paediatric immunisation and including 17 compounds in Phase III trials. seasonal . Sales by Sandoz, the Pfizer has set itself a number of R&D

www.scripnews.com/supplements Scrip 100 9 Scrip 100

The Scrip 100 Ranking Company Pharma sales 2007 % change Pharma sales as ($ million) % of total sales 1 Pfizer 44,424 –1.5 91.8 2 GlaxoSmithKline 38,501 4.0 84.7 3 Sanofi-Aventis 38,452 7.9 100.0 4 Novartis 31,194 9.3 78.4 5 Roche 30,686 15.4 79.7 6 AstraZeneca 29,559 11.6 100.0 7 Johnson & Johnson 24,866 6.9 40.7 8 Merck & Co 20,102 –1.3 83.1 9 Wyeth 18,662 10.5 83.3 10 Lilly 17,638 19.0 94.7 11 Bristol-Myers Squibb 15,622 12.7 80.7 12 Abbott Laboratories 14,632 18.0 56.5 13 Boehringer Ingelheim 14,453 13.3 96.3 14 Amgen 14,311 3.3 100.0 15 Bayer 14,073 49.8 31.7 16 Takeda 10,813 4.5 92.5 17 Schering-Plough 10,173 18.8 80.2 18 Teva Pharmaceutical Industries 9,408 11.9 100.0 19 Procter & Gamble 8,964 14.2 11.7 20 Astellas 8,258 –1.2 99.9 21 Novo Nordisk 7,696 17.9 100.0 22 Daiichi Sankyo 7,481 3.9 100.0 23 Merck KGaA 6,313 118.4 68.0 24 Baxter International 6,150 14.9 54.6 25 Eisai 6,050 7.8 96.9 26 Otsuka Pharmaceutical 5,442 9.8 69.0 27 Servier 4,798 N/A 100.0 28 Nycomed 4,794 12.4 100.0 29 UCB 4,370 59.8 100.0 30 Gilead Sciences 3,733 44.2 100.0 31 Solvay 3,552 8.7 27.1 32 Forest Laboratories 3,502 10.0 100.0 33 Allergan 3,105 17.7 80.1 34 Genzyme 2,833 21.8 81.9 35 CSL 2,662 24.0 100.0 36 Hospira 2,546 38.9 74.1 37 Mitsubishi Tanabe Pharma 2,483 75.9 92.6 38 Watson Pharmaceuticals 2,350 20.6 100.0 39 Barr Pharmaceuticals 2,334 61.6 100.0 40 Alcon 2,314 15.3 41.3 41 Shire 2,170 41.3 100.0 42 Stada 2,153 37.6 100.0 43 Biogen Idec 2,137 20.0 100.0 44 Taisho Pharmaceutical 2,122 1.9 100.0 45 King Pharmaceuticals 2,054 7.7 100.0 46 Lundbeck 1,894 27.1 93.7 47 Dainippon Sumitomo Pharma 1,774 0.0 79.0 48 Shionogi 1,772 7.3 97.3 49 Cephalon 1,727 0.4 100.0 50 Ranbaxy 1,692 24.6 94.0

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The Scrip 100 (continued) Ranking Company Pharma sales 2007 % change Pharma sales as ($ million) % of total sales 51 Mylan 1,587 28.0 100.0 52 Covidien 1,330 9.1 13.1 53 Celgene 1,300 60.2 100.0 54 Ipsen 1,262 16.6 100.0 55 Ono Pharmaceutical 1,240 1.8 100.0 56 Dr Reddy’s Laboratories 1,193 –16.1 100.0 57 Sepracor 1,177 2.4 100.0 58 Kyowa Hakko 1,176 4.0 35.3 59 Meda 1,124 81.1 100.0 60 Almirall 1,086 14.1 100.0 61 Endo Pharmaceuticals 1,086 19.3 100.0 62 Actelion 1,078 46.1 100.0 63 Grünenthal 1,050 N/A 90.6 64 Esteve 1,049 16.4 100.0 65 Hisamitsu 1,012 7.2 100.0 66 Galderma 1,007 16.7 100.0 67 Krka 993 28.2 92.8 68 Teijin Pharma 972 –0.1 11.0 69 Cipla 972 27.7 100.0 70 Leo Pharma 965 10.7 100.0 71 Meiji Seika 963 2.1 28.0 72 Asahi Kasei Pharma 945 5.2 6.6 73 Gedeon Richter 934 14.9 100.0 74 Taiho Pharmaceutical 933 5.2 82.5 75 Sigma-Tau 912 8.2 100.0 76 Chiesi 899 20.7 100.0 77 Warner Chilcott 888 18.1 100.0 78 Santen Pharmaceutical 857 2.5 97.5 79 Recordati 851 18.9 100.0 80 Zentiva 826 32.8 100.0 81 Valeant Pharmaceuticals 818 –1.0 100.0 82 Sun Pharmaceutical Industries 813 72.0 100.0 83 Biovail 801 –21.6 100.0 84 Orion Pharma 790 16.9 84.3 85 Pierre Fabre 750 N/A N/A 86 Par Pharmaceutical 739 4.8 100.0 87 Ajinomoto 715 –0.3 7.3 88 Amylin Pharmaceuticals 701 48.0 100.0 89 Kyorin 689 3.9 100.0 90 Dong-A Pharmaceutical 687 13.4 100.0 91 Kaken Pharmaceutical 679 3.4 100.0 92 Nicholas Piramal India 667 25.4 95.9 93 Lupin 656 47.1 100.0 94 Wockhardt 643 67.9 100.0 95 Egis Pharmaceuticals 641 21.3 100.0 96 Mochida Pharmaceutical 634 –0.5 100.0 97 Kirin Holdings 594 2.8 3.9 98 KV Pharmaceutical 583 37.3 96.8 99 Toray Industries 576 –3.9 4.1 100 Cadila Healthcare 549 38.9 100.0

Source: Scrip League Tables 2008. Sales figures refer to sales by the named company itself and do not include sales by licensees or other third parties.

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Life after M&A One year after the merger of CRO rms Averion and Hesperion, Dr Markus Weissbach, CEO of the combined company, Averion International, tells Frances Gapper about life as a local and global player

Most importantly, however, the combined You have been CEO of Averion for DR MARKUS WEISSBACH Q. companies under the Averion International more than a year now. What are some of banner have now moved onto the global the key issues that you have been stage. The company is now well positioned to dealing with? meet the needs of its clients locally as well as globally. The top priority for this year has been to integrate the staff, culture and operational What effect has the Hesperion processes of Averion and Hesperion, while Q. acquisition had on Averion’s operations? ensuring that the quality and timelines of our client deliverables were unaffected. Clearly Is Hesperion now fully integrated into the organisation was going through a the group? transition period and we recognised the need to work diligently to assure no interruption in This speaks to the core reasons that we service levels. This has been a year of change, created Averion International. Our larger size growth and focus on an expanded mission. provides us with the resources to select I am pleased to report that we have appropriately experienced and geographically expanded our newly established global located staff to work on a project team. With footprint by opening new offices and our expanded geographical reach, we can operations in central and eastern Europe, truly run studies in more countries with local further broadening our reach. teams. It is critical and more economical to use local teams who are familiar with local languages, cultures and regulations. Q. You were previously CEO of As a full-service provider, Averion Hesperion – would you say a bit about this International offers the full range of clinical company, its development and the reasons trials services from Phase I-IV through to for the merger? regulatory submissions. We are flexible and offer our services as a niche provider in Hesperion was founded in 1997 and over the support of full-service trials. 10 years pre-merger, the company grew into a primarily European CRO with significant Q. In 2008, Averion opened an office in experience in supporting global cardiology, the Czech Republic and another in Ukraine. oncology and vaccines trials. Before the merger, Will central and eastern Europe continue Hesperion had already started to expand into to be a main focus of growth for Averion? the US to meet the needs of its European clients that were looking to run trials in this key Central and eastern Europe will continue to market. As this client need increased, Hesperion be a focus area for growth for Averion explored a number of strategic alternatives, International as these regions offer a strong including looking for a comparable merger/ clinical trial environment with large patient acquisition partner that was established in the populations and well qualified investigators in US, but which needed the European coverage a broad range of indications. These factors are that Hesperion offered. top priority for our clients and are vital to the Averion, a company of similar size, was a successful conduct of international trials. predominantly US player with a relatively In addition, we continue to explore other small European presence. Thus, with minimal regions for expansion based on our clients’ client and geographical overlap, a similar needs. corporate culture, and comparable therapeutic expertise, Averion turned out to be the perfect merger partner: Averion and Q. Why has Averion focused on the Hesperion were an ideal match. areas of oncology, cardiovascular diseases, Ultimately, the merger doubled the size of dermatology and medical devices? the combined company, expanded our geographical coverage, deepened our Our clients want specific experience and therapeutic expertise and brought two highly in-depth expertise in the particular therapeutic professional and experienced teams together. indications for which they develop new drugs or

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devices. Over the past year, Averion a deviation arises. A client must be able to trust International has further developed and that Averion International cares as much about Q. What is the outlook for the CRO broadened its experience in the areas on which the success of the project as they do. And at industry given the current difficult the two legacy companies had focused their Averion International, our team and the client’s economic climate in which budgets are interest and know-how over the previous team are actually one team. shrinking and decision-making timelines are decade. Our people, our processes, and our I also believe that easy access for the client to being stretched out? knowledge of high-quality sites and physicians the senior CRO management team, which has are exceptional in these therapeutic areas. Our hands-on experience in the planning, conduct 2009 will indeed be a challenging year for the operational expert teams, supported by and problem resolution, is another advantage CRO industry and we are diligently preparing in-house therapeutic area heads and external that a company of our size provides. ourselves to maintain our growth and academic advisory boards, have first-hand skills profitability. and knowledge in bringing oncology, Can you reveal anything about your We made the move to expand our presence cardiovascular, dermatology and medical device Q. growth strategy? on both sides of the Atlantic, streamlined our projects from “first-in-man” to “regulatory filing”. processes and procedures increasing our This is what we deliver. efficiencies, and we are now seeing the benefits. It’s simple. If we continue to meet and exceed Our strengths are our people, our passion for our clients’ expectations we will win more excellence, our processes and our size. Q. What do you think that your clients business and new clients. This is the best kind As a mid-sized CRO, we have the resources seek in an ideal CRO partner? of growth and this is what we expect to necessary to meet the requirements of large achieve. pharma, biotech and medical device companies, Well firstly, the most basic criterion for a CRO Moving forward, we will continue to look for as well as the flexibility to work with emerging partner is being able to offer experience in the opportunities that will expand our capabilities and development stage companies. Importantly, client’s specific product indication and and to stay at the cutting-edge of clinical trial our size allows us to be nimble and to adapt capabilities to match the project requirements. service offerings. Any acquisitions will be quickly to change. Therefore, Averion Such capabilities would include the specific strategic and must add value for our clients International is uniquely positioned to face the service tasks, geographical scope as well as staff and shareholders. challenges expected for 2009. resources to get the project done. We look to attract the best and brightest We are optimistic about our prospects for When you look to the next level, project professional staff to provide best-in-class 2009 because we took bold steps to create a team chemistry is critical to the relationship. The services to our clients in our areas of new Averion International just a year ago and client and CRO project teams work together therapeutic focus. We will continue to set up are continuing proactively to adapt to the on trials over an extended period of time and operations in key countries where patient peculiarities of a rapidly changing market! the teams need to share the same vision, work populations and investigators are readily values, ethics and methodologies. We must have available to meet our clients’ needs. Meeting a solid project execution plan and associated client needs will be the primary driver for Frances Gapper is an editor for Informa Pharma. problem solving and escalation processes when Averion’s future growth.

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The next challenge for big pharma’s Mr Fix-it After the merger of Pharmacia and Pfizer in 2002, Fred Hassan could have taken easy street with early retirement. But he didn’t, choosing instead to join a beleaguered Schering-Plough. Five years on the company is going strong and the CEO now has bigger fish to fry: the next President of the US, writes Christopher Spillane

www.scripnews.com/supplements Scrip 100 15­­ Business

t Hofstra University in Hempstead, “I think it’s good that both candidates will Pharmacia Corporation. New York, Bob Schieffer, an American try to expand healthcare insurance,” said Soon after completing this merger in 2001, Anews anchor and moderator for the Mr Hassan, but he believes the basic model in Mr Hassan called his front line managers in third and final US presidential debate, turned which the private sector provides health Northern Europe to a meeting in Berlin, to his left and said: “All right, let’s go to a new coverage is the correct way of implementation. repeating this exercise in Rome for managers topic: healthcare.” Although Mr Hassan was keeping his political in Southern Europe. He also spoke directly Both presidential candidates at the time, doors open (an advisor to the CEO called with front line managers throughout Europe, Barack Obama of the Democratic party and following the interview to confirm this), his South Africa and the Middle East. the Republicans’ John McCain, composed comments could be interpreted as an Fast forward to April 2003, when themselves and smiled intently after a heated endorsement of Republican healthcare policy, Mr Hassan joined Schering-Plough, and within discourse about US dependence on foreign particularly as he has been a critic of his first days at the company, he had shared oil. Democratic takes on healthcare reform in the his five-step action agenda (stabilise; repair; “Given the current economic situation,” past. turnaround; build the base; and breakout) continued Mr Schieffer, “would either of you Mr Hassan talked of Hillary Clinton’s both with employees and Schering-Plough’s now favour controlling healthcare costs over healthcare proposals of 1994, which were board. expanding healthcare coverage? The question ultimately thrown out. Republicans derided Mr Hassan had inherited a morass of is first to Senator Obama.” the reform as an example of “big challenges, including two federal investigations After some dalliance, with Mr Obama government”, criticising its bureaucratic nature (into improper marketing practices, including vaguely outlining his universal healthcare and restriction of patient choice. There were alleged kickbacks) and a $500 million fine manifesto, he eventually said: “We’ll negotiate a series of extensive and influential television from the US FDA for breaching good with the drug companies for the cheapest advertisements condemning the plan, and the manufacturing practices. Since then he has available price on drugs.” reform subsequently drowned in red tape. turned Schering-Plough around and guided Mr Schieffer then invited Mr McCain’s “Both candidates have recognised that the the company towards 17 consecutive thoughts, which hovered around insurance 1993-94 experience did not do much and quarters of revenue growth. premiums and the need for online records, was probably not a good idea, especially at a More impressively, he took Schering-Plough before swiftly returning to political tit-for-tat time when they were stretched on the away from a reliance on a single blockbuster and point scoring. And with that, the financials,” commented Mr Hassan, adding that (the , Claritin (loratadine)), pharmaceutical industry entered and swiftly the “Clinton document [was] over- diversifying the company’s much-maligned left the political debate. complicated, very hard to read and pipeline, most recently with the $15 billion While other companies, particularly those understand, and too ambitious”. acquisition of Organon Biosciences from from the financial and energy sectors, were Our conversation moved on to Europe Akzo Nobel. where, noting my British accent, Mr Hassan “I work very hard to reach out to the front named and shamed, the drugs industry started off with the UK. He thinks progress is line,” explained Mr Hassan. “My philosophy is escaped the debates relatively unscathed. In being made with Gordon Brown’s Labour that the front line manager directly influences fact, this was the only time the pharma government in the sense that our staff as they [provide] the motivation and industry was mentioned in close to four-and- “pharmaceuticals need to have more morale [to] the people who do the work.” a-half hours of presidential debates that were investment at times like these because it is What about different cultures? Surely the broadcast to more than 173 million the most efficient component of the manner in which you approach a manager in Americans. But to the 62-year-old CEO of healthcare system”. Saudi Arabia is different from a conversation Schering-Plough, this came as no surprise. with someone in England? I could barely Although “working, travelling and early punctuate the sentence before Mr Hassan nights” meant that Fred Hassan wasn’t one of Pharmaceuticals need to have asserted: “I don’t think natural cultures come the millions of Americans (he’s a naturalised more investment at times like in the way of wanting to have shared citizen) watching the final debate, he has accountability, or people wanting to been keeping abreast of the clashes. these because it is the most continuously improve, or people wanting to In a calm and confident American accent, effi cient component of the approach other people.” peppered with his native Pakistani intonation, healthcare system Pausing briefly, he continued: “These are Mr Hassan told me: “I don’t think that once very basic behaviours for people – they are they understand all of the facts here, that the very intrinsic. It used to be said that [in] pharmaceutical industry will be their main Things have also gone well in discussions certain cultures, say [in] Latin America, that target to cut costs. There are other areas to with other European governments. “Even this sort of thing wouldn’t happen, but I’ve reduce healthcare costs.” though sometimes we might meet a health been there and it worked just as well as it He explained that pharmaceuticals minister with a slightly different point of view, worked anywhere else.” represent around 10% of total US healthcare the overall dialogue is pretty good.” Mr Hassan explained that he tries to tailor costs, pointing out that even if the industry’s “I met the person in charge of broader his own, and Schering-Plough’s, approach to a profits were taken away, only 1-2% of costs health education welfare in the [Silvio] given situation; for example the way the firm would be saved. He added poignantly: “And Berlusconi government [in Italy] about three engages with Francophone Africa may differ then you’ve lost that innovation engine.” weeks after he was installed,” continued from its approach to English-speaking regions So, what about the presidential candidates? Mr Hassan, adding proudly: “I was the first of the continent. He also likes managers in Even before the result, Mr Hassan multinational CEO to see him.” each country to help maintain a local understood clearly what each man had to This disclosure led our discussion presence, although some nations lack the offer: “One wants to rely more on tax towards one of Mr Hassan’s better known necessary infrastructure to support such a incentives and one candidate would like to qualities – his personal and personable strategy. put [in place] some more mandates,” painting approach to business, as exemplified by his However, Mr Hassan doesn’t believe that Mr McCain as the former and Mr Obama the leadership of the merger of Pharmacia & obstacle should prevent Schering-Plough from latter. Upjohn with Monsanto/Searle to create developing in those markets. “The one thing I

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said to our people is: ‘Don’t come to me about staying away from an emerging market CV because there are serious compliance challenges’.” The answer, said Mr Hassan, is to Education build compliance into the system as “we are 1967 BS Chemical Engineering, Imperial College not going to stay out of a market because of compliance challenges.” of Science and Technology, University He takes the same position with regards to of London. people’s fears over country volatility. “Yes, 1972 third-world countries do have volatility but MBA, Harvard Business School over the long term it makes sense to stay there.” Employment history The key, Mr Hassan said, is to “approach every country differently and not to 1971 Sales rep, Richardson-Vicks overreact to local political eruptions that usually occur in countries”. 1972 Joined Sandoz Pharmaceuticals (Novartis); began in That sentence struck me. As I write this corporate planning; became director of sales and article, Mr Obama has just been chosen as the marketing; went to head Pakistan subsidiary and turned US president-elect, to replace George W Bush. So aggressive was the reaction to the Bush around failing business; eventually headed company’s US administration that the country swung from the pharmaceuticals business and US R&D political right to the left, with the country’s first 1989 Joined American Home Products (Wyeth) and became African-American set to lead the world’s biggest economy. executive vice-president with responsibility for pharmaceutical and medical products; led acquisition I met the person in charge of Genetics Institute in 1991; elected to board of directors in 1995 of broader health education welfare in the Silvio Berlusconi 1997 Became CEO of Pharmacia & Upjohn government in Italy – I was the 2000 Became chairman of Pharmacia following merger fi rst multinational CEO to between Monsanto and Pharmacia & Upjohn see him 2003 Joined Schering-Plough as CEO

The Democrats increased their majority in both the Senate and the House of windfall profit tax on oil companies, are price Democrats’ policy folder. Having overcome representatives after a blue tide swamped controls for prescription drugs – all cost- some major business issues in turning around Republican strongholds in the mid-west. cutting measures. Healthcare costs may have Schering-Plough, it could be his and the Although narrowly missing out on the liberal appeared only once during the presidential company’s next big challenge. supermajority required to ratify legislation with debates but with the economy in recession, minimal scrutiny, many Democrats are the healthcare reform that was missing under Christopher Spillane is confident that their policy wish list will be a Republican leadership may come quickly Scrip’s US reporter. fulfilled. and swiftly. What appears on the Democrats’ policy We will have to wait and see how agenda? Accompanying a withdrawal Mr Hassan responds to the healthcare timetable for funding the Iraq war, and reforms that have been dormant inside the

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M&A: activity continues apace within pharma The general outlook for M&A may be shrouded in uncertainty caused by the current fi nancial turmoil, but in the past 12 months pharmaceutical M&A has shown few signs of a slowdown. The conservative nature of pharma has meant that M&A in the sector has been more resilient than the general trend in other industries, reports Sita Shah

harma M&A activity over the past year pharma companies were relatively cash rich renewed interest in the sector, the share Phas remained an important business and were exploring strategic options outside prices of pharma companies have strategy. Roche’s proposed takeover of their home turf to make acquisitions. This is underperformed for some time, reflecting Genentech, valued at $43.7 billion, for part of a wider trend of Japanese corporates investor concerns about patent expiries, example, exceeds AstraZeneca’s $15.6 billion re-entering the M&A market, he added. regulatory risks and an unwillingness to put acquisition of MedImmune, one of the More importantly, the challenges of value on pipelines. Generally, investors no biggest deals of 2007. Other recent high- declining growth on the back of patent longer believe in over-capitalised pharma profile transactions show that several expiries, the need to cut costs and growing balance sheets, they want more cash back companies are prepared to pay the full price investor pressure have meant that pharma’s from these cash-generative companies in the or above the odds for acquisitions. For need for M&A activity remains as strong as form of dividends and buybacks.” example, some analysts believe that Lilly has ever. Dr Chris Phelps, head of company overpaid for ImClone Systems at $6.5 billion, analysis at Datamonitor, says that for the first growth through diversification or $70 per share. In an uncertain financial time in decades, pharma is experiencing a In recent years, pharma’s move into biologics climate, price may cause some potential decline in sales and has nothing obvious to has tended to dominate M&A activity, as the bidders to withdraw from an acquisition, but replace these drugs in terms of like-for-like industry looks to replenish its pipeline and there will always be others queuing up to fill sales. As a result, pharma also has to diversify protect itself against patent expiries. An the space. its business model, a strategy that has been industry outlook by Moody’s Investor Service Unlike many other sectors, pharma is cash under way in the past few years, while at the in August 2008 said that companies with rich. The Japanese firm Takeda announced same time having to keep investors on side. heavier exposure to biopharmaceutical drugs that it had $20 billion to spend on At a time when investors are either fleeing had more protection against generic acquisitions or licensing agreements in cash. from the stock markets or can be more competition because biosimilars had a more In April 2008 it bought US-based Millennium choosy about the stocks they pick, pharma difficult path to approval. For example, Roche Pharmaceuticals for $8.8 billion, still leaving it needs to prove that it can deliver results. has an advantage through its majority with a substantial amount to spend on other Doug McCutcheon, managing director of shareholding in Genentech as the patents for deals. Shane Griffin, partner of healthcare investment banking at UBS in Mabthera (rituximab) and Avastin corporate/M&A and co-head of law firm London, says that pharma, traditionally (bevacizumab) run until 2013 and 2020 Linklaters’ healthcare team, says the rising regarded as a defensive-growth sector, is respectively. influence of Japanese companies generally now producing single-digit or in some cases And the past 12 months have shown that has been a noticeable trend in recent negative topline growth and is also now the move into biologics is continuing months. Until the most recent significant associated with higher risks. “While recent unabated, shining examples being Lilly’s downturn in the global economy Japanese market conditions have resulted in some acquisition of ImClone and Roche’s bid for

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Genentech. Dr Phelps says that any company consumer sales grew by 12%, double the business to extend its reach in the region. operating in biologics, oncology or growth rate of its pharmaceuticals. These Egypt is a fast-growing area and could be a immunology will command a premium. divisions are now regarded as core areas, platform to enter other countries in the ImClone and Genentech have put up stout says Mr McCutcheon. However, the challenge Middle East and North Africa, GSK believes. defences against initial takeovers and shown is that many of the larger, attractive It is also developing branded generics, which that boards are prepared to fight for their consumer assets are not for sale, so “you’re are more popular in emerging markets as shareholders. ImClone chairman Carl Icahn either in or out” of the business. “Companies the middle class expands, through an alliance rejected Bristol-Myers Squibb’s takeover not in consumer may need to wait for the with South Africa’s Aspen Pharmacare advances, initially at $60 per share and later next round of large cap pharma Holdings. raised to $62 per share, on the basis that he consolidation to get the opportunity to build, believed the offer undervalued ImClone’s but then the good assets will be highly cost control worth. sought after,” he says. In the past 12 months, controlling costs has But other biotechnology companies are The generics field is becoming another become a key factor influencing mergers or not in a position of strength. In the current major area of diversification, a move that acquisitions. The growth in pharmaceutical climate, M&A is a more attractive option for may have been anathema to pharma just a sales worldwide is expected to fall to about smaller biotechs. Mr McCutcheon says that few years ago. But with the threat of patent 3% in 2010, but then negative growth the market is extremely tough for small expiries, buying generics businesses, or at beyond 2010 as several patents expire. players, with the IPO route closed and least considering other business models, now A number of companies, from big pharma follow-on financings for private and public seems to make sense. This model could to biotechs, have announced plans to reduce companies having to be done off of low become increasingly popular as the leading staff, cut back on clinical programmes or valuations. “Investors are not feeling brave players seek to offset pipeline erosion and refocus their pipelines. right now. Therefore, IPO candidates need to enhance competitiveness, says Mr Griffin. However, M&A can also help companies pursue dual-track opportunities such as One recent example is Daiichi Sankyo to become more efficient and sharpen their mergers or selling themselves rather than completing the takeover of India’s largest product focus. For example, in the UK, BTG drifting.” generics manufacturer, Ranbaxy. More is merging with Protherics for £218.1 million Leo Gribben, a director in Ernst & Young’s importantly, generics companies have shown to become the country’s largest speciality pharmaceutical sector team, says: “The credit that they are on an equal footing with big company. BTG believes the deal will make it crisis has created opportunity for companies pharma. more profitable as it will gain a portfolio of with strong balance sheets to make In September, Zentiva, which is being late-stage products. More importantly, the acquisitions at a significant discount to acquired by Sanofi-Aventis, rejected the combined company is expected to save historical prices, not least because some French company’s initial offer, saying it fell around £20 million through synergies by biotechs are struggling to refinance their short of its “fundamental value”. Sanofi- 2010-11. Elsewhere, King Pharmaceuticals businesses and are viewed as ‘distressed’ Aventis was forced to raise its offer, from estimates that it will save around assets.” Though he points out that for big CK1,050 ($52.50) to CK1,150 per share in $50-70 million annually in the second year pharma, asset quality remains the major cash. Teva, the world’s largest generics after completing its acquisition of Alpharma. driver in acquisitions’ decision-making. manufacturer, has continued to grow Given their array of challenges, in While biotechs may be the prime target consistently over the course of the year, particular declining growth, and the desire to for big pharma, others are targeting niche posting sales growth of 20% and a 14% diversify, Mr McCutcheon says that pharma speciality areas. King Pharmaceuticals’ increase in net profit in the third quarter. companies are aggressively assessing $1.6 billion acquisition of Alpharma Pharma’s move into generics is important potential acquisitions. In doing so, companies succeeded only after it made hostile not just in terms of diversifying the business are broadening their scopes therapeutically, advances towards Alpharma to boost its pain model, but also in terms of expanding into geographically and by business segment. If product portfolio, moves which Alpharma new geographical emerging markets. the past 12 months are anything to go by, had initially rejected. Other areas of As growth starts to slow in mature M&A activity will remain strong. healthcare are also starting to attract markets such as North America and Europe, According to Dr Phelps, the days of the attention. In April, Novartis paid Nestle the recent drive into emerging markets mega mergers, where one big pharma $11 billion for a 25% stake in Alcon, the seems logical. Mr Gribben says that the merges with another, are over. “Peers are world’s biggest eye care company, with a margins may not be as high in these also facing declines so what you’d get is an view to securing a majority holding. geographical areas as well-established even bigger company facing even bigger Dr Phelps says that there is a bigger reach in markets. But if products are becoming declines,” he notes. Therefore, the more likely eye care, giving Novartis greater margins and genericised, the industry needs to go for deals will be done with medium-sized rest-of-the-world coverage. volume, he adds. companies that still have room for growth or Consumer businesses are once again AstraZeneca reported 18% growth in those that can offer a different model to becoming popular as a way of diversification. emerging markets compared with 1% in pharma. GSK, for example, plans to build its consumer North America and 2% in other established business through this strategy, as a way of markets in its third-quarter results. Schering- complementing and driving the growth of Plough’s third quarter also benefited from other key franchises. In the third quarter of strong sales in emerging markets, accounting 2008, the sales growth of several large for 12% of total net sales, double the figure corporations’ consumer divisions was greater in 2005. At the end of September, Pfizer than that of their pharmaceutical businesses. announced plans to offset the generic Sita Shah is Scrip’s senior For example, the sales of Bayer’s consumer erosion of Lipitor (atorvastatin) sales by companies reporter. healthcare division rose by 5% in the three targeting growth in emerging markets. months to September 30th, compared with Elsewhere, GSK recently bought Bristol- 3% for pharmaceuticals, while GSK’s Myers Squibb’s Egyptian mature products

www.scripnews.com/supplements Scrip 100 19 Business

Table 1: M&A snapshot (November 2007-October 2008) Buyer Country Target Country Focus/assets Total value Details 3i (private equity) UK Alpharma’s API business Norway APIs $395 million Access Pharmaceuticals US MacroChem US oncology $9 million Actavis Iceland Zhejiang Chiral Medicine Chemicals China APIs N/A Adamis Pharmaceuticals US Cellegy Pharmaceuticals US viral diseases N/A Adipogen Pharmaceuticals Australia Verva Pharmaceuticals Australia metabolic disease N/A Chemgenex Pharmaceuticals Autogen Research subsidiary Advent International US LaborMed Pharma Romania generics, €123 million (private equity) cardiovascular, CNS Aida Pharmaceuticals China Jiangsu Institute of Microbiology China microbiology N/A Aisling Capital, US Esperion Therapeutics US dyslipidaemia N/A Alta Partners, Domain Associates Algorithme Pharma Canada Simbec Research UK CRO N/A UK Athos Farma wholesaler N/A 25% stake Amarin UK Ester Neurosciences Israel neuroscience $32 million Amneal Pharmaceuticals US Interpharm US generics N/A Antisoma UK Xanthus Pharmaceuticals US oncology £26.8 million Anzag Germany Armila Lithuania wholesaler N/A majority stake Arch Pharmalabs India Avon Organics India APIs Rs290 million 63% stake ($7.3 million) Arch Pharmalabs India Benzochem Lifesciences India APIs, intermediates N/A majority stake Ark Therapeutics UK Lymphatix Finland VEGF products €2.3 million Astellas Pharma Japan Agensys US oncology antibodies $387 million Avant Immunotherapeutics US Celldex Therapeutics US immunotherapies $75 million AVI Biopharma US Ercole Biotech US RNA $9 million Bayer Healthcare Germany Sagmel’s OTC business US OTC N/A Bayer Healthcare Germany Direvo Biotech Germany protein engineering €210 million Belupo Croatia Farmavita Bosnia & wholesaler N/A Herzegovina Biocon India Axicorp Germany manufacturing, €30 million 70% stake distribution Biomedica Foscama Spain Pliva’s Spanish operations Spain generics N/A Industria Chimico- Farmaceutica Biovail Canada Prestwick Pharmaceuticals US CNS $100 million Boehringer Ingelheim Germany Actimis US respiratory, $515 million in ammatory Bristol-Myers Squibb US Kosan Biosciences US oncology $190 million BTG UK Protherics UK antibodies £218.1 million Celgene US Pharmion US haematology, $2.9 billion oncology Celldex Therapeutics US Avant Immunotherapeutics US oncology, infectious $115 million diseases, in ammatory Chiltern UK Clinical Trial Management Services US CRO N/A Chiltern UK Drug Development Solutions UK Phase I unit N/A China Aoxing China Shijiazhuang Lerentang China pain Yuan80 million Pharmaceutical Pharmaceutical ($10.8 million) Clinical Data US Adenosine Therapeutics US various $36.2 million CSL Australia Talecris Biotherapeutics US plasma $3.1 billion Cubist Pharmaceuticals US Illumigen Biosciences US hepatitis C $341.5 million Pharmaceuticals US Align Pharmaceuticals US oncology $3.8 million Cypress Bioscience US Proprius Pharmaceuticals US pain, arthritis $75 million CytRx US Innovive Pharmaceuticals US oncology, $21.3 million haematology Daiichi Sankyo Japan U3 Pharma Germany oncology biologics €150 million Daiichi Sankyo Japan Ranbaxy Laboratories India generics $3.4-4.6 billion Dara Biosciences US Point Therapeutics US Nasdaq listing N/A Dr Reddy’s Laboratories India Dowpharma’s small molecule UK custom services N/A business Dr Reddy’s Laboratories India Jet Generici Italy generics N/A ECI Partners UK Premier Research Group UK CRO £60.1 million management (private equity) buyout Eczacibasi Pharmaceuticals Turkey Monrol Nuclear Products Turkey radiopharmaceuticals €30 million 50% stake Egis Hungary Anpharm’s generic products Poland generics PLN55 million ($22.6 million) Eisai Japan MGI Pharma US oncology, acute care $3.9 billion Eusa Pharma UK Cytogen US oncology, pain $22.6 million Evotec Germany Renovis US CNS €62 million Fresenius Kabi Germany Dabur Pharma India oncology generics Rs8.8 billion ($178 million) Fresenius Kabi Germany APP Pharmaceuticals US manufacturing, $3.7 billion distribution

20 www.scripnews.com/supplements Scrip 100 Business

Buyer Country Target Country Focus/assets Total value Details Fuji lm Holdings Japan Toyama Chemical Japan pharmaceuticals $788 million Galapagos Belgium Sareum’s drug discovery assets UK structure-based €695,000 drug discovery Galderma Pharma Switzerland Collagenex Pharmaceuticals US dermatology $420 million Galenica Switzerland Aspreva Pharmaceuticals Canada rare diseases $915 million Gedeon Richter Hungary Pharmafarm Romania wholesaler Lei45.2 million ($19.5 million) Genepharm Australasia Australia Strides Arcolab’s Australian & India manufacturing, N/A majority stake Asian businesses distribution Genmab Denmark PDL BioPharma US antibody $240 million manufacturing plant manufacturing Gerresheimer Germany EDP Spain packaging N/A GlaxoSmithKline UK US cardiovascular $1.65 billion GlaxoSmithKline UK Sirtris Pharmaceuticals US metabolic disease $720 million GlaxoSmithKline UK Bristol-Myers Squibb’s Egypt mature products $210 million Egyptian business GlaxoSmithKline UK Genelabs Technologies US hepatitis C $57 million Healthcare Brands UK Antula Holdings Sweden OTC N/A International HemCon Medical US Alltracel Pharmaceuticals Ireland various N/A Technologies Jordan Arab Pharmaceutical Manufacturing Jordan generics JD116 million ($164 million) i3 US Lege Artis Russia CRO N/A ICI UK Synkem (Laboratoires Fournier) France  ne chemicals N/A Icon Ireland Healthcare Discoveries US clinical $22 million unit Immunovaccine Canada Immunotope US immunotherapies N/A Technologies Intercell Austria Iomai US vaccines $189 million International Drug France Eusa Pharma’s monoclonal France antibodies N/A Development antibody research business Invida Pharmaceutical Singapore Valeant Pharmaceuticals’ Asia-Paci c Asia-Paci c $37.8 million Asia-Paci c operations operations Invitrogen US Applied Biosystems US life sciences $6.7 billion Ipca Laboratories India Tonira Pharma India APIs Rs70-80 million 34% stake ($1.8-2.0 million) Ipsen France Tercica US endocrinology $373 million Ipsen France Vernalis Pharmaceuticals’ US business US neurology $17.5 million Iris Pharma France Clirophtha France ophthalmology N/A Jubilant Organosys India Draxis Health Canada speciality pharma, $255 million contract manufacturing Jubilant Organosys India Speciality Molecules India intermediates $4.9 million manufacturing King Pharmaceuticals US Alpharma US speciality pharma $1.6 billion Kirin Japan Kyowa Hakko Japan allergy, immunology, ¥300 billion oncology ($2.63 billion) Kyorin Pharmaceutical Japan Nisshin Kyorin Pharmaceutical Japan gastroenterology $31.8 million Ligand Pharmaceuticals US Pharmacopeia US novel small molecules $55 million Lilly US ImClone Systems US oncology $6.5 billion Lilly US SGX Pharmaceuticals US oncology $64 million Lupin India Hormosan Pharma Germany generics N/A Lupin India Pharma Dynamics South Africa generics N/A 60% stake Meda Sweden Recip Sweden infection SEK2.7 billion ($415 million) Meda Sweden Valeant Pharmaceuticals’ eastern Europe various $425 million and western European operations Mediceo Paltac Holdings Japan Alfresa Holdings Japan wholesaler N/A merger due to close April 2009 Medigen Biotechnology Taiwan Pacgen Biopharmaceuticals Canada infection, N/A in ammation Mitsubishi Tanabe Pharma Japan Choseido Pharmaceutical Japan generics N/A Neostem US Stem Cell Technologies US stem cells $940,000 Newron Pharmaceuticals Italy Hunter-Fleming UK development €8 million €21.7 million compounds Nicholas Piramal India Healthline’s pharmaceuticals India custom Rs150 million business manufacturing ($3.8 million) Novartis Switzerland Alcon US/ eye care $10.4 billion 25% stake, to Switzerland be followed by 52% acquisition for total deal worth $38 billion Novartis Switzerland Protez Pharmaceuticals US antibiotics $100-400 million Novartis Switzerland Nektar Therapeutics’ US pulmonary drug $115 million pulmonary drug delivery delivery business unit

www.scripnews.com/supplements Scrip 100 21 Business

Table 1 (continued) Buyer Country Target Country Focus/assets Total value Details Nycomed Switzerland Bradley Pharmaceuticals US dermatology $346 million Ocimum Biosolutions India Gene Logic’s genomics assets US genomics $10 million Oncologic US Triton Biosystems US oncology N/A OPG Netherlands Byram Healthcare US home deliveries $132 million of medicines Oriola-KD Finland Vitim, Moron Russia retailer, wholesaler €70-90 million Otsuka Pharmaceutical Japan Interpharma Praha Czech Republic manufacturing N/A Paion Germany Cenes Pharmaceuticals UK CNS, thrombotics €13.7 million Parexel International US ClinPhone UK interactive response $182 million technology Perrigo US Galpharm Healthcare UK OTC, prescription $86 million products Perrigo US JB Laboratories US OTC, nutritional $44 million products Perrigo US Laboratorios Diba Mexico OTC, prescription $25 million products P zer US Coley Pharmaceuticals US vaccines, $164 million immunomodulatory drug candidates P zer US Covx US oncology, metabolic N/A diseases P zer US Encysive Pharmaceuticals US novel small molecules $195 million P zer US Serenex US oncology N/A Pharmathene US Avecia’s biodefence vaccines UK vaccines $40 million Phase Forward US Clarix US interactive response $40 million technology Phoenix Pharma France France CERP Lorraine’s French France wholesaler N/A wholesaling business PSI Russia Thywill Argentina CRO N/A Reckitt Benckiser UK Adams Respiratory Therapeutics US respiratory $2.3 billion Recordati Italy Orphan Europe France orphan drugs €135 million Recordati Italy Fic, Fic Medical France registration, €12 million promotion of pharmaceuticals for third parties in Russia and CIS Recordati Italy Yeni Ilac Turkey urology €48 million Roche Switzerland Piramed UK oncology, $175 million in ammation Roche Switzerland Genentech US biotechnology $43.7 billion Roche already majority shareholder – deal ongoing Roche Switzerland Mirus Bio US RNAi $125 million Roche Switzerland Arius Research Canada antibodies Cdn$191 million ($188.8 million) Sano -Aventis France Zentiva Czech Republic generics $1.8 billion deal ongoing Sano -Aventis France Acambis UK vaccines £285 million Selvita Poland Biocentrum Poland microbiology N/A Shionogi Japan Sciele Pharma US generics, cardiovascular, $1.1 billion diabetes Shire UK Jerini Germany genetic therapies, other N/A Siro Clinpharm India Omega Mediation Group Germany CRO N/A Solvay Pharmaceuticals Belgium Innogenetics Belgium diagnostics €178 million Strides Arcolab India GenePharm Australasia Australia generics N/A Sygnis Pharma Germany Amnestix US neurology €4 million Symyx Technologies US Integrity Biosolution US formulation services N/A Taisho Japan Biofermin Japan OTC ¥27.3 billion ($256.6 million) Takeda Japan Amgen’s Japanese subsidiary Japan biologics N/A Takeda Japan Millennium Pharmaceuticals US oncology $8.8 billion Teva Pharmaceutical Industries Israel Cogenesys US biopharmaceuticals/ $400 million biogenerics Teva Pharmaceutical Industries Israel Bentley Pharmaceuticals Spain generics $360 million Teva Pharmaceutical Industries Israel Barr Pharmaceuticals US generics $7.5 billion deal ongoing The Medicines Company US Curacyte Discovery Germany antithrombotics $25 million TPG Capital (private equity) US Axcan Pharma Canada gastroenterology $1.3 billion TPG Capital (private equity) US SIA International Russia wholesaler $800 million 50% stake Uluru US Bio Med Sciences US wound healing $10 million United Drug Ireland Sharp Corp US packaging $99 million Valeant Pharmaceuticals US Coria Laboratories US dermatology $95 million ViroPharma US Lev Pharmaceuticals US hereditary angioedema $443 million Wuxi Pharmatech China Apptec Laboratory Services US CRO N/A Zach System Italy PPG Industries’  ne chemicals business US  ne chemicals $65 million Zimmer US Abbott Laboratories’ spine business US spine products $360 million Zydus Cadila India Laboratorios Combix Spain generics N/A

22 www.scripnews.com/supplements Scrip 100 Business

Destination Moscow… Merck & Co’s head of global pharmaceuticals Adam Schechter speaks with Christopher Spillane about the world’s high-growth, emerging markets and the company’s strategy for accessing them

helping him to “understand how they think multiple representatives with a detail bag that

ADAM SCHECHTER about healthcare, and how they try and move contained samples, literature and patient forward their agendas to advance healthcare”. education which looks almost the same today. he draw of emerging markets to big Mr Schechter says that when thinking We need a new commercial model that utilises pharma has been growing steadily in the about these growth markets, people should technology in addition to representatives and Tface of looming patent expiries, more be careful not to group them into one which provides solutions for customers to expensive drug development and a tougher consistent category. Instead, they should “look better improve human health.” regulatory climate. at the individual countries and develop very Mr Schechter adds: “We have a lot of The significance of emerging markets in specific strategies to be successful within the products in our portfolio today, including some Europe, Asia and Latin America for big pharma’s individual countries”. that you would typically think of as older Merck future growth can be seen in the quarterly In order to succeed in these territories, products that may be off patent in other results of 2008. Growth in developed markets Merck has deployed strong country countries, such as the US. These assets may be is in the mid-to-low single digits, while emerging management built upon a base of regional very important in emerging markets; for markets are expanding by double digits. management. This kind of structure, example, Proscar (finasteride) remains a very Furthermore, IMS health forecasts that Mr Schechter says, allows managers to make important product in a country like China.” “pharmerging” markets, which it defines as appropriate decisions for those markets. “We will also look to see if there are local China, Brazil, India, South Korea, Mexico, Turkey However, the key to breaking such markets business development opportunities that make and Russia, will grow by 12-13% to around lies in the way the company executes its sense just for that country – it doesn’t $115 billion [see p98]. By 2010, Merck & Co is approach, for example. “The commercial model necessarily have to be a global arrangement.” anticipating sales of around $2 billion from we have will be very different in a country like And it’s this approach that highlights some of emerging markets. the US or in Europe than it might be in China the issues that the pharma industry faces at the It transpires that this interview neatly and India. I think the model and the way we moment. Although big pharma has a thirst to punctuates Adam Schechter’s preparations for customise it to meet different customer needs discover new technologies and develop them, the his next trip to a handful of emerging markets. will be very important,” Mr Schechter says. toughness of the regulatory climate, coupled with Where is Merck’s head of global Despite pharma recognising the need to R&D costs and payers’ demand for cheaper drugs, pharmaceuticals going? Well, this time it’s Russia, tailor its strategy to meet consumer demands, has made the environment harder. Turkey and Dubai. he notes that the industry has been slow to Being able to roll out older and rigorously “I try to get to as many of them as I can: react to changes in its customer base and tested drugs in newer, less regulated markets Japan, Brazil, China, India. I like to go overseas approach, particularly when compared with could get around many of the sector’s whenever possible so that I can understand the the technological revolution, for example, in problems. environment better and the different business the laboratories. possibilities available to us,” he says. “25 years ago we didn’t have computers in On Mr Schechter’s travels he likes to the laboratory. We had to use chalkboards and Christopher Spillane is observe the current healthcare environment write things in laboratory notebooks. Today, we Scrip’s US reporter. and then imagine how that structure will evolve have high-throughput screening, genomics and in the coming years. He uses his trips as an protein analysis,” Mr Schechter continues. “You opportunity to meet local businessmen, key can see that things have fundamentally changed opinion leaders and government officials, in the industry, yet 25 years ago we sent in

www.scripnews.com/supplements Scrip 100 23 MAKE PLANS NOW TO ATTEND DIA’S 2009 FLAGSHIP EVENTS IN EUROPE AND NORTH AMERICA!

DIA 21st Annual EuroMeeting Berlin 2009 Internationales Congress Centrum Berlin, Germany March 23-25, 2009 A neutral, global forum for Industry, Academia, and Regulatory Professionals from over 50 countries

• Network with more than 3,000 colleagues • Showcase your company’s products and services to key decision makers • Attend sessions in 16 themes • Attend presentations by more than 350 speakers • Hear leading experts from the EMEA, FDA, regulatory agencies, industry and academia throughout Europe • Attend one of the 21 pre-conference tutorials • Visit student and professional poster sessions • Take advantage of excellent multi-disciplinary networking opportunities

The 45th DIA Annual Meeting “Better Medicines: Improving Safety with Every Step” June 21-25, 2009 - San Diego, CA

• Network with more than 8,500 colleagues • Showcase your products and services in the interactive exhibit hall • Attend hot topic sessions in 25 interest areas and 3 mega tracks • Hear from over 1000 speakers, including representatives from FDA, EMEA, and other global regulatory agencies • Gain additional educational credits at a preconference tutorial • Attend the Networking Reception aboard the USS Midway Museum • And visit beautiful San Diego!

For more information, or to register online, please visit www.diahome.org and click on the EuroMeeting and Annual Meeting icons. WORLDWIDE HEADQUARTERS: 800 Enterprise Road, Suite 200, Horsham, PA 19044, USA - Tel. +1 215 442 6100 Fax. +1 215 442 6199 [email protected] EUROPEAN OFFICE: Elisabethenanlage 25, Postfach 4002 Basel, Switzerland - Tel. +41 61 225 51 51 Fax. +41 61 225 51 52 [email protected] Business Christopher Spillane

2008 stock tracker: how robust is pharma? 12 months ago, the Scrip 100 studied the effects of the subprime/credit crisis on IPO and M&A activity. Here Christopher Spillane analyses its impact on the 15 biopharmaceutical stocks followed in Scrip’s monthly stock tracker from January 1st to October 31st, 2008

t’s been a year of extreme market liquidity on a short-term basis, rattling year in which short-selling was banned volatility driven by financial woes in the confidence. Eventually the credit markets and some of the best-known players in IUS financial system. The subprime crisis dried up and banks sought government investment banking, such as Lehman that began building towards the end of 2007 intervention to cure their liquidity afflictions Brothers, disappeared. rolled into a confidence-buckling credit crisis and kick-start interbank lending. Turning to the biopharmaceutical sector that will be synonymous with 2008. What followed was a taxpayer-funded and the Scrip Stock Tracker, it is clear that Risk associated with subprime investment bail-out of leading financial institutions to over the year to October 31st, 2008 the vehicles and securities became clear as low- prevent the financial turmoil boiling over turbulence of the 15 stocks we track has income homeowners defaulted on mortgage into the real economy and provoking a offered insight into the strength or otherwise payments rendering the value of these recession – an intervention that now seems of these companies. However, first we must investments worthless or unknown, and the to have fallen short of its target. So draw attention to the markets and the crisis then snowballed. With this uncertainty, profound was the subprime/credit crisis that sector indices in order to put share price financial institutions became unwilling to lend we will depart 2008 much chastened by a performances in context.

www.scripnews.com/supplements Scrip 100 25 Business

The S&P 500, FTSE Eurofirst 300 and Dow Jones Industrial Average all endured a Table 1: Biotechnology companies’ share price performance chaotic time in the year to date, plummeting (January 1st-October 31st, 2008) throughout 2008 into bear market territory. On the few occasions that the major indices Index or company January 1st October 31st % change rallied, lack of confidence swiftly returned Nasdaq biotech index 831.98 734.67 –11.7 and the markets continued to fall. The declines were most noticeable on the Biotechnology companies FTSE Eurofirst index, which fell by 38% to Genentech ($) 67.40 82.94 +23.1 928.81, while the S&P 500 dropped by 34% to 9336.93. The Dow Jones fell by 29% to Gilead Sciences ($) 45.34 45.05 – 0.6 9336.93. Overall, most of our biopharmaceutical stocks outperformed Amgen ($) 46.60 59.89 +27.4 these indices, perhaps due to their defensive Biogen Idec ($) 55.87 42.55 – 23.8 nature, yet the variance between the stocks is plain. Genzyme ($) 74.75 72.88 – 2.6 During 2008, our five biotech stocks grew Biotech average + 4.7 by 4.7% on average (see Table 1), outperforming the Nasdaq biotech index, which fell by 11.7% to 734.67. Our 10 The Swiss broker Helvea expects 2009 of atherosclerosis, despite showing a better pharmaceutical stocks declined by 15.7% to be critical for the pharma company. “With LDL-lowering effect. Merck and its partner (see Table 2) although these outperformed 45% of AstraZeneca’s pipeline at risk for Schering-Plough had hoped that the trial the Amex pharma index, which dropped by generics and an unproven pipeline portfolio, would show an effect in intima media 19.8% to 269.99. [it] faces an uncertain outlook in the mid-to- thickness, but no effect on plaque size was It appears that volatility is greater in the long term.” Helvea set its target price at found. pharma group with year-to-date changes £22.22, 15% lower than AstraZeneca’s Sour regulatory news continued in April from –43% to +22%, whereas biotech spans actual share price, as clinical news up to after Cordaptive (MK-0524A, ER niacin plus –24% to +27%. Healthcare consultant Emma Palmer Foster believes this variation mid-2010 will be critical for the firm’s laropiprant) was put on hold. Weeks later highlights the current state of the traditional long-term survival. the US FDA refused the pharma industry. Merck & Co’s share price has had the management product for primary “There is the well-documented gamut of toughest time in 2008. By October 31st, it hypercholesterolaemia-mixed dyslipidaemia. challenges faced by the pharma sector – had plummeted by 43% to $30.95, declining The rejection came as a blow as Merck was patent expiries, decreases in productivity, most notably in the first quarter as the first looking to the drug and a combination pricing pressures – and many of the of its regulatory troubles arose. follow-on product with simvastatin to offset companies are struggling to meet these It emerged that in the ENHANCE study its patent cliff. challenges,” she says. “By contrast, the biotech the combination product Vytorin (ezetimibe/ Merck’s year was dampened further by the companies are generally considered to be at simvastatin) was no more efficacious than Phase III clinical failure of taranabant for an earlier phase of their evolution and so ezetimibe alone at reducing the progression obesity in October and charges relating to many of them are at the stage of earnings growth rather than stagnation or decline.” Individually, the winners and losers were Table 2: Pharmaceutical companies’ share price performance clear. AstraZeneca led the pharmaceutical (January 1st-October 31st, 2008) stocks with a 23% increase in its share price Index or company January 1st October 31st % change to £26.30. The firm’s year began with doubts surrounding the patent risk of Nexium Amex pharma index 336.70 269.99 –19.8 (esomeprazole ) and Seroquel Pharma companies (quetiapine fumarate), the first of which hung over the UK company until April. AstraZeneca (£) 21.47 26.30 +22.5 AstraZeneca agreed a settlement with Ranbaxy, which will keep the generic Novartis (CHF) 54.57 50.99 – 6.6 version of the gastroesophageal reflux Roche (CHF) 192.00 176.80 – 7.9 disease drug off the market until 2014. The company’s share price rose by 7% to £21.22 Merck & Co ($) 57.37 30.95 –43.3 on the news and gradually continued GlaxoSmithKline (£) 12.70 11.97 – 5.7 climbing until July when a US federal court upheld AstraZeneca’s patent for the Johnson & Johnson ($) 65.91 61.34 – 7.0 antipsychotic Seroquel. Wyeth ($) 43.89 32.18 –26.7 The decision against Teva Pharmaceutical Industries for AstraZenenca’s second-largest Lilly ($) 55.25 33.82 –38.8 product meant that it’s unlikely that any generic versions of the drug will enter the Sano -Aventis (€) 62.28 49.43 –20.6 US market before 2011. The news buoyed P zer ($) 22.91 17.71 –22.7 the company’s share price further and helped it towards its yearly high of £27.66 Pharma average –15.7 on September 2nd, 2008.

26 www.scripnews.com/supplements Scrip 100 Business

Vioxx (rofecoxib). The firm refused to found to prevent fractures, as well as according to a recent analysis by Credit comment on its share price but one analyst increasing bone density, in postmenopausal Suisse, far exceeding the S&P average. said that after a phenomenal year in 2007, its women with osteoporosis. Big pharma companies have halted stock had “drifted a bit” in 2008. Data from the Phase III trial pushed share buy-backs to conserve cash for M&A, Lilly joined Merck at the foot of our Amgen’s share price up to the $63 mark and while many smaller biotechs are struggling to pharma stocks after sliding throughout the onto a YTD high of $65.89 when additional raise cash. With share prices low for year to reach YTD lows in October. data revealed that the drug halved biotechs, CEOs may be looking to grab Following a $57.18 high in January the stock osteoporosis patients’ risk of new vertebral platform technologies and products at a gradually fell towards the $50 mark amid fractures. On the back of the data, analysts deflated price. concerns around its patent exposure and raised their expectations and speculated that However, Mr Glennie makes a distinction regulatory setbacks for the anti-clotting big pharma might make an offer for the between US and European pharma. Many US agent prasugrel. marketing rights to the drug. firms are cash-rich, unlike their European Yet, the greatest decline came after Lilly Genentech’s share price crept up counterparts, meaning they could buy their agreed to pay $6.5 billion for ImClone to $98.81 in mid-August after rejecting way out of trouble and move towards Systems, which many viewed as too costly a Roche’s offer. Over the next quarter or so, speciality care/biologicals. Conversely, sum for the biotech company. Christian Genentech’s share price began to dwindle European companies have more revenue Glennie, a senior editorial analyst at EP as concerns that Roche, which was still diversity and they face smaller patent Vantage, described the deal as “a good bit of pursuing the company, would be unable to expirations than US competitors meaning we business” for ImClone. finance a better offer in the current financial can expect US firms to be more aggressive Analysts were sceptical about the deal, climate. Roche said financing the deal in M&A. would not be a problem and although with Credit Suisse, for instance, stating that cost-cutting the price is “largely dependent upon analysts agree, Genentech’s share price is Ms Palmer Foster also believes that more meaningful success” of ImClone’s pipeline. Its now at the upper end of $82 – lower than mergers, particularly between pharma and analysts also cast doubts on ImClone’s Roche’s bid – on fears that the deal may not go through. biotech, will occur. Driving pharma/biotech oncology programmes, believing that Biogen Idec underwent a difficult year, tie-ups will be “a fear and dislike of mega- although they are in very competitive areas becoming the greatest faller of our biotech mergers, the need to buy-in innovation and “differentiation and success are very stocks. The firm’s 24% decline to $42.55 a the temptation of battered biotech uncertain”. share was largely catalysed by Tysabri valuations”. She also predicts more cost- The group believes the acquisition could (natalizumab) and three separate cutting in sales, marketing, R&D and take up to five years to justify, some time occurrences of progressive multifocal manufacturing in big pharma, and portfolio after Lilly’s anticancer Gemzar (gemcitabine leukoencephalopathy (PML). In July two cases rationalisation driven by the need to focus HCl; 2010) and the antipsychotic Zyprexa were diagnosed in Europe by the company’s therapeutic expertise. (olanzapine; 2011) lose patent protection. partner Elan Pharmaceuticals. Ms Palmer Foster concludes by drawing Of the pharmaceutical companies attention to the new US President and his accruing share price declines of 6-8% influence on the key US market. “What will (Novartis, Roche, Johnson & Johnson and Lilly joined Merck at the foot of be the suggestions for healthcare reform? GlaxoSmithKline), Mr Glennie suggested that our pharma stocks after sliding What changes will there be at the FDA from their falls were largely attributable to stock throughout the year to reach a political point of view? What impact will sell-offs by investors in September and the financial crisis have on federal budgets?” October following a string of parlous YTD lows in October These questions will be answered in due developments surrounding the financial course, but there will be a period of markets and economy. uncertainty as the country’s new leader biotech’s better returns The news caused Biogen Idec’s share price settles in. to fall from $69.76 to $50.01. A further PML In conclusion, the remainder of this year The five US biotech stocks tracked in case in the US drove the share price down and 2009 will be interesting – that’s one of Scrip’s Stock Tracker produced a much more further before settling around the $40-42 the few things of which we can be certain. mixed picture over the year, with gains, mark in October. The drug was withdrawn in Over that time the Scrip Stock Tracker will declines and almost flat performance. 2005 following the possible emergence of continue to monitor the impact of the Genentech finished the period with the the brain disease, before being reintroduced capital markets and the financial system on highest share price of $82.94, up by 23% in 2006. the biopharmaceutical sector, and our 2009 following Roche’s $43.7 billion offer for the The cases of PML capped a disappointing review will show how our predictions 44% of Genentech it does not already own. year for Biogen Idec, which looked to be in panned out. However, with investor disquiet over recovery after Carl Icahn sought to replace a Roche’s ability to fund the acquisition quarter of Biogen’s board to help trigger its dragging Genentech’s price south, Amgen sale. The activist shareholder had expressed finished the period with the best performing an interest to acquire the company in stock of all our biopharmaceutical shares, up October 2007. by 27.4%. Amgen’s shares traded at around $47 during the first quarter, before dipping M&A to average out at $42 until July. One aspect of the forecast for 2009 is Christopher Spillane is In July, the firm’s osteoporosis drug consolidation. Pharma typically doesn’t have Scrip’s US reporter. denosumab showed efficacy in several pivotal much debt on its books, is cash-rich and pays Phase III trials in men with osteoporosis and out dividends. Indeed, healthcare product the stock price gained momentum towards companies as a whole are second only to IT the end of the month when the drug was firms in terms of balance sheet liquidity,

www.scripnews.com/supplements Scrip 100 27 Business

How to spend it Private equity players fi ll a key role in supporting portfolio companies’ growth strategies and boosting their value offering. Axel Malkomes and Dr Brian Hargreaves take some time out from assessing and implementing global healthcare-focused investments to explain 3i’s investment philosophy to Pete Chan

nvestors, by their very nature, aim to make DR BRIAN HARGREAVES smart decisions when it comes to spending Box 1: 3i fast facts their capital and look to enjoy a healthy I • FTSE 100 company with an international team of return on their investments. But what makes 30 healthcare investment professionals operating a compelling proposition given the current from 14 countries across Europe, Asia and North tumultuous state of the financial markets? America 3i, a world leader in private equity, invests • Focus on buyouts, growth capital, infrastructure in pharmaceuticals, medical technology and and quoted private equity, investing in businesses care services companies valued at up to with an enterprise value of up to €2 billion €2 billion across Europe, Asia and North • Invested €1.6 billion in 36 healthcare companies America. And despite the challenging financial worldwide and realised 25 healthcare investments markets, its dedicated healthcare team through IPO and trade sale since April 2001 continues to see plenty of opportunity; using • Invested over €700 million in pharma companies its deep sector insight and networks the since April 2001 team has committed €820 million to seven healthcare companies in 2008. get products to the market as quickly as they AXEL MALKOMES can so, in general, we see the proportion of attractive areas of investment outsourcing increasing.” Dr Hargreaves points In 3i’s view, there are many attractive areas out that another important factor is the “new for investment in pharmaceuticals, including breed of CEOs coming into pharma, who are outsourced services, value-add generics and prepared to make changes and as a result, we speciality pharma. are seeing a move towards strategic Companies making up the outsourcing outsourcing”. sector range from CROs and CMOs, through In the clinical outsourcing space, 3i’s recent to contract sales and marketing organisations, deals have included a significant minority and providers of distribution or other investment in Quintiles and an investment in logistics services to pharmaceutical Siro Clinpharm, a leading Indian CRO. customers. “Our global footprint, sector insight and Current growth in the market for deep networks make us an ideal partner for outsourced services reflects broader trends businesses operating in the international that are sweeping across the industry. A arena,” explains Dr Hargreaves. “We are one recent reshaping of pharma business models, of the few firms that can boast this”. These for instance, is transforming some of the factors played a major part in Quintiles industry’s bellwethers and forcing large choosing 3i as a financial partner. “We players to offshore non-core, and in some demonstrated the value that we will bring to cases even core, functions. “This relates to a their business.” significant proportion of R&D and Another interesting area is what manufacturing,” comments Axel Malkomes, a Mr Malkomes calls “value-added” [as opposed Frankfurt-based buyouts director in 3i’s to “commodity”] generics. He clarifies the healthcare team. distinction: “We don’t simply want to follow “For a private equity player”, explains the market into traditional generics Mr Malkomes, “the outsourcing area within businesses. We want to target generics healthcare overall is attractive as we’re talking companies that have a specific value-add or about services – businesses that enjoy solid niche play – differentiated via drug delivery, underlying market growth with good, stable difficult to make/complex products, cash flows, based on long established geography or specialist therapy area.” For customer relationships, ie, at the lower end of example, 3i backed the €300 million buyout the risk spectrum”. of Betapharm, supporting the company’s Pharma’s push for increased efficiency isn’t strategy of becoming one of the largest just about achieving cost-savings. The generic prescription drugs groups in requirement for quality and reliability is Germany. Following the strengthening of paramount and a given. And companies are Betapharm’s senior management team, and also concerned about timelines, adds two years of impressive growth, India’s Dr Brian Hargreaves, 3i’s London-based Dr Reddy’s then bought the company for sector partner for healthcare. “They want to €480 million in 2006.

28 www.scripnews.com/supplements Scrip 100 Business

Current 3i portfolio company, Axellia, a €258 million buyout from Alpharma in the first half of 2008, reinforces the firm’s appetite for opportunities that command an interesting value creation story, this time in the active pharmaceutical ingredients (API) field. Mr Malkomes recalls his involvement in the investment: “It is focused on the manufacturing of APIs in the specialist niche of fermentation-based antibiotics and fill/ finish products. Axellia has a global presence with manufacturing facilities in both Europe and Asia, and importantly, it offers a broad range of value creation opportunities in a growing market.” Not so long ago, there were tantalising rumours fuelling speculation over a potential big pharma takeover by one of the world’s larger private equity players. Current turmoil in the financial markets may well have put such ambitious buyout plans on the back- he explains. “Some recent deals, particularly investment was “really about backing Bryan burner for the time being, but there’s no with Eastern European businesses, haven’t Morton, president and CEO, and his reason for private equity to take its eye off completed – presumably because they management team to build that business,” opportunities in mid-cap speciality pharma, couldn’t agree on valuations, or certainly the explains Dr Hargreaves. “It’s grown from a notes Mr Malkomes. valuation expectations of sellers. You would small European business to a pan-European Axellia is one of seven investments that 3i expect valuations to decrease over the next business, and now with the acquisition of US has made within various healthcare sectors 12 months and that sellers will have more firm Cytogen into a global business.” Eusa and geographies in 2008. “The strength of realism in their expectations about pricing.” Pharma now has offices in the US and our network means that we see the majority Europe and is targeting the hospital market of healthcare opportunities available. backing company management with products in the areas of oncology, pain However, we remain a highly selective In an industry like pharma, which has science and critical care. investor,” says Dr Hargreaves, who expects at its very core, the quality of a company’s Dr Hargreaves talks of 3i’s pride in its the credit crunch to bring about a healthy assets and technologies are key partnership style. “We believe in providing dose of reality checking on the part of considerations in the eyes of potential more than just capital. Unless we thought vendors. “Prices and valuations have been investors. But what about that less tangible we could add value to a business we increasing quite significantly over the past few factor: the people? In the case of speciality wouldn’t invest in that business.” From that years, with pretty high multiples being paid,” pharma company Eusa Pharma, 3i’s perspective, 3i draws strength from the diversity of its own staff. Dr Hargreaves is a pharmacist by training with more than 20 Table 1: Selected 3i healthcare investments years’ pharma industry experience, while Company Headquarters Detail Mr Malkomes’ background includes various senior positions, most recently at Merck Ambea Sweden Leading Nordic healthcare provider of primary, KGaA – including country management disabled and acute care services to the private responsibilities – before which he worked in and public sectors investment banking. Similarly, significant Axellia Norway Global supplier and developer of APIs, healthcare and financial sector expertise specialising in injectable antibiotics runs throughout 3i’s core international healthcare team. Eusa Pharma UK Transatlantic speciality pharma company with a portfolio of drugs for pain, oncology and critical care Over many years, Dr Hargreaves explains, 3i has built relationships with an active Labco France Pan-European medical diagnostic group with network of business leaders, comprising non- more than 250 clinical laboratories across six executive chairs, non-executive directors and countries senior advisors. “Peter Chambré, a former LHi Technology Singapore Medical cables manufacturer supplying CEO of Cambridge Antibody Technology, is exclusively to international medical device working with us and he’s now chairman of companies and original equipment manufacturers two of our companies. We’re increasingly partnering with business leaders from the Phibro Animal North America O ers medicated and nutritional feed additives industry to help to guide our investment Health and vaccines to poultry, pig and cattle producers decisions and advise strategy with our Quintiles North America World-leading provider of clinical research portfolio companies. Active partnership is not outsourcing services to pharma and biotech just a philosophy, it is an approach to our clients work that is embedded throughout our team.” Ultralase UK Provider of laser vision correction treatment through a network of 17 clinics across the UK Pete Chan is editor of the Scrip 100. Source: 3i

www.scripnews.com/supplements Scrip 100 29 Sales & Marketing

The latest buzz in sales force e ectiveness Everybody knows that the traditional sales model involving armies of sales reps engaging in face-to-face details with physicians will soon be consigned to the history books, but what is the best way to shift from sales force effectiveness to sales force ef ciency? Dr Sandra Reynolds argues the case for establishing network intelligence, managing key accounts and optimising web-based approaches

harma’s promotion of branded drugs However, the current healthcare then targeting the appropriate key influencer is moving from the traditional environment has many stakeholders. should potentially generate sales through Pphysician-centric sales model Therefore, what is needed today is a the other stakeholders that a key employing large sales forces to a more strategy that incorporates all of the key stakeholder influences. streamlined, network-orientated approach. components to give a more accurate The implementation of a KAM-based Behind this shift lie government and payer representation of their needs and approach also resolves a frequent problem cost-cutting initiatives, which have taken orientation – network intelligence. At experienced by many pharma companies – considerable prescribing power away from present, there does not appear to be a clear the fact that multiple departments deal with doctors, effectively changing the key framework for depicting healthcare the same stakeholders without decision-maker. networks. Therefore, pharma companies synchronisation. This results in inefficient This has left sales reps in a precarious should map out all the key stakeholders account management, which can position of trying to promote drugs to involved for their particular therapy area(s) unintentionally result in neglecting or frustrated doctors who are themselves and associated healthcare networks under pressure to prescribe cheaper generic misinterpreting important decision-makers’ alternatives. Also, tightening pricing and (covering buying/commissioning groups, needs. reimbursement (P&R) controls have hospital networks, as well as treatment and encouraged companies to pursue specialist referral networks among others) to build a KAM explored drugs in secondary care markets in an effort network intelligence operation. This Designing a new sales model is difficult as one to secure a better ROI, a strategy which approach, however, would need to be size will not fit all. Each company must decide requires a very different sales model from redesigned on a country-by-country basis. on a strategy that fits its current and future that of the blockbuster era, as well as a new Once the key decision-makers and portfolio. Also, the emergence of additional breed of sales force. influencers have been identified, a key healthcare stakeholders requires the New sales models will become more account can be established around the introduction of a new approach to sales tailored to an individual company’s product principal decision-maker, driven by a team account management. Pharma’s recent move portfolio and evolving customer base. The that is fully aware of the needs of that client. towards a KAM-type model reflects a trend recent trend has been towards a key If accurate network intelligence is gathered, already seen in other industries. This model account management (KAM) type model, supported by a comprehensive “network Figure 1: Remapping of key stakeholders in the UK healthcare market intelligence” operation. This has led to an upsurge in outsourcing sales teams to streamline operations. Today’s sales models are increasingly incorporating internet-based resources, such as eDetailing to boost their Key opinion leaders, reach to time-pressed physicians. patient associations

network intelligence a key factor Key in uencers Network intelligence is a method of In uencers gathering customer intelligence from all key Pharmacy advisor stakeholders rather than simply prescribing Coach Roles physicians alone. Network intelligence uses Remapping of key market research data and technologies, stakeholder targets including customer relationship for KAM User management (CRM), customer profiling and Authoriser Patient quantitative segmentation to gather Primary care trust customer intelligence. Decision-makers Technical buyer In the past, crucial components of customer profiling, such as social and

professional networks, role-related NICE formulary Commissioning influence, and limitations on choice committee practice manager resulting from policy and budget restrictions, were largely ignored when conducting customer intelligence. Furthermore, there were fewer KAM = Key account managers, NICE = National Institute for health and Clinical Excellence stakeholders and, correspondingly, no need to perform in-depth network intelligence. Source: Datamonitor

30 www.scripnews.com/supplements Scrip 100 Sales & Marketing

focuses on building relationships through Figure 2: Advantages and disadvantages of a KAM model for pharma understanding and addressing individual

stakeholder needs via a specialised account Advantages Disadvantages team supported by a comprehensive network intelligence operation. In effect, local healthcare Expensive to initially set up systems are treated as a key account.

There are a number of pharma companies Scaling up initial pilot studies implementing KAM on some level, such as Pfizer, Bristol-Myers Squibb, AstraZeneca and Reduce costs Complexity of internal processes GlaxoSmithKline. This approach demands: makes change di cult

• Sales and marketing teams working Increase e ciencies Lack of corporate role models to closely together, with the key account inspire change: no one wants manager playing a central role in to be the rst implementing and coordinating the Generate long-term value account; • An account team to incorporate new Superior method for allying pharmaceutical companies wih roles, such as skilled personnel to their customers negotiate with governments/payers; scientific/medical liaison officers to deal with specialist queries, and sales reps to promote a drug; all pulled together KAM with an account manager who model coordinates the account holistically; KAM = Key account management • A complete map of the framework of Source: Datamonitor the local healthcare economies, such as key decision-makers, influencers and although pharma companies may be people buy from people. However, with reps payers through network intelligence. It expected to be hesitant in utilising such a facing ever-shorter time in front of a is the account manager’s responsibility service given that they would have to physician, if any at all, the use of traditional to pull all this information together. disclose confidential information to the CSO. detailing is in jeopardy. Abbott set about implementing KAM However, according to a director at one The question posed today though is whether strategies in the UK market for a variety of leading CSO company interviewed by the this traditional service in its current format is reasons, including the fact that it needed to author, this shift is already happening. still relevant. Doctors do of course need improve its segmentation and targeting models An important counterargument against information and assistance from pharma to cope with expanding stakeholder diversity. the use of CSOs is their level of brand companies regarding the drugs they offer. While switching to the KAM model led to a belief and loyalty. Representatives working for However, they do not need the same reduction in the size of its sales force, new a CSO, although very competent, will not have information to be repeated to them on a roles were also created. Abbott’s KAM strategy the same brand understanding and company regular basis with no added services or follow- encompassed adapting to a changing customer culture as an in-house rep. up. This is where eDetailing (a term used to base – from primary care to secondary care – describe various online physician marketing, providing (NHS) promotional and communication activities) liaison support and changing the physician Representatives working for a could complement the traditional detailing product adoption process. CSO, although very competent, service for busy physicians who want to receive drug information at a time that suits them. Abbott’s KAM strategy has optimised the will not have the same brand company’s sales model, allowing it to focus Internet-based resources are already on the identification of productive understanding and company being used, although eDetailing, in its stakeholder targets and establishing its culture as an in-house rep present form, remains rather primitive. appropriate targeting frequency. This has eDetailing does, however, show potential to made rep activity more efficient and evolve into a valuable tool for effective compared with the company’s communicating key messages, clinical data traditional sales model. Another important factor is corporate and peer reviews for a drug. identity; most customers identify a company efficiency through outsourcing through its sales reps, so outsourcing may References Pharma’s realisation that traditional damage a relationship that a firm has striven 1. ‘Bayer to discuss latest tactics and approaches to SFE were no longer efficient to establish over the years. However, the strategies to achieve sales excellence’, or cost-effective has led to an upsurge in advantages for the pharma industry of 2008, www.medicalnewstoday.com. the use of contract sales organisations outsourcing sales functions outweigh the 2. ‘E-Detailing Navigating the Maze’ – (CSOs), especially in the primary care disadvantages through cost savings alone. Mednet Media, 2002, setting. However, CSOs are also evolving, www.allaboutmedicalsales.com. with many now offering a service in which eDetailing underused reps are dedicated to promoting one Dissemination of product information to Dr Sandra Reynolds is a particular product/service per client call. This physicians through detailing is a fundamental part of a sales rep’s role, and has been senior pharmaceutical strategy reflects the growing use of KAM strategies analyst at Datamonitor. by pharma companies’ in-house sales teams. shown to directly increase prescribing of a CSOs are also offering the services of given drug. Ideally, face-to-face detailing is scientific/medical liaison officers in the US, the preferred selling method – after all,

www.scripnews.com/supplements Scrip 100 31 Oracle Health Sciences 8 of the 10 Top Pharmas Run Clinical Apps

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209M00183_HS_TopPhrmRCA.indd 1 10/29/08 2:30:36 PM R&D

Innervation or enervation in pharma? It is all too easy to focus on the research-based pharmaceutical industry’s negative prospects, but how worried should we really be, ask Alix Biancardi and Sophie Green

he pharmaceutical industry has, over areas accessible to the pharma industry, but battle for market dominance between the years, built up a straightforward this blockbuster model did generate vast Merck & Co’s Gardasil and Tmethod of developing and returns for investors. Between 1993 and GlaxoSmithKline’s rival Cervarix, both commercialising drugs to meet market 2000 the FT Pharmaceuticals index rose by prophylactic anti-HPV vaccines that show demands and create a highly profitable more than 350%, indicating sizeable huge marketplace potential. Now, new business model. More recently, however, this investments made in a traditionally hugely drugs not only have to compete in terms of model has evolved and, like Darwin’s profitable industry. Over the next two years, marketing and branding in a crowded Theory of Evolution, been acted on by a however, the index lost half its value against marketplace; there is also far greater sort of “natural selection”, albeit over a a backdrop of ongoing substantial financial emphasis placed on demonstrating much shorter timeframe. Pipelines are success. In fact, at this time, the combined significantly better safety and/or efficacy subject to external forces exerting profits for the top 10 drug companies in compared with existing therapies to gain pressures that determine which drugs will the index were $35.9 billion, compared with approval in the first place, especially under be successful competitors, and which will $33.7 billion for all the other 490 businesses the US accelerated approval process. In enter evolutionary dead ends. The old drug put together. From the beginning of 2000 to addition, there is growing pressure for development model that brought the March 2007, the FTSE global products to demonstrate cost-effectiveness pharma industry so much success is now pharmaceuticals index rose a mere 1.3% to satisfy health economics considerations. under unprecedented pressure to adapt or compared with the Dow Jones World Index There simply is not enough space left in face extinction. increase of 34.9%. What did analysts and niches to support more newcomers. In the past, drug development focused on investors see that made them shy away Under the pressure of competition, discovering blockbusters from large from a sector with such phenomenal novelty is now an adaptive requirement for pipelines of chemical entities. While there figures? creating a new, competition-free niche. This were many notable successes, there was a The pharmaceutical marketplace has means that companies must use an high attrition rate as candidates were tested changed dramatically in the past decade. It innovation-led model for drug development for efficacy in a hit-and-miss high- is becoming flooded with generics and (instead of the serendipitous discovery of throughput approach in a narrow spectrum “me-too” rival branded prescription drugs, “magic bullet” drugs, such as penicillin) and of disease areas. This strategy was costly, creating a crowded and competitive focus on targeted treatments. New and it limited the number of therapeutic environment. One example is the ongoing approaches include identifying those

www.scripnews.com/supplements Scrip 100 33 R&D

patients most likely to respond to a drug, compounds and biological therapeutics pharma industry has picked up the rather than developing a medicine targeting developed with NIH funding, and establish innovation slack with increased spending on a broad range of patients with different licensing deals with big pharma. This gave R&D. In 2007, global spending on drug R&D disease etiologies. Most drugs only work in the industry affordable access to early-stage was $58.8 billion, according to Burrill & an estimated 40-60% of the patients therapeutics demonstrating promise. The Company. In 2003, PricewaterhouseCoopers prescribed them. Scientists are now looking potential for exclusivity through patents and valued it at $48 billion compared with just closely at the molecular basis of diseases licensing agreements provided a huge $17 billion in 1997. and designing therapies targeting specific incentive for innovation. Since then, biotech So the money is available, and there is no points in the pathological process with the companies have begun raising their shortage of material to boost pipelines. aim of improving response rates, but also to expectations of deals significantly, and have What has happened as a result? According design drugs that impede disease progress, enjoyed the chance to channel their profits to Pharmaprojects, since 1980, there have rather than just ameliorate their symptoms. from increasingly lucrative licensing deals been at least 1,685 protein targets studied While the identification of novel targets back into their own in-house development, by various companies in R&D pipeline helps reveal more about disease adding further competitive pressure on projects; however, launched drugs since that mechanisms, it is also crucial to the pharma pipelines. time only target 325 of these. Currently, adaptation of the drug development model. Between 2000 and 2005 the cost of active pipeline projects target 1,073 human In 2003, the completion of the Human acquiring an early-stage drug candidate proteins, with projects targeting over 540 Genome Project identified approximately from a biotech firm increased eight-fold. At proteins dropped along the way, and of 20,000–25,000 protein-coding genes. Off the same time, pharma companies have these 332 were studied seriously only once the back of this, many small biotech shown a healthy appetite for outright (not just high-throughput screening)! As companies were born and they began biotech acquisitions, but even these M&A more successful drugs targeting particular evaluating the therapeutic viability of the deals have become more difficult as proteins prevail in clinical trials, the less targets with the aim of producing valuations for the most popular biotech adept projects are selected against and, marketable novel biological therapies. firms have shot up. In Darwinian terms, by consequently, so too are the targets. It was legislation that was introduced fitting so neatly into an ecological niche, the The impetus for pushing drug candidates before the completion of the Human biotech industry is thriving and may well through development at such a rate has Genome Project that proved a major boost become a dominant “species”. Now, more evidently led to a substantial increase in the to the pharma industry. Patent life was than ever, the number of therapeutics number of drugs in Phase I and II clinical extended and academia, small biotechs and targeting novel or previously unproven trials. However, this rise has not been the US National Institutes of Health (NIH) human proteins has become a key method reflected at Phase III (see Figure 1) which, itself were allowed to patent novel targets, for measuring innovation. In turn, the of course, has an impact on the number of

Figure 1: Drugs in clinical trials by phase of development 2,000 1995 1996 1997 1998 1999 1,500 2000 2001 2002 2003 2004 2005 2006 1,000 2007 2008 Number of drugs

500

0 Phase I Phase II Phase III

Source: Pharmaprojects

34 www.scripnews.com/supplements Scrip 100 R&D

challenges from generic producers, such as Figure 2: Why investigational candidates are dropped Ranbaxy. Pfizer is frantically seeking patent extensions, and developing reformulations, 11% such as the fixed-dose combination drug Caduet, using Lipitor and Norvasc (amlodipine), which itself went off-patent in 28% 2007. Even so, the company will not be able Adverse events to fill the huge gap from the expected 80% drop in Lipitor’s sales once generic E cacy competition kicks in. 44% Financial As a consequence, companies are keen Miscellaneous to bolster their pipelines by reformulating

Strategic existing marketed products, generating much needed revenue to develop novel therapies. There is almost double the 9% number of reformulated drugs in preclinical 8% development today (just over 400) than Source: Pharmaprojects there were in 1998 (230). In 1998, the top big pharma companies announced plans to produce three NCEs Table 1: Top 10 most popular targets in development per year to fill the early stages of their Rank Target Primary disease pipelines and boost flow throughout all development stages. This was reflected in 1 HIV-1 gag-pol HIV infection the mid-1990s when the number of new 2 COX-2 pain active substances (NASs) reaching the 3 COX-1 pain market averaged around 40-50 products 4 oestrogen 1 hormone replacement therapy per year. In 2008, however, the figure was somewhat disappointing, with only 25 NASs 5 , voltage- hypertension successfully launched. This isn’t to say that dependent, L type, alpha 1C subunit NCEs and NASs aren’t being developed; as of October 2008, Pharmaprojects had 8,982 6 D2 dopamine receptor schizophrenia/Parkinson’s active drugs in its database, of which 4,433 disease were NCEs. Pharma companies are clearly 7 µ1 opioid receptor pain successfully developing NCEs and NASs. 8 glucocorticoid receptor asthma The question is, are there enough of them, and will they continue to progress 9 β2 adrenergic receptor asthma successfully and consistently through the 10 serotonin neurotransmitter depression 12-14 year development time for novel transporter drugs, to provide the profits needed to Source: Pharmaprojects sustain the industry as its business model changes? drugs launched. Why are these drugs not against profits generated by marketed It is of little surprise that companies are getting through? As well as poor candidate products. Long-term pipeline potential is sticking to what they know. Table 1 shows selection, and the fact that drugs are key to securing investment from the the top 10 most popular targets in spending more time in Phase II, attrition financial sector. In the past, pipelines were development and their associated primary must be held accountable. According to balanced to produce new drugs in a steady indication as documented by Pharmaprojects. Pharmaprojects, between 2000 and 2008, stream to replace profit losses following Comparing this information with the 1,941 drugs were discontinued. Of the patent expiries on older medicines. This all launched drugs for these indications (see projects for which companies have disclosed began to change at the beginning of this Table 2) it is evident that the most the reason for discontinuation, a startling decade with the coincidental loss of patent frequently researched targets, historically, 44% of decisions were strategic, while just protection for a slew of major blockbusters. are those which already have proven safety 28% of programmes were dropped because In 2001, Lilly’s hugely popular antidepressant and efficacy, and are therefore more of lack of efficacy and 11% for poor side- Prozac () and Bristol-Myers economically safe for the company to effect profiles (see Figure 2). Squibb’s anti-diabetes drug Glucophage develop. Of course, it is not only in the clinic that (metformin hydrochloride) both came off This is perhaps not the best news for drugs are failing due to safety concerns. In patent. The past seven years have witnessed patients for whom there are few or no 2004, Merck & Co’s Vioxx (rofecoxib) was significant loss of blockbuster exclusivity, alternative therapies for their diseases. At withdrawn due to increased risks of cardiac spelling financial disaster for some the 2007 BIO conference, Michael J Fox events and now, following a spate of companies, and the trend looks set to appealed for research into novel treatments lawsuits, the company is being sued by the continue. for diseases, rather than investment in the state of Florida. Pfizer’s Lipitor (atorvastatin calcium), a more cost-effective, less risky reformulations Market withdrawals have proven market leader in the cholesterol control that are so popular in the industry today. calamitous to an industry for which the market and the best-selling drug of all time, Highlighting the need for novel therapies, costs of developing a drug, possible lawsuits, faces patent loss from 2010, and the Mr Fox pointed out that the “gold standard” and product attrition must be balanced company is already fending off patent in the Parkinson’s disease field, and the drug

www.scripnews.com/supplements Scrip 100 35 R&D

versions were dropped from competitors’ Table 2: Launched drugs for indications in Table 1 pipelines, at huge cost. Despite prevailing fears that innovation in Disease Most common drug target pharma is suffering, novelty is gaining HIV infection HIV-1 gag-pol headway in the pipeline, as can be seen in pain COX-2 Figure 3. 2007 saw the launch of two new hormone replacement therapy oestrogen receptor 1 antiretrovirals with completely novel mechanisms of action – Merck & Co’s hypertension calcium channel, voltage-dependent, integrase inhibitor Isentress (raltegravir) and L type, alpha 1C subunit Pfizer’s CCR5 antagonist Selzentry schizophrenia/ Parkinson’s D2 dopamine receptor (maraviroc) – marking a potentially huge asthma glucocorticoid receptor, β2 adrenergic receptor step forward in HIV therapy. The HIV field previously had only three approved depression serotonin neurotransmitter transporter treatment strategies: reverse transcriptase Source: Pharmaprojects inhibition, protease inhibition and fusion inhibition. By forging entirely new paths to treat HIV based on novel targets, both Figure 3: Novel drugs by phase of development Merck and Pfizer have gained access to 80 potentially vast profits by opening up niche areas of the market. And most importantly, 70 the 38 million patients infected with HIV worldwide will benefit hugely from the new drugs, especially those who have developed 60 resistance to, or cannot tolerate, existing drugs. 50 By forging entirely new paths to 40 treat HIV based on novel targets,

30 both Merck and Pfi zer have gained access to potentially vast Percentage unproven targets unproven Percentage 20 profi ts by opening up niche areas of the market 10

0 It is clear that the future of the pharma Preclinical Phase I/II Phase III PR industry will depend on key influencing Source: Pharmaprojects factors, but whatever shape it takes will almost certainly be entirely new. Companies he has used to treat his own condition for and specific symptom sets meant less as large as Pfizer are rethinking their the past 15 years, the dopamine blockbuster potential. The Act filled a business plans, and making dramatic levodopa, had been around for more than desperate need in targeting untreated restructuring changes as a result. Such four decades. He added that, over the patients with chronic and often fatal streamlining of business practices, including course of his disease, he had been offered conditions, such as gliomas. Drugs face less refocusing on therapeutic areas with the no alternative drug with the possibility of competition in these niche areas, allowing most potential, may well have a huge fewer side-effects or greater efficacy in most/all of the potential profits to be beneficial effect. Add to this the sea of controlling disease progression, and that he retained by the manufacturer, with the targets waiting to be taken full advantage of, could see none on the horizon. added boon of tax reductions and a seven- and it is clear that anything could happen. Michael J Fox represents a new year prolonged exclusivity period. The Act With investors waiting with baited breath evolutionary pressure influencing drug has proven quite successful; in 2008 alone for the outcome of all this change, the development today – that of demand from over 80 drugs have been granted orphan evolution of the pharma industry has huge patients, physicians, insurance companies drug status. potential for exciting innovation, benefiting and government regulatory bodies. Drugs Patient and physician preference for drugs patients, shareholders and governments. for difficult-to-treat and poorly understood can also play a part in their success, as conditions are now demanded, and highlighted by poor market uptake of expectations for treating the underlying Pfizer’s inhaled insulin drug Exubera, for causes, not just symptoms, are higher than example. There were some concerns over ever. In January 1983, incentives for pharma safety, but a major factor in determining to develop drugs for unmet diseases came Exubera’s fate was the device’s design – in the form of the Orphan Drug Act. This patients simply didn’t like it, preferring piece of US legislation was introduced to modern injectable devices over the bulky Alix Biancardi and Sophie Green are assistant boost research in rare diseases, where small inhaler. As a result, a potential blockbuster editors for Pharmaprojects. patient populations (fewer than 200,000) failed to make an impact, and “me-too”

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www.scripnews.com/supplements Scrip 100 37­­ R&D University of Western Australia Western University of

VICTIMLESS LEATHER: ‘A Prototype of Stitch-less Jacket grown in a Technoscientifi c “Body” 2004’ by Oron Catts and Ionat Zurr Stem cells continue to excite Stem cell research, and research involving human embryonic stem cells in particular, continues to offer hope for patients suffering from a range conditions, reports Dr Peter Charlish

he fate of an item in an exhibition at the laboratory within the school of anatomy and consultation with the exhibit’s creators, a senior Museum of Modern Art in New York in human biology at The University of Western curator at the museum, Paola Antonelli, took the T2008 spoke reams about attitudes Australia, in consultation with Verigen, a Perth- decision to switch off its life support system. The towards stem cell research. The exhibit, entitled based subsidiary of Genzyme that specialises in New York Times quoted Ms Antonelli as saying ‘Victimless Leather’, consisted of a layer of living tissue-engineered cartilage for clinical that she felt “cruel” when she did so. mouse stem cells supported by a biodegradable applications. This bizarre episode illustrates the sometimes polymer matrix in a form of a miniature coat. Unfortunately (or perhaps fortunately, surprising depth of feeling that human beings The exhibit was maintained in an incubator with depending on your point of view), the life can display towards other living things, and also nutrients: The New York Times described it as support system in the incubator was too perhaps echoes the strong moral objection that “unsettlingly alive”. The exhibit was created by efficient. The stem cells rapidly began to grow some people have to research using embryonic SymbioticA, which describes itself as an artistic out of control, clogging the incubator. In stem cells.

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There is widespread agreement that stem cell contamination, and earlier in 2008 the Bundestag muscle. The attraction of this approach is that a research holds out the hope of finding new (the lower house of the German parliament) patient would be unlikely to reject cells derived treatments, possibly even cures, for diseases as passed amending legislation that will mean that from his own body. But this particular research is diverse as cancer, Parkinson’s and Alzheimer’s human embryonic stem cell lines established up to still at a very early stage, and a number of issues diseases, diabetes and heart disease, and it has April 2007 may be imported and used for remain to be resolved. For example, because been suggested that stem cells could be a research. In practice, this will mean that the sperm precursor cells may also be the origin of source of red blood cells for transfusion. But the number of cell lines available to German testicular cancers, there is an issue with safety. And, area where agreement has been hard to come researchers will increase from 20 to about 500. of course, female patients would not be candidates by is in the morality of stem cell research. The new legislation still sets out certain for such treatment. Traditionally, human stem cells are obtained from criteria that must be met before a research On the other hand, cells derived from four- or five-day-old human embryos that have project involving human embryonic stem cells menstrual blood, known as endometrial been created for in vitro fertilisation purposes can go ahead, such as a requirement that the regenerative cells, have been shown to restore but which are no longer needed (so-called embryos must have been created by in vitro blood flow in an animal model of critical limb embryonic stem cells). fertilisation or similar artificial techniques for ischaemia, an advanced form of peripheral The problem is that, in some people’s eyes, reproductive purposes. But significantly, it artery disease. In fact, these cells have been such embryos have the potential to grow into removes the threat of legal sanctions from found to be capable of being transformed into complete human beings, and to destroy them German scientists involved in foreign research at least nine different tissue types. A research (which is necessary to obtain the stem cells) is projects using embryonic stem cells, thus team based in the US and Canada recently therefore tantamount to destroying a human life. facilitating international projects. suggested that such cells could be used in an One prominent holder of this point of view is At the opposite extreme are countries like “off the shelf” manner because they can be outgoing US President George W Bush who, in the UK, where research on embryonic stem cells delivered at the point of care, do not require 2001, banned the use of federal funds to and the creation of new embryonic stem cell matching, and are easily injectable without the support research using human embryonic stem lines are permitted, subject to approval from the need for complex equipment. cell lines established after August 2001, and has Human Fertilisation and Embryology Authority One of the challenges with stem cells is coaxing twice vetoed Congressional bills that sought to (HFEA). Legislation currently passing through them to differentiate into the desired tissue type. reverse this policy. Parliament would permit experiments using One approach is to deliver specific genes into Like his Republican opponent in the US hybrid human-animal embryos for stem cell pluripotent stem cells. Various vectors have been presidential election, president-elect Barack research, subject to HFEA approval. used for this, and a team of Japanese researchers Obama has voiced support for embryonic stem As the moral debate about stem cell research recently announced that the use of a helper- cell research. Mr Obama has said that, without goes on, scientists continue to find potential new dependent adenoviral vector can considerably federal funding for embryonic stem cell research, uses for them. In addition, new sources of stem increase the efficiency of the process. the US will fail to keep up with developments cells continue to be reported, although none so In the case of differentiation into nerve cells, the by the international research community. A far has demonstrated the wide range of method currently used in the laboratory is to statement on his website declares that “…we potential applications claimed for the pluripotent stimulate the cells with a naturally occurring must all work together to expand federal embryonic stem cell. substance, all-trans-retinoic acid (ATRA). funding of stem cell research”, adding that the For example, Australian researchers recently Unfortunately, ATRA is less than ideal for this technique will require “comprehensive, reported that stem cells extracted from teeth purpose because it rapidly degrades on exposure thoughtful and carefully crafted ethical and could one day be used to help stroke victims. The to light, heat and air, so it is difficult to be sure of scientific guidelines”. researchers, from the new Centre for Stem Cell the concentration of ATRA in solution, and the Like Mr Obama, the former Republican Research in Adelaide, have been injecting stroke- extent to which it has decomposed. Researchers in presidential candidate Senator John McCain damaged rat brains with adult dental pulp stem the UK are hoping to overcome this problem by voted in favour of the two Congressional bills cells, and hope to publish their results by the end developing more stable ATRA analogues. Two vetoed by President Bush in 2006 and 2007, and of 2008. Dental pulp stem cells are extremely synthetic retinoids in particular have been he has expressed his support for a reversal of attractive as precursors of brain cells because they developed that stimulate stem cell differentiation: the Bush veto on devoting federal funds to are easy to obtain, can be taken from the patient not only are they more stable than ATRA, but they embryonic stem cell research. According to needing treatment, and have properties similar to also appear to affect differentiation in different press reports, Mr McCain’s support was those of cranial neural crest cells, the embryonic ways. One, for example, reportedly stimulates stem bolstered after discussions with Nancy Reagan, precursors of cranial neurones. cells to differentiate into nerve cells, while another widow of former president Ronald Reagan, who Other Australian research suggests that stem is particularly effective at producing epithelial cells. suffered from Alzheimer’s disease, and a strident cells could be used to improve the performance This opens up the possibility of studying structure- advocate of stem cell research. of cochlear implants used to restore some activity relationships and developing agents that will Since the election, Mr Obama’s transition hearing to the profoundly deaf. The problem lead to the production of specific cell types. team leader John Podesta has confirmed that with cochlear implants is that, although they are Clearly, stem cell research continues to tax the restrictions on federal funding for embryonic designed to replace some of the function of the the minds of both legislators and the research stem cell research are among a number of Bush cochlear hair cells involved in converting sound community. But the signs are that significant Administration policies that could be reversed vibrations into nerve impulses, they cannot progress is being made in the search for new by an executive order by the president-elect, replace the hair cells themselves. So far the treatments for a whole range of diseases. What and House Speaker Nancy Pelosi has said that research, being carried out at the Melbourne is needed now is the right regulatory increasing stem cell research funding is a Eye and Ear Hospital, has shown that stem cells environment to allow stem cell research, and the legislative priority of the incoming administration. introduced into the inner ear survive, although it new businesses it spawns, to flourish. Another country with relatively strict limits on is not yet entirely clear whether they will grow the type of stem cell research that can be carried into new hair cells. out is Germany. The Stammzellgesetz (Stem Cell Meanwhile, research carried out in Germany Dr Peter Charlish is a principal analyst for Informa Act) of 2002 prohibited the import or use of stem and the UK suggests that a certain type of stem Pharma. cell lines created after December 2001. However, cell derived from testicular tissue, known as sperm researchers have continued to argue that most precursor cells, may be capable of being coaxed to such cells lines are unusable because of viral grow into other types of tissue, such as bone or

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All eyes on oncology 2008 brought both high-profile successes and failures in major oncology indications including lung cancer and breast cancer, while the field continued to be the most explored therapeutic area by far, leading the way in terms of novel drugs being explored and in “personalised medicine” approaches, writes Malini Guha

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ith somewhere between a quarter different mechanisms of action, they have yet GlaxoSmithKline formed an oncology research and a third of all drugs in to prove their worth in large clinical trials. and development organisation. Wdevelopment being investigated High-profile failures this year included Pfizer’s for oncology, and more than 1,200 companies anti-CTLA-4 monoclonal antibody NSCLC involved in producing cancer drugs, there was tremelimumab in melanoma, which the Lung cancer remains the biggest cancer killer, no shortage of news in this cutting-edge company discontinued after Phase III failure. due to its high incidence combined with the medical field in 2008. Sanofi-Aventis/Oxford BioMedica’s gene- fact that it is often detected at an advanced In addition to being the most explored therapy based immunotherapy Trovax also stage, and the failure of many drugs to improve therapeutic area, cancer also continues to be stumbled in Phase III in kidney cancer, although upon standard doublet-based chemotherapy. the area where the most novel drugs are it continues to be explored in this and other Among this year’s successes in non-small cell being tested. There is a mind-boggling array indications. Dendreon’s cellular therapy lung cancer (NSCLC), which comprises about of targets and mechanisms, spurred by the Provenge (sipuleucel-T) failed to meet a 75% of all lung cancer, were Erbitux, Iressa, rapidly increasing knowledge of molecular statistical interim hurdle in Phase III and must Tarceva, and Lilly’s Alimta (pemetrexed). biology and the realisation that patients need wait until 2009 to see if it shows a survival Erbitux became the second targeted drug after to be treated according to the underlying benefit in the pivotal trial in hormone- Avastin to lengthen overall survival in the genetics of their disease rather than simply refractory prostate cancer. Cell Genesys disease in the Phase III first-line FLEX trial, and their basic tumour type. discontinued GVAX for prostate cancer after it was subsequently filed for this indication in As a result, cancer is the disease at the the failure of two Phase III trials. It may be that the EU, with imminent plans for a US filing. forefront of the “personalised medicine” investigating immunotherapy in earlier rather However, last year the drug failed in another revolution, with targeted anticancers continuing than late stage disease proves more fruitful, Phase III first-line trial, BMS CA225-099, to to generate the most excitement in the something GlaxoSmithKline is doing with its meet its primary progression-free survival oncology community. The personalised MAGE-A3 vaccine in a large adjuvant Phase III (PFS) endpoint on top of another medicine approach was arguably best trial in lung cancer. chemotherapy doublet. Moreover, the increase illustrated this year with the KRAS story, with in median survival in FLEX was only one major studies confirming this well-known Even pharma companies month, leading some experts to question oncogene to be a negative predictor of whether the high cost of the drug was worth response to EGFR-targeted drugs in colorectal intent on developing the this modest benefit, and highlighting the need cancer, such as ImClone Systems/Bristol-Myers next blockbuster drug realise to further refine the patient population which may benefit most. If approved, Erbitux would Squibb/Merck KGaA’s Erbitux (cetuximab) and the necessity to subdivide Amgen’s Vectibix (panitumumab). Both drugs provide an option to squamous cell patients, were approved in Europe only for advanced patient populations based on who comprise about 25-40% of NSCLC – colorectal cancer patients whose tumours are underlying disease genetics Avastin is not used in these patients because EGFR-positive and who have a wild-type KRAS of the risk of fatal pulmonary bleeding. gene. The large IPASS trial of AstraZeneca’s Positive predictors of response to targeted In addition to testing targeted therapies on EGFR-targeted Iressa (gefitinib) in non-smoking therapies appear to be more difficult to their own, some were tested in combination, Asian patients with adenocarcinoma was the discover, but even pharma companies intent on where the greatest promise of such drugs is first in the first-line metastatic setting to show developing the next blockbuster drug realise thought to lie. However, the high-profile failures a benefit (in terms of PFS) of the product the necessity to subdivide patient populations of some combinations – such as Roche/ compared with standard doublet based on underlying disease genetics and are Genentech’s anti-angiogenic Avastin chemotherapy. These selected patients have a hard at work to find appropriate biomarkers (bevacizumab) with Erbitux in colorectal higher rate of EGFR-sensitising mutations that would allow them to do this. This would cancer, and Avastin and Roche/Genentech’s which make it easier for Iressa to bind to the also lead to greater success in clinical trials and EGFR-targeted Tarceva (erlotinib) in second- EGFR receptor and block it. Iressa is not greater likelihood of drug approval, which is of line NSCLC – illustrated the need to rationally licensed anywhere in the first-line setting, great importance in an area where attrition design combinations of targeted drugs, a including Asia, and AstraZeneca said it was in remains a major issue. necessity as more and more reach the market. consultation with relevant health authorities In 2008, there were both high-profile late- While some novel drugs reported Phase III regarding the IPASS data. In 2008, AstraZeneca stage clinical successes and failures. Some results in 2008, far more candidates are still in also filed for EU approval for Iressa in pre- successes included drugs that were previously Phase III, Phase II, or earlier clinical or preclinical treated NSCLC on the basis of the INTEREST used in non-cancer indications, such as development, hinting at even more news to trial, presented in 2007, in which the drug Novartis’s bone drug Zometa (zoledronic acid; digest in years to come. Moreover, some showed equivalent survival to docetaxel approved for osteoporosis and to treat bone targeted drugs, such as Avastin, are in late-stage chemotherapy. complications in cancer) which showed trials in the adjuvant setting, where the greatest Tarceva, which is approved as a second-line promise in adjuvant breast cancer, and possible benefit, a cure, is a potential. therapy in NSCLC based on a survival benefit Novartis’s mTOR inhibitor RAD001 The tremendous interest in oncology was in that setting, could find use earlier in the (everolimus; approved as Certican for the highlighted in the corporate world by battles treatment of the disease. Roche/Genentech prevention of organ rejection in a different to acquire major cancer drug developers, such said that it had met its primary PFS endpoint dosing) in kidney cancer. Drugs already as Roche’s so-far unsuccessful bid for in its first Phase III trial testing it as a first-line approved for cancer, such as Erbitux, showed Genentech and Bristol-Myers Squibb’s and maintenance therapy in advanced NSCLC, and a benefit this time around in other major Lilly’s battle for ImClone, eventually won by Roche plans to discuss filing a new indication oncology indications (lung cancer in the case Lilly. Additionally, Pfizer, the world’s largest for the drug with regulators. of Erbitux). pharma company, has now shifted its major While the major interest might lie with While immunotherapies harbour significant investment from cardiovascular disease to targeted anticancers, Lilly’s Alimta proved that potential in cancer, and companies large and cancer, Schering-Plough underlined cancer as a additional benefit may still be derived from small remain dedicated to exploring numerous key part of its future product pipeline, and chemotherapies. The drug received FDA

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approval in the first-line setting for patients targeted agents. This was shown to be the case with non-squamous histology, after it showed in 2008 with Erbitux. When a KRAS biomarker an approximate one-month survival advantage analysis was conducted on evaluable tumour for this group compared with Lilly’s older samples in the pivotal CRYSTAL trial, it was chemotherapy drug Gemzar (gemcitabine), shown that patients with a mutated KRAS both used in combination with cisplatin. oncogene did not benefit from the addition of Although the benefits of the lung cancer Erbitux to chemotherapy in terms of PFS or successes might be termed marginal, they response rate. On the other hand, patients appear larger next to the numerous failures. with wild-type KRAS had improved PFS with Bayer/Onyx’s multi-targeted kinase inhibitor Erbitux (32% reduction in the risk of Nexavar (sorafenib), approved in liver and progression or death during the period of kidney cancers, failed a Phase III first-line trial observation). There was also a trend towards when added to carboplatin and paclitaxel improved overall survival (a non-significant chemotherapy, the common US doublet benefit of approximately four months) for chemo regimen, although it is still being tested patients with a wild-type KRAS gene. Other in a second study evaluating it in combination studies with Erbitux in CRC showed similar low to intermediate risk of disease recurrence, with a different chemotherapy regimen. results, as did a KRAS analysis of Amgen’s compared with hormone therapy alone (with AstraZeneca said that a Phase II/III study of Vectibix in previously treated patients five-year disease-free survival of 94% vs 91%, its new experimental anti-angiogenic Recentin presented last year. respectively). (cediranib; AZD2171) in first-line NSCLC However, the presence of a wild-type KRAS While some experts said the result was “not would not continue into Phase III development gene does not predict a sure response to yet practice changing”, the potential anticancer due to toxicity. However, it also said that a new EGFR-targeted agents, and therefore the benefit of Zometa could soon be confirmed in Phase II/III first-line trial would commence in search is underway for other biomarkers to other trials. AZURE (Adjuvant Zoledronic acid 2009 testing a lower dose of the drug. further refine the population most likely to to reduce Recurrence), which completed Meanwhile, AstraZeneca’s most advanced respond to these drugs. There are thoughts to enrolment in 2006, is evaluating the impact of new anticancer Zactima (vandetanib), an oral combine EGFR inhibitors with inhibitors of a more intensive schedule of Zometa in inhibitor of VEGFR-2, EGFR and RET kinase, downstream components of the KRAS reducing the risk of cancer recurrence in 3,360 prolonged PFS in one Phase III trial in pre- pathway to overcome resistance, but most of pre-menopausal and postmenopausal women treated NSCLC and failed do to so in two these have not yet reached late-stage with stage II/III breast cancer (therefore at others. development. higher risk of recurrence than those in Amgen was forced to temporarily suspend The other biggest story in CRC this year ABCSG-12) when added to chemotherapy enrolment in its Phase III trial of motesanib may have been the Phase III failure of the and/or hormonal therapy. In targeting higher- testing its anti-angiogenic drug candidate as a Avastin plus Erbitux combination. From a cost risk women, the trial is more in line with first-line treatment for advanced NSCLC after perspective, such a combo would have difficult clinical practice. higher mortality rates were observed with the to afford. However, there were hopes that Avastin secured accelerated approval in the drug compared with placebo in an interim combining two targeted agents which have US, a surprise and controversial decision that analysis. Treatment was discontinued in patients shown efficacy in the disease would lead to an came after the drug’s failure to show a survival with squamous cell NSCLC based on an added benefit. Instead, in the large first-line benefit in its pivotal study, E2100, and the observation of a higher incidence of CAIRO2 trial, the outcome (in terms of PFS) FDA’s advisory committee voting against pulmonary bleeding in these patients, the same was actually worsened with the two agents approval in a panel meeting. A full review of issue as with Avastin. when added to chemotherapy versus the other trials with Avastin, including the first-line Avastin failed to improve overall survival in a Avastin plus chemo control arm. Experts Phase III AVADO and RIBBON-1 studies, is second Phase III pivotal trial, AVAIL, testing it concluded that the understanding of the VEGF required for accelerated approval to be on top of gemcitabine and cisplatin. This led and EGFR pathways was incomplete. converted into a full approval. Like E2100, some experts to say it was not a mandatory AVADO met its primary endpoint of standard in lung cancer despite its showing an breast cancer extending PFS (although by a much more approximate two-month survival benefit on Breast cancer remains one of the biggest modest margin, with median PFS extended by top of chemotherapy in its first pivotal trial cancer killers, despite a relatively high survival less than one month). Overall survival results which led to its approval in NSCLC. rate when compared with many other tumour from AVADO are expected by mid-2009, but The combination of Avastin and Tarceva types, as a result of its high incidence and not given the modest PFS benefit observed, as well failed their first Phase III trial in NSCLC, in the always being caught early. as the crossover allowed in the study, there is second-line setting, but they are still being Novartis’s bisphosphonate Zometa provided some chance that a survival benefit may not tested together as first-line maintenance one of the biggest clinical success stories this be seen. Roche and Genentech said that treatment. year. The 1,803-patient ABCSG-12 trial was RIBBON-1, which tested Avastin in the first large-scale study to demonstrate the combination with other chemotherapies, colorectal cancer significant anti-tumour benefit of zoledronic succeeded in meeting its primary PFS Colorectal cancer (CRC) remains the second acid, which so far is known only for its endpoint, but overall survival data are not yet biggest cancer killer in the West. The biggest beneficial effects on bone. However, preclinical available. story of 2008 was that of the KRAS biomarker. studies have suggested that the drug may have In the largest study of two targeted agents KRAS is a well-known oncogene, which is anticancer effects, and research over the next in HER2+ metastatic breast cancer, the synergy mutated to different levels in different tumour several years may help further elucidate its of Roche/Genentech’s HER2-targeted types (35-45% in CRC). The KRAS protein is mechanism. Herceptin (trastuzumab) and GlaxoSmithKline’s downstream of EGFR, and when locked in the In the trial, Zometa reduced the risk of newer dual-targeted Tykerb () was “on” position as a result of a mutation in the breast cancer recurrence on top of hormone demonstrated in a Phase III trial in patients KRAS gene, confers resistance to EGFR- therapy by 36% in pre-menopausal women at who had received prior chemotherapy.

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Improved clinical outcome, in terms of renal cell carcinoma Antigenics filed for EU approval of its significantly improved PFS, was achieved with The good news for the relatively rare, but therapeutic kidney cancer vaccine, Oncophage the combination in patients progressing on hard-to-treat, kidney cancer continued in 2008, (HSPPC-96; vitespen), as an adjuvant treatment Herceptin-based therapy. The role of combined with further success for the targeted therapies in the disease, under the conditional anti-HER2 therapy, in combination with which have recently changed the face of this authorisation provision, following Russian chemotherapy, in less heavily pre-treated disease. Novartis filed its mTOR inhibitor approval in 2008. The vaccine failed to meet its patients with early stage disease is ongoing in Afinitor (RAD-001; everolimus) in the US and primary relapse-free survival endpoint in its pivotal trial, which included various stages of the ALTTO (Adjuvant Lapatinib and/or EU for the treatment of patients with kidney cancer, but appeared to show a benefit in Trastuzumab Treatment Optimization) study. advanced kidney cancer who have failed on Stage I and II patients (intermediate-risk), the standard treatment. The filings were based on population in which Antigenics hopes to secure prostate cancer data from the RECORD-1 trial, in which most approval. Despite prostate cancer having one of the patients received RAD001 as a third-line Meanwhile, despite the significant progress best prognoses of any tumour type, like breast therapy. PFS was the primary endpoint of the made in kidney cancer in the clinic, the UK’s cancer it remains one of the biggest killers study, which was terminated early when a large National Institute for health and Clinical benefit with RAD001 compared with placebo due to high incidence and not being caught Excellence (NICE) released draft guidance, amid was observed – median PFS was 4.0 months early in all cases. Much of the focus of drug significant controversy, which said that Avastin, vs 1.9 months. discovery is on hormone-refractory prostate Nexavar, Sutent and temsirolimus (Wyeth’s The trial’s lead investigator said that cancer (HRPC), as there are few options for Torisel) were too expensive to be made the men who develop this late-stage RAD001 should be the standard of care for available on the NHS in England and Wales. This condition. patients who progress on a VEGF receptor highlighted the cost-effectiveness hurdles that There was more disappointment for GPC tyrosine kinase inhibitor (ie, Pfizer’s Sutent even the most promising anticancers will have to Biotech, which announced this year that the (sunitinib) or Bayer/Onyx’s Nexavar), since no face, especially in some healthcare systems. other drug has shown a benefit in this setting EU marketing application for its oral platinum- in a large trial. However, other experts said based chemotherapy drug satraplatin was to chronic lymphocytic leukaemia that more work needed to be done to Chronic lymphocytic leukaemia (CLL), an orphan be withdrawn by its partner for the drug in establish the best sequence of therapies in drug indication and the most common form of Europe, Celgene (previously Pharmion). There kidney cancer, with the numerous new options adult leukaemia, saw significant activity this year. had been high hopes for satraplatin as a on the market and other second-generation First, in March, the FDA approved Cephalon’s second-line agent in HRPC (after failure of drugs that target VEGF receptors, which new chemotherapy drug Treanda (bendamustine other chemotherapy) after it prolonged PFS, include GlaxoSmithKline’s pazopanib and HCl) for CLL, its first indication, after it showed but last year GPC announced the Pfizer’s axitinib, in late-stage trials. in a pivotal study in treatment-naive patients to disappointing news that satraplatin had failed Meanwhile, overall data from Sutent’s pivotal have a higher rate of overall response and longer to extend overall survival in the pivotal trial became available in 2008. Overall survival PFS compared with standard chlorambucil SPARC trial. Pharmion had said that the key in the trial was 26.4 months for Sutent vs chemotherapy. Treanda also secured approval for for the European submission would be to 21.8 months for alpha-interferon. However, the the treatment of relapsed indolent non- conduct pre-specified subset analyses focusing most informative data, according to experts, Hodgkin’s lymphoma (NHL). on the impact of prior use of Sanofi-Aventis’s was that showing the comparison of Sutent Genentech/Roche/Biogen Idec’s Rituxan/ chemotherapy Taxotere (docetaxel), but this and alpha-interferon for patients who did not MabThera (rituximab), a blockbuster drug in its failed to sway the European agency. get any post-study treatment. For these primary indication of NHL, succeeded in two Other disappointments included Cell patients, median survival was doubled with pivotal trials in CLL in combination with Genesys’s GVAX and Dendreon’s cellular Sutent – 28 months vs 14 months. 14 months chemotherapy in previously untreated patients and in relapsed patients. Roche filed for EU therapy Provenge (see above), but hopes still has been the traditional survival duration seen approval for rituximab as a first-line agent in CLL remain for Provenge to improve overall with interferon before the advent of the new after it met its PFS endpoint in the CLL-8 trial in survival in the final analysis expected mid- targeted therapies in kidney cancer, showing previously untreated patients. 2009. If approved in the US, it would be the that the lengthened survival for patients treated with interferon in the overall trial Finally, GlaxoSmithKline and Genmab said the first immunotherapy for cancer and would pivotal, single-arm, single-agent Phase III trial of give a significant boost to the field. population was likely due to the post-study treatments. ofatumumab met its primary response endpoint One prostate cancer success was Ferring at interim analysis in refractory CLL. If approved, A disappointment in renal cancer was Pharmaceuticals’ degarelix, which is to be used CLL would be the first indication for Oxford BioMedica’s TroVax, a novel in men who are still responsive to hormonal ofatumumab which, like rituximab, targets the therapeutic cancer vaccine being developed treatment rather than in HRPC. Ferring filed CD20 antigen on the surface of normal and with Sanofi-Aventis. Oxford BioMedica said it the drug, a GnRH antagonist, in the US and malignant B-cells. However, it is a fully human would not meet its predefined primary EU after successful completion of a pivotal monoclonal antibody, while rituximab is endpoint of a survival benefit in its pivotal chimaeric. It also targets a novel epitope of Phase III trial that compared it with Abbott’s Phase III TRIST study after a fourth interim CD20, and preclinical studies indicated that it is Lupron (leuprolide acetate), a standard GnRH analysis was conducted. However, the UK associated with greater complement-dependent agonist. The GnRH antagonists, in contrast biotech company subsequently said the FDA cytotoxicity than rituximab. with the agonists, do not cause an initial supported its proposed amendments to the increase in testosterone and therefore have a study design, which will look at whether Malini Guha is Scrip’s faster onset of action in reducing levels of the patient outcome is dependent on the number science editor. hormone. Whether this leads to better clinical of doses, background standard of care and outcomes is not yet known. However, patients patients’ prognostic factors. However, an on these drugs would not need to also take additional confirmatory clinical study in this an anti-androgen therapy. indication will still be needed for approval.

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Japanese approvals marked by high-need products The Japanese Pharmaceuticals and Medical Devices Agency (PMDA) continues to take various steps to speed up its reviews of new products with the aim of cutting Japan’s “drug lag”. The agency’s moves to approve products for serious diseases, particularly cancer, have also been boosted by the allowance over the past few years of physician-led trials and the formation of a special committee to review drugs in common use elsewhere but still unavailable in Japan

look at the products approved in Sutent (sunitinib) for renal cell carcinoma. worldwide clearance in Japan was for Japan over the year to November The list also reveals a relatively large Dainippon Sumitomo Pharma’s dopamine A 2008 (see Table 1) suggests that number of priority and expedited reviews D2/5HT2 blocker Lonasen (blonanserin) these initiatives – along with companies’ and orphan drugs, suggesting the PMDA is for schizophrenia. own efforts to develop their new products making greater use of such designations to simultaneously in Japan via global trials – speed up the approval of high-need vaccines are beginning to bear fruit. During the products. In most cases, this is balanced A domestically developed vaccine against period, close to 40 chemical or biological out by stricter (usually all-patient) H5N1 bird flu was approved in October entities new to Japan received formal postmarketing surveillance programmes to 2007, but there was little activity approval from the ministry of health, ensure safety in the real-world setting. elsewhere in the vaccines area during the labour and welfare. Actemra, Aroglycem, Champix, Clexane, review period. Under Japan’s current The list includes several important Concerta, Erbitux, Nexavar and Sutent reimbursement policy, prophylactic vaccines biological therapies, notably Chugai/Roche’s were among the products to receive are not granted national health insurance anti-interleukin-6 antibody Actemra priority reviews. coverage. (tocilizumab). This product received its first But despite the progress in getting Two cervical cancer vaccines, clearance for its main indication of valuable new products onto the Japanese GlaxoSmithKline’s Cervarix and Banyu’s rheumatoid arthritis, following on from an market, virtually all of the drugs approved (Merck & Co) Gardasil, were filed for earlier approval for the much smaller by Japan in the period studied had already approval in Japan in the last quarter of orphan indication of Castleman’s disease. been launched elsewhere, often several 2007 but have yet to be approved. In the oncology area, which is seeing years previously. Ian Haydock is Scrip’s Asia rapid growth in Japan, important approvals The number of global first approvals in editor. included ImClone Systems/Merck KGaA/ Japan remained small, perhaps reflecting Bristol-Myers Squibb’s Erbitux (cetuximab) the Japanese industry’s ever-increasing for colorectal cancer, and Bayer Schering emphasis on the US as its priority market. Pharma’s Nexavar (sorafenib) and Pfizer’s Besides Actemra, the only other first

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Table 1: Japanese new chemical entity approvals* Product Generic name Indication Company Actemra tocilizumab rheumatoid arthritis1,2 Chugai/Roche Amerge migraine GlaxoSmithKline Aroglycem hyperinsulinism Schering-Plough Champix varenicline smoking cessation Pfizer Clexane enoxaparin venous thrombo-embolism (orthopaedic) Sanofi-Aventis Differin adapalene acne Galderma Erbitux cetuximab colorectal cancer2 ImClone/BMS/Merck KGaA Exjade deferasirox iron overload Novartis Famvir famciclovir herpes Asahi Kasei Fosrenol lanthanum hyperphosphataemia Bayer Schering Ganirest ganirelix in vitro fertilisation Schering-Plough Gracevit sitafloxacin infections Daiichi Sankyo Humira adalimumab rheumatoid arthritis Abbott Inoflo nitric oxide infant hypoxic respiratory failure Ino Therapeutics Irbetan/Avapro irbesartan hypertension Shionogi/DSP Irribow ramosetron3 male irritable bowel syndrome Astellas Isentress raltegravir HIV-12 Merck & Co Julina estradiol climacteric syndrome/ovarian Bayer Schering deficiency, postmenopausal osteoporosis Lamictal epilepsy GlaxoSmithKline Lonasen blonanserin schizophrenia Dainippon-Sumitomo Lunabell norethisterone plus dysmenorrhoea Nobel Pharma ethinylestradiol Macugen pegaptanib wet age-related macular degeneration2 Pfizer Mycobutin rifabutin tuberculosis/Mycobacterium Pfizer avium complex in HIV Naglazyme galsulfase mucopolysaccharidosis2 AnGes MG Nexavar sorafenib renal cell carcinoma (RCC)2 Bayer Schering Nobelbar phenobarbital neonatal seizures Nobel Pharma Nobelzin zinc acetate Wilson’s disease2 Nobel Pharma Pirespa pirfenidone pulmonary fibrosis Shionogi Prezista darunavir HIV/AIDS2 Janssen Revatio sildenafil pulmonary arterial hypertension2 Pfizer Ricomodulin ART-123 disseminated intravascular coagulation Asahi Kasei Sutent sunitinib RCC/resistant gastrointestinal stromal tumours2 Pfizer Talimus tacrolimus eye spring catarrh2 Senju Tapros tafluprost glaucoma/ocular hypertension Santen Thymo-globulin rabbit globulin hypoplastic anaemia2 Sanofi-Aventis Wellnara estradiol plus postmenopausal osteoporosis Bayer Schering levonorgestrel Zevalin ibritumomab non-Hodgkin’s lymphoma/mantle cell lymphoma2 Bayer Schering Zosyn tazobactam plus piperacillin pneumonia etc Taiho/Toyama

Note: originators, licensors and alternative brand names not shown; 1 previously approved for Castleman’s disease; 2 orphan indication; 3 already marketed as an anti-emetic. * products listed alphabetically, year to October 31st, 2008

www.scripnews.com/supplements Scrip 100 45 R&D

US NME approvals: cancer no longer reigns supreme Cancer and HIV medicines took a back seat to constipation and hypertension treatments in the number of therapeutic new molecular entities and new biologicals approved by the US FDA from November 2007 through October 2008. The 12-month span also saw some long-delayed medicines fi nally reach commercial fruition

he FDA’s drugs and biologicals centres (REMS) that includes a restricted distribution Bystolic was one of two antihypertensives approved 22 therapeutic NMEs and scheme. Despite the delays, it managed to to clear the agency. The Medicines Company’s Tnew biologicals, excluding imaging beat GlaxoSmithKline’s rival platelet booster Cleviprex (), a short-acting agents (see Table 1). In contrast to the first 10 Promacta (eltrombopag) to market. Promacta intravenous calcium , was months of 2007, when four new cancer also endured FDAAA-related delays following approved in January. Cleviprex also had its medicines were approved, Cephalon’s a positive advisory panel review in May, finally share of development problems, encountering chemotherapeutic agent Treanda securing approval in mid-November. an 18-month delay after the temporary (bendamustine HCl, licensed from Astellas) Only one new HIV medicine, Tibotec’s suspension of some Phase III trials following marked the only first-time oncology drug (Johnson & Johnson) non-nucleoside reverse concerns about atrial fibrillation. approval during the 12-month period analysed. transcriptase inhibitor (NNRTI) Intelence Five of the 22 NMEs and new biologicals The alkylating agent secured its first approval (etravirine), gained agency clearance during the were evaluated by advisory panels. These were in March for chronic lymphocytic leukaemia 12-month period. The FDA licensed two new Adolor/GSK’s Entereg; Amgen’s Nplate; Lev (CLL) and added an indication for relapsed HIV medicines during the first 10 months of Pharmaceuticals’ (now ViroPharma) Cinryze indolent non-Hodgkin’s lymphoma (NHL) in 2007. (C1 inhibitor (human)), the first product October. Two NMEs were approved for treating approved in the US to prevent attacks in Although the cancer NME approvals were constipation. Wyeth/Progenics’ mu-opioid people with hereditary angioedema; Prestwick sparse, several previously approved oncologics Relistor (methylnaltrexone Pharmaceuticals’ (now Biovail) chorea added commercially significant indications. bromide) won approval for treating opioid- treatment Xenazine (tetrabenazine), the first Headlining this group was Genentech/Roche’s induced constipation in patients with advanced US product licensed for any symptom of anti-angiogenic drug Avastin (bevacizumab), illness receiving palliative care. Adolor/ Huntington’s disease; and Sirion Therapeutics’ which received accelerated approval for locally GlaxoSmithKline’s peripheral mu-opioid Durezol (difluprednate ophthalmic recurrent or metastatic breast cancer. Although receptor antagonist Entereg (alvimopan) emulsion),the first topical corticosteroid the VEGF inhibitor already carried indications became the first drug indicated for treating approved for the treatment of both for colorectal and lung cancer, the breast post-operative ileus. inflammation and pain associated with ocular cancer approval was controversial because Entereg has endured despite a troubled surgery. Tetrabenazine and difluprednate were Avastin failed to show an overall survival development programme that included available in overseas markets for decades benefit in its pivotal study and the agency’s imbalances in serious cardiovascular events, before entering the US. oncologic drugs advisory committee narrowly neoplasms and fractures in a large study of The biologicals centre approved three new recommended against its use. opioid bowel dysfunction, a more commercially vaccines during the 12-month period (see Bayer/Onyx’s oral multi-targeted kinase significant indication. GSK has returned Table 1), although none was first-in-class or inhibitor Nexavar (sorafenib), first launched for worldwide rights in the opioid indication to aimed at addressing previously unmet medical kidney cancer in 2005, also gained a significant Adolor. needs. Instead they represented alternative new indication for liver cancer, becoming the Entereg was one of several novel medicines formulations and new combinations of existing first approved systemic therapy for the disease that finally saw the light of day in the US vaccines. after improving overall survival. commercial market following a series of Approved April 3rd, GSK’s Rotarix joined The FDA’s oncology drug products division developmental setbacks and regulatory delays. Merck & Co’s Rotateq on the US rotavirus did sign off on two other new therapeutics: Others on this list included Wyeth’s anti- vaccine market. Rotarix had the distinction of Amgen’s thrombopoietin receptor agonist depressant Pristiq (desvenlafaxine), the follow- being the first product subject to mandatory Nplate (romiplostim) for chronic immune on agent to Effexor (venlafaxine). FDA approval postmarketing safety studies under FDAAA. (idiopathic) thrombocytopenic purpura, and for major depressive disorder came more than Rotarix and Sanofi Pasteur’s (Sanofi-Aventis) Roche’s Mircera (methoxy polyethylene glycol- two years after desvenlafaxine’s initial filing five-in-one paediatric vaccine Pentacel were epoetin beta) for anaemia associated with owing to compliance problems at Wyeth’s subject to advisory panel scrutiny. It took chronic renal failure. Mircera cleared the manufacturing plant and late submission of Pentacel 17 months to clear the agency agency in November 2007 but was blocked Phase III data on a lower dose. An indication for following a positive panel endorsement, with from launching by a patent dispute with vasomotor symptoms associated with approval coming almost three years after the Aranesp (darbepoetin-alfa) marketer Amgen. menopause has been delayed by the FDA’s original BLA filing. Nplate received an overwhelming request for an additional clinical trial. endorsement from the agency’s oncology Approval of Mylan’s Bystolic drugs advisory committee in March, but the (nebivolol) was also a long time coming. Mylan’s Sue Sutter is Scrip’s BLA’s April user fee date made it subject to attempts to gain US approval were set back by Washington editor. the FDA Amendments Act’s drug safety requests for more data, including an FDA provisions, which took effect on March 25th. approvable letter in 2005. The company Nplate finally cleared the agency in mid-August licensed the drug to Forest Laboratories with a risk evaluation and mitigation strategy in 2006.

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Table 1: US therapeutic NME, new biological and vaccine approvals*

Product Generic name Company Indication Date

Arcalyst rilonacept Regeneron cryopyrin-associated periodic syndromes 27/2/08

Artiss  brin sealant (human) Baxter Healthcare skin graft attachment in burn patients 21/3/08

Bystolic nebivolol Mylan hypertension 17/12/07 (licensed to Forest Laboratories)

Cimzia certolizumab pegol UCB Crohn’s disease 22/4/08

Cinryze C1 esterase inhibitor (human) Lev Pharmaceuticals hereditary angioedema 10/10/08 (ViroPharma)

Cleviprex clevidipine The Medicines Company hypertension 1/8/08

Durezol di uprednate Sirion Therapeutics ocular surgery in ammation and pain 23/6/08

Entereg alvimopan Adolor/GlaxoSmithKline GI recovery following bowel surgery 20/5/08

Intelence etravirine Tibotec (Johnson & Johnson) HIV 18/1/08

Kuvan sapropterin Biomarin/Merck Serono phenylketonuria 13/12/07

Mircera methoxy polyethylene Roche anaemia associated with chronic 14/11/07 glycol-epoetin beta renal failure

Nplate romiplostim Amgen thrombocytopenia 22/8/08

Pristiq desvenlafaxine Wyeth major depressive disorder 29/2/08

Rapa o silodosin Watson Pharmaceuticals benign prostatic hyperplasia 8/10/08 (licensed from Kissei Pharmaceutical)

Recothrom thrombin topical Zymogenetics aid to hemostasis 17/1/08 (recombinant)

Relistor methylnaltrexone Progenics/Wyeth opioid-induced constipation 24/4/08

Toviaz fesoterodine P zer (licensed from overactive bladder 31/10/08 Schwarz Pharma/UCB)

Treanda bendamustine Cephalon chronic lymphocytic leukaemia, 20/3/08 (licensed from Astellas) non-Hodgkin’s lymphoma 31/10/08

Vimpat Schwarz Biosciences (UCB) epileptic seizures 28/10/08

Voluven 6% hydroxyethyl starch 130/0.4 Fresenius Kabi hypovolemia 27/12/07 in 0.9% sodium chloride injection

Xenazine tetrabenazine Prestwick Pharmaceuticals (Biovail) Huntington’s disease chorea 15/8/08

Xyntha antihemophilic factor Wyeth Pharmaceuticals hemophilia A 21/2/08 (recombinant) plasma/albumin free

Vaccines

Kinrix GlaxoSmithKline diphtheria/tetanus/pertussis/polio 24/6/08

Pentacel Sano Pasteur diphtheria/tetanus/pertussis/polio/ 20/6/08 Haemophilus in uenzae type b

Rotarix GlaxoSmithKline rotavirus 3/4/08

* From November 2007 to October 31st, 2008 Source: US FDA

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www.scripnews.com/supplements Scrip 100 47 R&D

EU drug approvals roundup It’s not just innovative new drugs and vaccines that go through the EU’s centralised procedure nowadays – in 2008, a number of generics and biosimilars were approved for marketing, and the fi rst OTC switch of a centrally approved medicine is on the way too

n the year from November 2007 to October • from GlaxoSmithKline for forthcoming approvals 2008, some 28 new chemical entities, allergic rhinitis; A number of products received positive opinions Icombinations and vaccines were approved via • tadalafil from Lilly for erectile dysfunction; and from the CHMP in September and October and the EU’s centralised procedure. The products • olanzapine Mylan from Generics (UK) for could be authorised for marketing by the end of were for diseases ranging from cancer through schizophrenia. 2008. cardiovascular diseases to diabetes and pandemic Also approved was Extavia, an interferon beta- They include: flu. 1b product for multiple sclerosis from Novartis As well as new substances, the European Europharm. This is identical to Bayer Schering • Celgene’s Vidaza (azacitidine) for Commission approved a number of generic Pharma’s Betaferon/Betaseron and was approved myelodysplastic syndromes (this was the products, four biosimilar medicines and a new as an informed consent application authorised by 50th orphan drug to be given a positive indication for thalidomide. the originator. opinion); 2008 also marked a new stage in the A product containing thalidomide from • Howmedica’s Opgenra (recombinant development of the self-medication sector when Pharmion (now part of Celgene) was registered human osteogenic protein-1/eptotermin the European Medicines Agency’s scientific for the treatment of multiple myeloma, in alfa) for posterolateral lumbar spinal fusion; committee, the CHMP, recommended the first combination with melphalan and prednisone. • Merck KGaA’s Kuvan (sapropterin switch from prescription-only to non-prescription The biosimilar products approved during the dihydrochloride) for status for a centrally authorised medicine. 12-month period were Stada’s Silapo and hyperphenylalaninaemia; Among the generic medicines approved during Hospira’s Retacrit (both epoetin zeta) for anaemia; • Lilly’s Zypadhera (olanzapine pamoate) for the 12-month period were the following and the first biosimilar G-CSF products – Teva’s the maintenance treatment of adult (including some submitted by the originator TevaGrastim and ratiopharm’s Ratiograstim, for schizophrenia; and companies): chemotherapy induced neutropenia. The reference • Alcon’s Azarga (brinzolamide/timolol) for decreasing intraocular pressure in glaucoma • olanzapine from Teva and Neopharma for product for the G-CSF biosimilars was Amgen’s or ocular hypertension. schizophrenia; Neupogen. • clopidogrel from Sanofi Pharma-Bristol- The OTC switch of a centrally authorised Ian Schofi eld is a principal Myers Squibb and BMS Pharma for the medicine was GSK’s anti-obesity medicine, Alli analyst for Informa Pharma. prevention of atherothrombotic events; (). It was approved as a lower-dose (60mg) • duloxetine from Boehringer Ingelheim for capsule for use in conjunction with diet for the stress urinary incontinence and diabetic treatment of patients with a body mass index of peripheral neuropathic pain; 28 or above.

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Table 1: New product approvals in the EU* Product Generic name Company Indication Date

Torisel temsirolimus Wyeth advanced renal cell carcinoma 19/11/07

Tasigna nilotinib Novartis chronic myelogenous leukaemia 19/11/07

Vectibix panitumumab Amgen colorectal cancer 3/12/07

Nevanac nepafenac Alcon post-operative pain and in ammation 11/12/07

Glubrava pioglitazone/ Takeda type 2 diabetes 11/12/07 metformin

Atripla efavirenz/ emtricitabine/ Bristol-Myers HIV infection 13/12/07 tenofovir disoproxil Squibb/Gilead Sciences

Isentress raltegravir Merck Sharp & Dohme HIV infection (in combination) 20/12/07

Tesavel sitagliptin Merck Sharp & Dohme type 2 diabetes (in combination) 10/1/08

Ivemend fosaprepitant dimeglumine Merck Sharp & Dohme nausea and vomiting in cancer 11/1/08 chemotherapy

Pradaxa dabigatran etexilate mesilate Boehringer Ingelheim primary prevention of venous 18/3/08 thrombo-embolic events

E entora fentanyl citrate Cephalon breakthrough pain in adults with cancer 4/4/08

Volibris ambrisentan GlaxoSmithKline pulmonary arterial hypertension 21/4/08

Mycamine micafungin Astellas Pharma candidiasis 25/4/08

Prepandrix H5N1 vaccine GSK Biologicals pre-pandemic  u vaccine 14/5/08

Pandemrix H5N1 vaccine GSK Biologicals pandemic  u vaccine 20/5/08

Adenuric febuxostat Beaufour Ipsen chronic hyper-uricaemia 28/5/08

Relistor methylnaltrexone bromide Wyeth Europa opioid-induced constipation 2/7/08

Trevaclyn/ nicotinic acid/ laropiprant Merck Sharp & Dohme dyslipidaemia 3/7/08 Tredaptive/ Pelzont

Latixa CV Therapeutics angina 9/7/08

Firazyr icatibant Jerini hereditary angioedema 11/7/08

Janumet/ sitagliptin/metformin Merck Sharp & Dohme type 2 diabetes 16/7/08 Velmetia/ E cib

Bridion sugammadex Organon reversal of drug-induced 25/7/08 neuromuscular blockade

Doribax doripenem Janssen-Cilag infections 25/7/08

Intelence etravirine Janssen-Cilag HIV infection 28/8/08

Vimpat lacosamide UCB epileptic partial-onset seizures 29/8/08

Xarelto rivaroxaban Bayer HealthCare prevention of venous thrombo-embolism 30/9/08

Evicel human  brinogen/ Omrix supportive therapy to improve 6/10/08 human thrombin haemostasis in surgery

Ceplene histamine dihydrochloride EpiCept acute myeloid leukaemia 7/10/08

*from November 2007 to October 31st, 2008

www.scripnews.com/supplements Scrip 100 49 R&D

Empowerment through IT Patti Gaves, senior director of product strategy for the Oracle Health Sciences Global Business Unit, explains to Pete Chan how the company has aligned its applications and infrastructure software with pharma’s evolving challenges, with the aim of helping companies drive innovation, improve R&D effi ciency and facilitate regulatory compliance

PATTI GAVES Q. What is the Oracle Health Sciences Q. How are today’s pharmaceutical giants Global Business Unit (GBU)? breaking through or working around bureaucratic constraints to retain their Oracle’s Health Sciences GBU is really like a innovative spark? company within a company, focusing exclusively on applying IT to address the Many believe that the “mega-merger” business scientific and business challenges facing today’s strategy that led to the formation of today’s life sciences organisations. Oracle has launched pharmaceutical giants – huge organisations similar business unit structures to support focusing on many different therapeutic areas – other industry sectors, such as insurance, has made these companies too large and financial services and communications. bureaucratic to retain their ability to innovate. The Health Sciences GBU brings together We’ve seen companies becoming victims of teams within Oracle that formerly may have their own success, whereby there is no agility, been separated geographically or by function no ability to make a decision and no single line – neatly uniting dedicated professionals that of accountability as there is in a business unit. span multiple functions, including development, As a result, many companies have begun to sales, consulting, strategy, communications and focus on redefining their core activities and marketing – all with a focus on the health even core therapeutic areas. One prominent sciences industry. new research model is seeing some companies returning to their scientific roots, Q. Why did Oracle decide to launch an looking for inspiration in relationships with organisation focused specifically on the life biotechs, research centres and academia. Others are replicating “biotech-like” sciences industry? environments within big pharma structures. Still others are extending their long-term Oracle has a long history in the industry – strategic relationships with CROs. with all 20 of the top 20 pharma companies running Oracle. We support the entire pharmaceutical life cycle from discovery and Q. How can Oracle support these development to manufacturing and marketing evolving approaches? via our continually expanding and evolving product set. Three factors – speed, agility and security – We launched the business unit to help our are essential to sustaining large pharma clients more effectively respond to continued innovation, and Oracle solutions support all challenges in clinical trials, as well as the three. As organisations increasingly rely on increasing linkages across life sciences, outside partners, they need to share large diagnostics and healthcare. Through this new quantities of information – often disparate organisational structure we look to advance data – and intelligence more quickly, effectively the ability of organisations to discover, develop and securely than ever before. Large pharma and successfully market innovative products companies’ research partners must be able to and services to prevent and cure disease, access and transfer information at a moment’s enhance quality of life and meet shareholder notice across organisations. Equally important and stakeholder expectations. is agility; being able to adapt or abandon Today, we are the only company that offers research or trials based on up-to-the moment a unified data model that gathers and information. synchronises real-time information across our Starting in the discovery cycle, Oracle’s data clients’ organisations, including multiple platform for life sciences facilitates access to research programmes, regulatory groups, distributed data, integration of a variety of data manufacturing facilities and sales and marketing types, management of vast quantities of data teams. This approach helps to optimise and secure collaboration across organisations. discovery and accelerate the introduction of Additionally, our clinical data management safe and effective products. systems, including Oracle Clinical and web-

50 www.scripnews.com/supplements Scrip 100 R&D

based Oracle Remote Data Capture, support major impact across the entire industry. For Oracle, third-party and custom applications. the need for speed and agility, delivering near example, the US Food and Drug Regulators have also become increasingly real-time data to both research partners and Administration Amendments Act (FDAAA), keen to see documented evidence of pharma sponsors regardless of their location. which can require manufacturers to submit a compliance and due diligence without manual Closer collaborative relationships in the Risk Evaluation and Mitigation Strategy intervention; they’re really looking for system pharmaceutical industry have, in fact, led to (REMS) when a drug first comes on the controls and limited human intervention opportunities of a different type for Oracle. market or later, is proving to be hugely when it comes to critical compliance issues. The company aims to provide its products in influential in this regard. Similar moves are They’re becoming more and more interested ways so that they can be used or afoot in Europe. One of the biggest in the technology and understanding how it dispositioned from one customer to another, developments is the emergence of post- can help to reconstruct events accurately and enabling organisations to work together more marketing surveillance commitments attached objectively. efficiently and effectively. In addition, industry to any potential approval. Oracle is working to put a lot of that players may require the same types of basic information into the application so it can be information, but a CRO might want to see it produced on screen or produced in a report What tools do pharmaceutical presented in a slightly different format than a Q. form. In this way, inspectors can be assured manufacturers need to facilitate compliance pharmaceutical customer. Evolving industry that information came from the system and models are, therefore, influencing the with these new requirements? that nobody has adjusted it. direction of Oracle’s products as we remain steadfastly focused on meeting the market’s Pharma companies require tools that enable needs. them to effectively track, analyse and report Q. How has pharma’s relationship with IT on data, particularly around providers changed over time? How has pharmacovigilance/safety. This type of Oracle responded to this? What challenges does the trend Q. information can come from many different toward globalisation of clinical trials present sources, including physicians and patients, and As life sciences organisations increasingly rely to the pharmaceutical industry? arrive via many different channels. The on IT to enable innovation and faster time to challenge is to effectively bring the market, collaboration has enhanced, as the As clinical trial sponsors face demands for information together in a way that enables stakes are increasingly high for both parties. larger patient pools, they are increasingly greater visibility and intelligence. At Oracle, our focus is on the customers’ looking to emerging regions, such as Eastern needs. As such, we rely heavily on customer Europe, Asia and Latin America for trial input to guide product development and subjects. Conducting global trials presents a Pharma companies require enhancement. Most of Oracle’s products unique set of challenges that range from tools that enable them to come with their own strategic development ethical issues, cultural and language differences, programmes, under which the company legal and regulatory hurdles and the need to effectively track, analyse and “partners” with representative customers, manage multiple CROs. report on data, particularly vetting their requirements, and using this Oracle Remote Data Capture, our pure insight to help shape the future direction of HTML application, helps trial sponsors to around pharmacovigilance/safety work. overcome challenges related to geographic Extensive collaboration between Oracle location and managing multiple CROs. Our and its customers has resulted in a greatly Oracle is focused on these goals. In web-based application can be easily and enhanced version of Oracle Remote Data combination with its partners, Oracle rapidly deployed anywhere in the world with Capture that focuses on ease-of-use for trial provides comprehensive adverse event an internet connection, collecting data in a investigators and improved manageability of tracking and reporting solutions that meet structured and consistent manner regardless the system. The hard work paid off with increasingly stringent requirements. For of location. project managers and site investigators example, Oracle Adverse Event Reporting Oracle also has responded to help pharma reporting a marked improvement in usability System is integrated with DrugLogic Qscan, a companies streamline the management of and navigation speed with Oracle Remote leading drug safety data and analytical tool. multiple CROs by making it easier for them Data Capture 4.5.3, which is resulting in faster, The integrated applications equip pharma and to leverage Oracle Clinical applications, if more accurate data entry, thus accelerating biotech companies with a powerful lens that even for a single trial. We have worked with the clinical trial process for our clients. our partners to create a new subscription enables them to rapidly analyse patterns in pricing model for single studies/study adverse events that may indicate emerging What lies ahead for Oracle in health programmes, aimed at pharma companies’ drug safety risks pre- and post-market, Q. partners, which may include CROs or regional enabling faster response times and sciences? services companies. It provides a variety of streamlined compliance. deployment and pricing options to meet the In addition, earlier in 2008, Oracle Oracle will continue to work to deliver needs of global trials and emerging introduced Siebel Contact Center Integration integrated end-to-end solutions that help our companies. Pack for Oracle Adverse Event Reporting life sciences clients spur innovation and more System, a solution that streamlines the effectively and efficiently bring products to capture, reporting and management of market. We are excited to be on the front Q. What types of emerging regulatory adverse events and product complaints while lines of the dramatic transformation taking challenges keep pharmaceutical executives improving data integrity. The new integration place today as life sciences, diagnostics and awake at night? pack offers a closed loop adverse event and healthcare begin to converge to accelerate complaint solution. It is delivered as part of insights for better health. From a regulatory perspective, increased Oracle Application Integration Architecture, scrutiny on the part of national authorities to which is a comprehensive set of products that Pete Chan is editor of the Scrip 100. ensure the safety of new drugs is having a delivers integrated business processes across

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SHARP FOCUS: Novel drug delivery technologies provide effective life cycle management strategies for products nearing patent expiry Deals de ne drug delivery space in 2008 The diverse and expanding drug delivery sector provided a hotbed of activity for companies wishing to exchange business during 2008, with a number of important deals proving there is much to be gained nancially by players willing to invest in new and innovative technologies, writes Caroline Richards

evelopments in drug delivery have Pharmaceuticals is developing an oral insulin six-month sustained-release formulation given rise to a range of innovative capsule for type I diabetes, ORMD 0801, of Decapeptyl (triptorelin), a luteinising Dformulations of new and existing which has just entered Phase IIa trials. hormone releasing hormone agonist, being products, from those that can be swallowed, More unusual routes of administration, a prime example. The product has just been inhaled and injected, to medicines which are such as into the eyes, have been exploited led in Europe for the treatment of locally delivered intranasally, to the back of the eyes for ocular conditions like age-related macular advanced or metastatic hormone-dependent or via a patch on the skin. Changing the way degeneration (AMD). Intravitreally-injected prostate cancer. an existing medication is administered can compounds, such as Novartis Ophthalmics’ However, it is not all plain sailing in drug have a profound effect on the convenience Lucentis (ranibizumab), have been developed delivery, as the  op of P zer’s inhaled insulin, or effectiveness of the product, such as to replace intravenous products like QLT’s Exubera, in 2007 showed. More recently, the greater bioavailability, enhanced absorption, Visudyne (vertepor n). rst iontophoretic powered transdermal faster onset of action and an improved Intranasally delivered drugs offer the fentanyl patch, Janssen-Cilag’s Ionsys, has run dosing schedule, in turn leading to improved potential advantages not only of better into problems associated with self-activation. patient compliance and treatment success patient compliance, but also improved rates. ef cacy by treating a condition at its source. deals and more deals Novel oral formulations coming onto the With this in mind, the UK CRO Retroscreen Over the past 12 months, a series of market include dissolve-in-the-mouth tablets, Virology is gearing up for its rst clinical collaborations, alliances and joint ventures such as Orexo’s sublingual fentanyl tablet study of a novel, culture-based avian have been nalised to accelerate the Abstral. The rapidly dissolving nature of the in uenza (H5N1) intranasal vaccine, which development of new drug delivery product provides a signi cant advantage to is intended to halt the virus at the point of formulations. Some of the more important patients with breakthrough cancer pain as entry – the nose. include oral lm, needle-free injections and it enters the bloodstream more quickly and Less frequent dosing has been inhaled vapours. has a more predictable onset of action than accomplished largely by the advent of The Swiss company Applied Pharma other products. extended-release formulations. Swiss-based Research, along with its joint venture Oral formulations of drugs which would Biopartners, for example, is developing a partner Labtec, licensed APR’s thin- lm oral otherwise be injected have the potential to once-weekly sustained-release recombinant formulation (RapidFilm) of the anti-emetic improve on current treatment regimens; for human growth hormone. The company has ondansetron to BioAlliance Pharma in an example diabetics might welcome pain-free just announced three-year safety and ef cacy exclusive €6 million deal in August. The alternatives to insulin injections. Phase II/III data for the product, showing it product dissolves rapidly on the tongue Generex Biotechnology’s oral insulin has comparable ef cacy to existing, daily without the use of water, and it is hoped spray, Generex Oral-lyn, was licensed to growth hormone products. Even longer- that this will improve patient compliance. Dong Sung Pharmaceutical for the South acting formulations have also helped address The US company MonoSol Rx is also Korean market in August 2008. Oramed the issue of patient compliance, with Ipsen’s developing thin- lm formulations of existing

www.scripnews.com/supplements Scrip 100 53 Drug Delivery Month signed Month June June July August agreement extended to include extended to agreement May up-front receive SkyePharma to milestones and developmental meet to Kyorin plus royalties; April clinical development for costs ling responsibilities and in clinical and regulatory from plus royalties milestones, net sales MonoSol to receive MonoSol receive to milestones developmental and sales-based revenues $23.5 million of up to unknown June $1.5 million, with up-front and $500,000 milestone nal $500,000 following the drug for the initial order August once approved Nycomed Nycomed approved once distribution, will have sales and promotion marketing, rights in Canada July unknown unknown Deal terms Deal terms $6 million up to pays BioAlliance unknown August asthma, COPD asthma, COPD pain associated with iv pain associated insertions or blood draws countries additional European and non-cancer patients $40 million and up to up front diabetes diabetes anti-emetic asthma, COPD asthma, COPD post-surgical pain post-surgical Therapy area area Therapy anti-emetic pain cancer

Zingo (needle-free) tape transdermal citrate fentanyl pain cancer Atimos (formoterol) (formoterol) Atimos ETI-211 ER) ( Product/technology lm ondansetron thin- (morphine)Oramorph Kyorin Pharmaceutical Pharmaceutical Kyorin Flutiform Sigma-Tau Sigma-Tau Strativa Pharmaceuticals Pharmaceuticals Strativa lm ondansetron thin- Nycomed Canada Canada Nycomed US biotech company, vaccines Glide SDI (solid-dose injector) undecided PainReform PainReform Licensee Licensee Pharma BioAlliance Pharma Archimedes SkyePharma Anesiva Anesiva Pharmaceuticals Alexza Endo Pharmaceuticals Biotechnology Generex fentanyl) (Staccato AZ-003 Dong Sung Pharmaceutical pain in cancer breakthrough insulin spray Oral-lyn $10 million Alexza pay Endo to January MonoSol Rx Hitsamitsu Pharmaceutical Hakko Kyowa Chiesi Farmaceutici Chiesi Farmaceutici Glide Pharma Encore Therapeutics Therapeutics Encore Table 1: Selected Table drug delivery deals, 2008 Licensor APR and Labtec APR and Labtec Molteni Farmaceutici

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drugs using its proprietary PharmFilm pulmonary products time. And as trandermally delivered drugs technology. In June it licensed exclusive US Inhalable products that deliver bronchodilators avoid systemic metabolism, they have the marketing rights to its thin- lm formulation and corticosteroids for asthma or COPD potential to show higher and more uniform of ondansetron to Strativa Pharmaceuticals, have been around for many years, but new bioavailability and fewer adverse events. a subsidiary of Par Pharmaceutical. MonoSol technologies are still being developed. Thus the transdermal drug delivery market will receive developmental milestones and One company specialising in drug delivery has also witnessed a rapid expansion, with continued demand for products, such as sales-based revenues from Strativa. technologies for respiratory conditions is nicotine patches, hormone therapies, pain Another deal clinched in 2008 on the oral Italy’s Chiesi Farmaceutici, which is developing relief and other treatments. drug delivery front was that between the UK Atimos (formoterol), an inhaled, long-acting The main challenge to transdermal drug rm Archimedes Pharma and Italy’s Molteni bronchodilator therapy using its HFA Modulite delivery is, of course, the permeability of the Farmaceutici, the former granting the latter aerosol technology, for the treatment of skin, but new technologies can overcome this company German rights for Oramorph, the asthma and COPD. The Modulite technology, only oral liquid immediate-release morphine barrier by employing pharmacologically inert which uses an HFA propellant, has a fast adjuvants. Companies are developing novel sulphate product available in Germany in onset but is long-acting. The aerosol particles patient-friendly unit dose vials. The product formulations based on active transdermal administered by the inhaler are made extra acts to quickly initiate morphine analgesia in drug delivery, such as iontophoresis, small, enabling the disease to be more patients with cancer pain. electrophoresis and thermal activation. uniformly treated, according to the company. Encore Therapeutics’ post-surgical pain injectables In July Chiesi’s novel technology attracted the product, ETI-211, has been formulated using New methods of injecting drugs are being attention of Nycomed Canada, which licensed the company’s proprietary phospholipid developed to enhance patient compliance; Atimos to advance its position in the Canadian gel technology. The product works by this is achieved through device technologies, respiratory market. delivering a sustained-release formulation such as needle-free injection techniques Another respiratory disease deal was that of ropivacaine subdermally at the surgical and implants, by developing sustained/ signed between SkyePharma and Kyorin site. It has the potential to reduce or stop controlled-release formulations of drugs and Pharmaceutical back in April, giving the post-surgical pain for up to 72 hours, by PEGylation. The injectables space is being Japanese rm exclusive development and Encore says. As it acts locally, potential side- driven by increasing patient awareness, a distribution rights to the asthma treatment effects associated with systemic opiate or stronger emphasis on healthcare providers’ Flutiform. Flutiform is a xed-dose combination non-steroidal anti-in ammatory drugs are safety and a range of new drug delivery of formoterol and  uticasone in a metered- avoided. technologies. dose inhaler. SkyePharma was eligible to The Israeli pain management company One company working on needle-free receive up-front and development milestones PainReform entered into its rst major technologies is Oxford (UK)-based Glide of “several millions of pounds” plus royalties as licence agreement in July with Encore, which gave PainReform exclusive North Pharma. Its Glide SDI (solid-dose injector) part of the deal, thus helping it to re nance its American rights to ETI-211. The deal also system administers solidi ed doses of debt obligations. gave PainReform the option to expand the biologicals, small molecules and vaccines Recently, companies have also started to agreement to other countries, including non-invasively via a spring-loaded, handheld exploit the lungs’ ability to transfer molecules Japan and the EU. actuator. Glide says that vaccines delivered into the bloodstream for other conditions Also collaborating on the transdermal using its SDI device have enhanced properties including pain management, cystic brosis and delivery front in 2008 was the Japanese compared with those delivered by needles. diabetes. company Hisamitsu Pharmaceutical, which In June, Glide secured two separate Alexza Pharmaceuticals, for example, has signed a co-marketing agreement with biologics agreements with unnamed partners developed a condensation aerosol technology, Kyowa Hakko in June for its fentanyl citrate – one a vaccine company and the other a Staccato, which works by rapidly vapourising transdermal tape for cancer pain. Under listed US biotech rm, to evaluate its needle- a drug to form a small particle aerosol the agreement, Hisamitsu was to retain the optimal for rapid-acting systemic delivery. free technology. Glide signed an earlier deal in marketing authorisation for the product, February with another pharma player for the At the start of 2008, the company signed a HFT-290, with the partners carrying delivery of a branded peptide; in total it has North American licence and development out distribution and marketing activities branched its technology out to ve separate partnership with Endo Pharmaceuticals independently. companies. for AZ-003, a Staccato version of fentanyl, New drug delivery technologies have Another company developing needle- which has completed Phase I clinical trials armed companies with opportunities to free technology is Anesiva, whose single- and is in development for the treatment of extend the lives of products nearing patent use device Zingo ( hydrochloride breakthrough pain in both cancer and non- expiry, thus sustaining and increasing their monohydrate) uses a blast of helium to cancer patients. The product is designed for revenues, as well as attracting attention from deliver lidocaine powder into the skin to treat deep lung delivery of excipient-free fentanyl potential collaborators. And if the  urry of pain associated with peripheral intravenous in a temper-resistant reusable controller using drug delivery-focused business deals that insertions or blood draws. Anesiva says this disposable multiple-dose cartridges. were made in 2008 is anything to go by, easy-to-administer method gives rapid onset Alexza recently announced that its Staccato then 2009 looks set to provide an equally of pain relief (one to three minutes after version of loxapine (AZ-004) exerted positive lucrative environment for business exchange. administration). The company expanded effects in schizophrenic patients with acute on an existing marketing and distribution agitation, in a Phase III trial. agreement with Sigma-Tau in May, giving Sigma-Tau the right to distribute the product transdermal delivery Caroline Richards is a in all major European markets, except the UK If drugs that traditionally were administered reporter for Scrip. and Scandinavia. The deal included additional by injection could instead be delivered up-front payments to Anesiva and transfer transdermally, and thus painlessly, patients price, as well as a milestone payment. Zingo would in turn be more likely to take the was launched in the US in late June. right amount of their medicines at the right

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POLICY & REGULATION

Yes Obama can, but what change for pharma? The new US President was elected on a platform promising sweeping changes in the healthcare system. The branded pharmaceutical industry now faces challenging times and revenue pressures ahead from policymakers’ efforts to lower drug costs, Sue Sutter reports www.barackobama.com

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he new political look of Washington is not all bad news for the medicines Tindustry. The incoming Democratic administration and Congress will push to expand and enhance healthcare coverage for approximately 70 million people who are currently uninsured or underinsured,

making medicines more affordable for www.barackobama.com these individuals and reducing the need for manufacturer-funded free drug programmes. Disease prevention and chronic care management are expected to take on a heightened policy focus, and generics stand to benefi t from the emphasis on reducing healthcare costs. There also is optimism that the beleaguered US FDA will become less of a political punching bag for Democratic lawmakers if the agency’s commissioner is an and Congress, followed by reauthorisation and whether the underlying structure of the appointee of their own party’s choosing. of SCHIP, the joint federal/state programme Part D programme is changed. Barack Obama’s healthcare reform platform that provides health insurance to low-income Allowing the government to negotiate breaks down into two parts: providing children. It expires at the end of March 2009 directly with manufacturers absent changes in quality, affordable and portable insurance and could be extended at current funding Part D’s design will have only minimal impact coverage, and lowering healthcare costs. levels for a brief period or signifi cantly on reducing prices, said Dan Mendelson, Key components include creation of a new expanded, serving as the stepping-off point president of the Washington consulting fi rm national health plan that would guarantee for broader changes. Avalere Health. Currently, the government coverage for any American, and establishment The medicines industry supports negotiates bids for Part D plans with insurers, of a national health insurance exchange to expanding SCHIP but is less enthusiastic which in turn negotiate prices with drug help individuals who wish to purchase private about some of the measures that could manufacturers. Accommodating direct insurance. Coverage could not be denied for be legislatively attached to it in what is government negotiations with manufacturers pre-existing conditions, and large employers known as the “Christmas tree” effect. This would require a programme redesign. who do not make a meaningful contribution includes legislation on Medicare drug price In addition, simply allowing the HHS to to their workers’ health insurance costs would negotiations, medicines importation and ask a manufacturer for lower prices will have have to pay a fee. comparative effectiveness. no signifi cant impact unless it also has the The cost-lowering strategies envisioned authority to establish drug formularies – a include establishment of an independent factor noted in a congressional budget offi ce institute to guide comparative effectiveness There are many unknowns report that concluded allowing government reviews and research, repeal of the so-called to Mr Obama’s ambitious price negotiations would have a negligible “non-interference” clause that prevents healthcare strategy, including effect on federal spending. Medicare from negotiating drug prices in the Some say that a government-run Part D Part D programme, importation of cheaper its total cost plan that competes with private insurers drugs from other countries and creation of a would need to be established if direct HHS biosimilars approval pathway. negotiations were to have any substantial There are many unknowns to Mr Obama’s changing Part D impact, although concerns abound that ambitious healthcare strategy, including its With the Democrats controlling the White private plans would be at a competitive total cost (analysts estimate $1-2 trillion House and bolstering their majorities in disadvantage to the Medicare-run plan. Some over 10 years), how it will be funded and the the House and Senate, there is growing leading Democrats have proposed requiring timing for legislative changes. expectation that Medicare drug pricing that Medicaid’s statutory price discounts Key Democratic lawmakers are pushing legislation will pass Congress in 2009. be extended to medicines used by those for quick movement on large-scale reform. Changing or removing the Part D non- individuals who are dually eligible for Medicaid Legislative proposals are expected as early as interference clause has been staunchly and Medicare and have been covered under January as proponents seek to capitalise on opposed by the pharmaceutical industry, Part D since 2006. Some observers see this high levels of post-election interest – and the which says such changes are a move toward as perhaps the most likely legislative scenario new president-elect’s political capital – while price controls and will result in more given that it can be touted as reducing also framing healthcare reform and the need restrictive Medicare formularies and increased drug costs but leaves intact the Part D for expanded insurance coverage as integral medicine costs for consumers outside of the programme’s underlying structure. to the nation’s economic recovery. federal programme. However, the potential The pharmaceutical industry has battled However, some pharmaceutical industry revenue threat is ominous – the Boston the threat of importation for years, publicly observers believe the Obama Administration Consulting Group estimated that government asserting safety concerns, but also fearful might reach for a few early victories in the price negotiations could cut pharmaceutical about the loss of US sales when drugs healthcare arena in 2009 before tackling industry sales by $10-30 billion. are imported from countries with lower, broader reform at a more deliberate pace. The true impact will depend on various government-set prices. While Mr Obama For example, lifting of federal funding factors, including whether the health and supports the purchase of “safe medicines restrictions on embryonic stem cell research human services (HHS) secretary is required, from other developed countries”, his is likely to be an early piece of healthcare or merely just allowed, to negotiate, whether enthusiasm has been dampened somewhat related business for the new administration negotiations are limited to certain medicines by the scandal over contaminated heparin, his

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health policy advisor told a generics industry take time and money and is unlikely to have the generics sector. Representative Henry meeting in September. Manufacturing quality any short-term impact on drug sales or Waxman, co-author of the 1984 law and a problems at Ranbaxy’s Indian facilities and healthcare spending, experts said. good friend to the unbranded industry, won ongoing reports of melamine-contaminated the chairmanship by successfully challenging food from China have added to the public’s year of the biosimilar? the committee’s long-time Democratic leader worries about foreign-sourced products. The generics industry is positioned for strong John Dingell. “There’s an increasing awareness that gains under an Obama Administration. The While Mr Dingell has moved cautiously just opening the borders to importation country’s economic woes “put our industry on biosimilars, Mr Waxman was the fi rst to raises serious safety concerns,” said Michael front and centre, and it allows us to be able introduce legislation in the House in 2006. Ruggiero, senior director of government to bring a very strong message to Congress His proposal would provide no additional policy and external affairs for Astellas Pharma and the new administration that generics marketing exclusivity to innovators, and he US. “It’s what industry has been saying for really are the solution to decrease healthcare has repeatedly challenged the brand industry a long time.” costs and to increase access”, said Kathleen to justify its need for additional protections What an importation measure would look Jaeger, president and CEO of the generics beyond currently available exclusivities and like is an open question. Any legislation that trade group GPhA. patent term extensions. depends upon HHS certifi cation that drugs 2009 marks the 25th anniversary of the The generics industry also may gain can be safely imported from certain countries Hatch/Waxman law creating the ANDA some leverage in its fi ght against “carve- seems hard to reconcile with the globalised process for small molecules, and it could out” practices that block automatic generic nature of the pharmaceutical supply chain, the become the legislative birth year for a substitution for certain epilepsy, mental health FDA’s widely publicised struggles to inspect biosimilars approval pathway. “I believe there and immunosuppression drugs in some and regulate foreign drug manufacturing will be a major effort to get that done,” BIO state Medicaid programmes. Mr Obama has operations and previous HHS leaders’ refusal president and CEO Jim Greenwood said. pledged his support to counter this practice, to make such a certifi cation. “We do believe it’s going to move in and states facing severe fi nancial diffi culties in 2009,” Ms Jaeger said. “The new Congress the year ahead may be less willing to pay for no NICE and the new administration understand that more costly brand medicines. While innovator groups publicly support it’s imperative that they establish an approval The new administration and Congress comparative effectiveness research, they pathway for biogenerics.” will mean changes for the FDA beyond harbour deep concerns over how it will be the inevitable replacement of the agency’s used and fear development of a system akin commissioner and other political appointees. to the UK’s National Institute for health and Pharmaceutical manufacturers’ Congressional passage of a measure to Clinical Excellence (NICE). direct-to-consumer advertising give the FDA new powers and resources, “Comparative clinical effectiveness and other promotional including user fees, to inspect and oversee research should be used to help inform foreign drug manufacturers is expected in physicians’ and health professionals’ clinical practices are expected to face 2009. judgements and decisions rather than be heightened scrutiny Avalere’s Mr Mendelson said the incoming used to make system-wide decisions that administration will look to repeal or revise could limit patients’ access to benefi cial care,” some rules passed late in the Bush era. The the trade group PhRMA said in its principles Jake Hansen, Barr Pharmaceuticals’ senior FDA’s controversial August rule governing for healthcare reform. The research “should vice-president of global government affairs, is the types of labelling revisions that can be assess all points along the continuum of care more cautious on the timing. “I would hope made through a “changes being effected” to better inform healthcare decisions and at a minimum that we would be able to supplement is ripe for modifi cation or improve patient outcomes”. advance the ball signifi cantly, that there would reversal, he predicted. Pharmaceutical Comparative effectiveness proposals be legislation that our industry can support manufacturers’ direct-to-consumer have been fl oated over the past few years, that would be introduced and moving along advertising and other promotional practices including one from Senate fi nance committee and at least gotten through hearings” in 2009, are expected to face heightened scrutiny chairman Max Baucus that would create an he said. from the FDA and Congress as well. institute to identify national priorities for The innovative and generics sectors During the past few years the FDA has comparative clinical effectiveness research, still disagree on several key provisions, felt the full force of Democratic lawmakers’ establish a research project agenda and particularly the marketing exclusivity attacks against Bush Administration policies, contract out studies. The measure would period for branded products. BIO’s and some observers hope the adversarial bar the institute from making coverage or Mr Greenwood said 14 years’ exclusivity is relationship will ease under the Obama reimbursement policies. needed to provide the necessary innovation Administration. “I’m certainly hopeful that the Astellas’ Mr Ruggiero said any comparative incentives by allowing companies to recoup political environment will improve,” Astellas’ effectiveness entity must operate with their R&D costs and turn a profi t, which Mr Ruggiero said. “A lot of the heat the FDA transparency and a broad range of is necessary to attract investors. GPhA has been taking has been politically driven.” stakeholder input, and not be aimed at suggests the exclusivity term should more rationing care. “I don’t think the American closely resemble the Hatch/Waxman model public is interested in seeing that kind of a of three to fi ve years because the average rationing entity as part of our healthcare development time for biologicals is not system. It seems contrary to what people much longer than that for small molecules. have grown accustomed to.” The generics sector can be expected to Sue Sutter is Scrip’s Mr Mendelson was confi dent the Medicare push back hard against any proposal with a Washington editor. programme would not go the way of double-digit term of protection for branded requiring a cost-effectiveness evaluation for products, Barr’s Mr Hansen said. reimbursement. “We’re not going to NICE The new leadership of the House energy this year,” he said. Setting up an institute will and commerce committee bodes well for

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US grapples with paying for pricey drugs Medicare lets plans administering a drug benefi t to US seniors aggressively use “tier four” formularies that impose exceptionally high out-of-pocket costs for a wide range of expensive biotech/specialist- driven therapies – and the practice is spreading. Critics contend that vulnerable patients are being exposed to great fi nancial risks, Nancy Faigen reports

UNCOMFORTABLE RETIREMENT: US seniors may end up bearing the brunt of costly fourth tier medicines

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t is happening in all parts of the US Medicare Part D plans, however, have subset of specialty products. In September healthcare system – faced with an been at the forefront of using the much 2008 it responded to a report criticising price Iageing population and increased demand more aggressive tiering system and thus trends and stated: “Four recent independent for all kinds of interventions, government these Medicare formularies do not mimic polls conducted by the Wall Street Journal/ and private insurers are pushing more formularies in private insurance plans. In a Harris Interactive, the Medicare Rx Education of the fi nancial burden of illness to the way, Medicare D plans have revolutionised Network, AARP, and Medicare Today patient. But a debate has erupted stemming the shape of the market by placing more demonstrate that a large majority of seniors from formularies with more tiers than the expensive drugs into additional tiers, says Dan – between 65% and 75% – are saving money traditional three, and thus higher Mendelson, president of Avalere Health, a US from their Medicare drug coverage, as a co-payments. consulting and national policy analysis fi rm. higher percentage of seniors reported saving The costs of speciality drugs – primarily Using its proprietary database, which money in 2007 than in 2006.” high-cost injectables and biotech products houses information about every Medicare But tier four is a pressing concern for used to treat fairly common diseases, drug plans’ drug coverage and associated seniors who are not living at poverty but including multiple sclerosis, rheumatoid benefi ts, Avalere found that, on average, near poverty, Mr Mendelson said. “Let’s say a arthritis, anaemia, hepatitis C and some Medicare Part D benefi ciaries pay 25-35% person contracts cancer or multiple sclerosis cancers – have been rising as much as 20% of the total cost of tier four drugs, and that that requires treatment with therapies where a year recently. One scheme to deal with among Medicare’s top 10 Part D plans, nine most of the drugs are in the fourth tier – that the escalating costs has been the subject use Tier four formularies. Because there are can be devastating for them, and it’s not like a of numerous editorials on the pages of no generics for specialty drugs, patients must lot of these folks can go out and get another US newspapers – it involves a system that either pay or do without, unless they can get job.” places most of the high-cost drugs in a newly some assistance from charitable groups or As more and more drugs go into tier four, created fourth tier, in which benefi ciaries patient assistance programmes run by Mr Mendelson believes there will be more of must pay a percentage of the total drug cost the manufacturer. an outcry. “The Medicare folks are using this (generally 20-35%) out of their own pocket. Although one insurer, Humana, was the tier four as a way to expose people to the full For many of these patients, that can mean a fi rst to experiment with tier four, the concept cost of medication so as to generate some bill of $300 to $600 a month (or even into never entered the mainstream until Medicare revenues, but that position will be challenged the thousands of dollars) for a drug that they Part D plans were put together. When the by the policy process – and that takes a may need for many years. Medicare drug benefi t took effect in January while,” he said. One industry advisor has called it a move 2006, about 30% of plans had a fourth tier, Most likely, the practice will be curtailed, to tie members’ payments to the true cost positioning it as a way to make the drug Mr Mendelson predicted. The initial focus will of the drug. The scheme keeps premiums benefi t affordable for most seniors. “About probably be on Medicare, where it is easier low for the other, healthier members of the 90% of Medicare plans now have four tiers, to legislate changes. “They would not even insurance pool, but it can be costly for those and sometimes fi ve,” Mr Mendelson told Scrip. need legislation, as they could curtail the who become chronically ill. Social critics say it “In comparison, the use of more tiers has practice through regulation,” he added. As just gets to the fundamental question of “What is grown in a few years from negligible to about one example, those in the government who insurance?”, and they ask: What are the ethical 10% for workers who get their insurance oversee the Medicare standalone drug plans issues of shifting to sick people the costs of through their jobs. I would expect the use of and approve bids could say, through new essential interventions? tier four to continue to grow rapidly over the regulations, that a plan cannot charge move It may surprise many, but seniors are most next few years.” than 20% of the drug through the fourth tier. likely to be exposed to a fourth tier for “They have a range of things they can do expensive drugs. This is because the majority It’s not like a lot of these folks to curtail the practice through regulation.” of Medicare “Part D” prescription-drug plans For private insurers, Mr Mendelson believes are now requiring seniors to pay what is can go out and get another job the practice might be addressed through an more appropriately called “co-insurance” action akin to a federal national catastrophic than simply a bigger co-payment. (US illness rights bill. insurers administer the drug benefi t, and are The insurers themselves determine which Many argue that four tier plans could be subsidised by the government, with patients drugs fall into different pricing tiers. Some totally counterproductive and ultimately more paying small monthly premiums.) will move a product from tier four to a lower costly if they lead to nonadherence, excess This is a stark contrast to US workers tier if it fi nds that the medication can reduce hospitalisation, etc. obtaining their drugs through their employers, hospitalisation. Some of the insurers do have In early 2008, The New York Times described who buy most private health insurance. The an annual out-of-pocket spending limit for what some tier four co-payments entailed. workers traditionally pay fi xed amounts, or patients faced with high co-insurance from a One patient who had been paying only a co-pays, when purchasing a prescription drug, tier four product. $20 co-payment for a month’s supply of the regardless of the actual cost of the drug. Medicare offi cials have said that most multiple sclerosis drug Copaxone (glatiramer Pharmacy benefi t managers have set up a patients who did not have other drug acetate) was told that under a tier four system of tiered co-payments, where a patient coverage before the Part D plans came into payment plan her monthly cost for a 30 days’ might pay $5-10 monthly for a generic (tier existence are saving a substantial amount supply would escalate to $325, or about one), $20-30 for a preferred brand (tier two), even if their drugs are in the fourth tier. $3,900 a year. Another patient was told that, and $45-50 for a brand not preferred by the Additionally, the acting administrator of the under the plan that she had selected, the insurer (tier three). A few of the plans for Centers for Medicare and Medicaid Services targeted anticancer Tykerb (lapatinib) for workers have become more aggressive and recently stated that millions of elderly advanced breast cancer would be a tier four have a fourth tier for expensive biologicals Americans are “living better” because of the drug. She believed that she could not afford or lifestyle drugs, and there are patients who drug benefi t. it, with her share coming in at more than a face escalating costs for certain high-priced PhRMA, the US trade group, also chooses thousand dollars per month. brands, even without a fourth tier. to view the larger picture when addressing An editorial in the same paper, entitled The insurers that put together standalone concerns about high prices for the very small “When Drug Costs Soar Beyond Reach”,

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charged that tier four pricing “turns the According to the latest Express Scripts Drug The NEI was encouraged to do the trial ordinary notion of insurance on its head Trend report, speciality drug spend in the by a Medicare advisory panel, since seniors … instead of spreading the risks and costs US increased by 14% in 2007. The fi gure largely use Lucentis and the cost disparity across a wide pool of people to protect a is also forecast to grow through 2011 at between Avastin versus Lucentis is substantial. smaller number of very sick patients from 18-20% per year, three to four times the rate “The NEI-sponsored trial signals a new fi nancial ruin, insurers are gouging the sickest of non-specialty spending. Express Scripts level of activism in the US by the single patients to keep premiums down for healthier also says that, of the $286 billion spent on largest payer body: the Centers for Medicare people”. The editorial called for Congress pharmaceuticals in the US in 2007, $60 billion and Medicaid Services,” according to IMS, to fi nd out “how best to protect people went to speciality drugs. By 2011, it predicts writing about the harbingers of change in from medical and fi nancial disaster”. Another that US speciality spend will have grown to Pharmaceutical Executive earlier in 2008. editorial, in USA Today, said that the tiered $100 billion. Globally, the situation is just as The US will no longer categorically accept system was originally a good idea, but “some alarming. Recently, David Twinberrow, director drug makers’ pricing of biologics. IMS added insurers have taken the idea too far”. of oncology at IMS Health, was quoted as that: “Although the trial may be expensive, Amid these complaints, Karen Ignagni, saying, “Affordability is a big issue.” any cost might be miniscule compared to president and CEO of America’s Health potential savings from avoiding widescale use Insurance Plans (AHIP), the industry lobbying NIH head-to-head trial of Lucentis. Until now, the problem for payers, group, had stated that tier four “is a balance There are other indicators that policymakers and prescribers was that funding of making sure people have access to the pharmaceutical and biotech companies are head-to-head trials has been prohibitively newest developments while … trying to operating in a much more cost-conscious expensive. However, if real-life data from encourage cost containment”. Writing in an environment in the US – where billions of healthcare utilisation databases can be used opinion piece in USA Today, Ms Ignagni said dollars could be at stake. to make head-to-head comparisons routine, that AHIP encourages Congress to create a One involves the decision by the US Pandora’s box will be opened.” national institution to compare new drugs National Eye Institute (NEI; part of the NIH) The CATT trial, however, has not with the treatment options currently available to put $16 million of its own money into a been without controversy – as the NIH and provide patients and doctors with data head-to-head trial of two Genentech VEGF is effectively funding Avastin’s off-label use. about which are safest, work best and are inhibitors as treatments for age-related “Should the trial results support Avastin most cost effective. This would “transform the macular degeneration (AMD): iv Lucentis for AMD, there is no clarity on whether healthcare system to one that is driven by (ranibizumab) versus iv Avastin. there will be a move to give it a label for research and rewards best practice”. this indication – or who would do so,” Policy watchers cite larger concerns. IMS warned. Writing in a perspective article in the New Given that most people will Health reformers in the US are also mulling England Journal of Medicine, Dr Thomas Lee need an expensive intervention over a long-sought plan to create a national of Partners Healthcare System in Boston and at some point, shifting these institute to evaluate the comparative merits Dr Ezekiel Emanuel of the National Institutes of drugs, devices and procedures, purportedly of Health (NIH), stated that, given that most costs of expensive new drugs to to save Medicare money and improve people will need an expensive intervention at the sick is an issue of concern to medical care. some point, shifting these costs of expensive In August, two powerful Democratic new drugs to the sick is an issue of concern society at large leaders – Senate Finance Committee Chair to society at large. “At some point in our Max Baucus and Senate Budget Committee lives, we may all join that small pool of users Chair Kent Conrad – introduced a bill to of high-cost care … when we are sick and Avastin is approved as a cancer drug but establish the public-private Health Care scared, we do not want to be preoccupied by with the help of compounding pharmacists, Comparative Effectiveness Research Institute. the cost of treatments,” they wrote. retinal specialists had started using the This was proposed to function as a non-profi t One solution would be for society at product off-label before Lucentis received entity, not a federal agency, governed by a large to get tougher in “avoiding using … FDA approval in 2006. Many stuck to Avastin public-private board of governors, according interventions in situations where they are due to cost: $40-75 a shot if a pharmacist to Mr Baucus. Among other objectives, the unlikely to help,” they noted. splits off a small fractional dose into tiny institute would have a private group to Additionally, Americans must collectively get ophthalmic syringes. (This compares with help plan research and disseminate fi ndings more discriminating about what technologies roughly $2,000 per injection for Lucentis, and about head-to-head comparisons of medical will be supported, Dr Lee told Scrip. For the with a typical course of eight to 12 injections, treatments. interventions that really do provide value, the cost of Lucentis might amount to about The bill has not gained much momentum, everyone should chip in, even if only a small $24,000 compared with $900 for Avastin.) but industry watchers expect Senator Baucus number of patients need the technology or IMS Health has identifi ed the NEI’s trial, to reintroduce it in 2009. Healthcare fi rms product. “We do this already for heart and called CATT, as one of its top 10 “harbingers worry that any federally funded comparisons bone marrow transplants, but we should be of change” highlighted in its yearly analysis of clinical effectiveness might be a slippery consistent in our approach,” he said. Dr Lee of strategic issues facing the industry as it slope to cost-effectiveness analyses, which are supports some kind of knowledge base which moves forward. IMS stated that the trial common in Europe. would provide recommendations for when bears watching because head-to-head expensive anticancers like Roche’s Avastin trials are normally only conducted by drug (bevacizumab) should be used. “This would makers – but in this case, Genentech declined allow consistency among payers,” he said. to participate. (Genentech questions the Nancy Faigen is Scrip’s What is driving an increase in such wisdom of spending a large sum in view of a assistant US editor. aggressive tiered pricing? US payers are fi nite US R&D budget, and it maintains that looking at future costs, and they are worried. it developed Lucentis with safety concerns in They all see the same issue: the level of mind, and that Avastin remains unproven as potential demand for these new treatments. an eye treatment.)

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INEXACT COPIES: Biosimilars have started to gain recognition, yet some innovators are still trying to portray them as less safe or effective than reference products

Biosimilars regulation fi nds its feet Progress with new biosimilars legislation was slow in 2008, and the EU remains the only market with a dedicated pathway. However, the new political scene in the all-important US market could well speed things up in 2009, says Ian Schofi eld

fter a promising start, the European approval pathway in place since 2005, substance, partly because the originators have biosimilars segment lost momentum supported by a range of regulatory and come up with advanced delivery systems, and Ain 2008, with just one substance – product-specifi c guidelines. partly because insulin analogues are now taking G-CSF for chemotherapy-induced neutropenia Nonetheless, so far biosimilar versions over from standard insulin. – receiving marketing approval from the of just three substances – human growth Biosimilar versions of more complex European Commission. hormone, EPO and G-CSF – have been compounds, such as monoclonal antibodies, Things are likely to look up over the coming approved for marketing in Europe, albeit may also face substantial scientifi c hurdles years as companies and regulators gain more from various companies under a range of when it comes to showing their similarity to experience in biosimilar development and brand names. existing products. evaluation, and more biotech drugs come Other products have hit problems. But the EMEA is pressing on, and has been off patent. But given the scientifi c challenges Alpheon, an interferon alfa-2a product for drafting new guidelines as well as updating old presented by increasingly complex biotech hepatitis C from BioPartners, was rejected by ones. A guideline on biosimilar low molecular products, progress may well be on the the European Medicines Agency’s scientifi c weight heparins was released for consultation slow side. committee, the CHMP, in mid-2006, over in April 2008, and the current guidance on Moreover, the EU is still alone in having a quality, safety and effi cacy concerns. dedicated regulatory pathway for biosimilars, And at the beginning of 2008, Marvel interferon alfa is being reviewed in light of new so companies working in this sector do not yet LifeSciences withdrew its application for a scientifi c knowledge. have a global marketplace for their products. biosimilar version of Lilly’s insulin product, The agency itself believes progress will be The US failed to pass legislation in 2008, and Humulin, after the company was refused extra fairly slow in the near future. “We don’t expect while Japan and Canada are both working on time to answer questions posed by the CHMP. so many applications in the coming years, systems for approving biosimilars, few concrete Insulin poses a particular challenge for maybe fi ve or six, or even less than this,” EMEA results have emerged so far. biosimilar fi rms. There is an EMEA guideline in executive director Thomas Lönngren told Scrip. The EU can pride itself on having led place on biosimilar insulin, dating from 2006, “There were a lot in the beginning, [but] now the way in this fi eld. It has had a biosimilars but few fi rms are thought to be developing the it has stabilised at a lower level.”

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market issues medicines association, the GPhA, said it did authorities released draft guidance on what It is not only scientifi c issues that are not like the EU’s guideline-based approach, they call “subsequent entry biologics” (SEBs), hindering the biosimilars sector. According to and preferred a system that gave the FDA the which would allow approval based on a the European Generic medicines Association discretion to decide what data are required similarity exercise versus the originator product. (EGA), although biosimilars are becoming an on a case-by-case basis. An SEB would not necessarily have all the established part of the European regulatory Arguments are also raging over the length indications of the reference drug, and clinical of the exclusivity period that should be scene, the concept needs to gain wider trials would be required to show safety, awarded to innovators in any biosimilars recognition and acceptance if these products effi cacy and quality, with the amount and type legislation. The R&D-based industry has been are to make real inroads into the market. of data required depending on the level of holding out for at least 14 years, while the The association’s director Greg Perry told similarity shown between the two products. GPhA prefers fi ve (the exclusivity period in an EGA conference in April that a number The guidance documents said the food the EU is 10 years). of hurdles stood in the way, such as efforts and drug regulations would be amended So what are the chances of legislation by innovator companies to hinder the to lay down a comprehensive legal basis being passed in the near future? Because of acceptance of biosimilars among doctors, for regulating biosimilars, and that in the the presidential and congressional elections, meantime the guidance itself could allow pharmacists and patients. He claimed any pending legislation will have to be innovator companies were trying to portray biosimilar product approval. They did not, reintroduced in 2009. however, make any mention of market biosimilars as somehow less safe or effective Things have also become more complicated than the reference products. exclusivity for originator products. with the intervention of the Federal Trade In Japan, the regulators are drawing up Mr Perry said biosimilar medicines were Commission. In late August, the FTC said it formal guidelines, and in the meantime plan manufactured to the same quality standards intended to look into the possible competitive to proceed on a case-by-case basis. The fi rst as other biopharmaceuticals and that clinical impacts of implementing a biosimilars approval biosimilar to take advantage of this case-by-case effi cacy and safety were demonstrated in pathway. The FTC has already had to deal approach was Japan Chemical Research/Kissei’s clinical studies. “The use of scare tactics with a number of potential antitrust issues recombinant EPO for the treatment of anaemia against biosimilar medicines must cease,” in the area of chemical generic products, in dialysis patients, which was fi led in November. he declared. such as patent settlements and authorised The continuing lack of biosimilars legislation The European Commission, which is generic deals among originator companies and in such important markets is a problem because responsible for approving biosimilars, also generics fi rms. global companies need global access to patients. came out in defence of the products. At The issue was raised again by the EGA’s the conference, Nicolas Rossignol of the Mr Perry at an Information Day organised by commission’s pharmaceutical unit said: Things have also become his association and the EMEA in October. “We have promoted and developed with more complicated with the the European Medicines Agency a special intervention of the Federal sustainability biosimilars framework. So we are confi dent Mr Perry said global biosimilar development that if a product meets all the requirements Trade Commission was very important for the sustainability and gets a marketing authorisation from of the biosimilars industry. Acceptance of a the commission, it means that the product global development programme, he pointed is as safe and effective as any other product out, would reduce the number of redundant The commission fears that these practices authorised by the commission.” clinical trials and the consumption of fi nite might spill over into the biosimilars arena, regulatory and industry resources. and is taking action early in order to head seeking global recognition For now the generics industry’s dream Mr Perry said he hoped that eventually them off. Kurt Karst, an associate of law fi rm Hyman, Phelps & McNamara, said the of a worldwide marketplace for biosimilars companies would be able to submit the same remains just that. But if there is suffi cient “global data package” in each country where FTC had learnt a lot about anticompetitive actions under the Hatch-Waxman Act, and political impetus, some progress might be approval of a biosimilar was sought. The key made in 2009. Attention will focus on the word here is “eventually”. Mr Rossignol (who considered this “a good opportunity to wade in early and nip it in the bud” in the all-important US market, where some have has since left the commission) said there predicted that a biosimilars pathway could be was no reason in principle why a global data biosimilars arena. In preparation for a workshop the in place by 2010. package would not be possible. However, FTC planned to hold in the autumn, the There will be strong political backing this would “imply that you have at least an commission put out a series of questions for for such legislation: before his election as established biosimilars framework in the US, public comment. These asked, among other President, Barack Obama said that he saw with the notion of a reference product. But things, whether biosimilars should have their biosimilars as a key component in keeping for the moment we don’t have that, so there own marketing exclusivity period and what down healthcare costs. He was also reported is a long way to go.” the likely impact of the interchangeability of as saying that the legislation should offer as There is indeed. Despite years of effort, biosimilars would be. short an exclusivity period as possible for and the existence of the EU model, the US The FTC will collate the responses from originator drugs. When the long-awaited still lacks any form of a biosimilars pathway. the consultation, together with the results of legislation is fi nally passed, it could well fall Several bills have been tabled, including the the workshop, and put them into a report short of what originator companies have Pathway for Biosimilars Act, the Access to scheduled for release in spring 2009, which been pressing for. Life-Saving Medicines Act, and the Patient will analyse the potential marketplace effects Protection and Innovative Biologic Medicines of the various policy options. Ian Schofi eld is a principal Act. But none has made much headway. analyst for Informa Pharma. Progress has been held up mainly by Canada and Japan disagreements over questions such as Elsewhere, efforts continued to draw up interchangeability and whether the US should biosimilars legislation, but again progress has follow the EU example. The US generic been patchy. In March 2008, the Canadian

64 www.scripnews.com/supplements Scrip 100 POLICY & REGULATION Pete Chan Pete

The view from Canary Wharf Low R&D productivity and safety issues are among the most pressing problems facing those involved in developing new medicines, but what’s the regulator’s perspective on the situation? Ian Schofi eld spoke to Thomas Lönngren, executive director of the European Medicines Agency, to fi nd out

Critical Path Initiative, have been set up to we can do to help. We want to stimulate THOMAS LÖNNGREN develop biomarkers and other tools to ensure innovation, we have the legislative tools. For new drugs are better targeted, make the drug example, we have increased our provision of ew would dispute that the R&D development process more effi cient and scientifi c advice, and we fully support the IMI, productivity of the pharmaceutical predictable, and minimise attrition. But is this of course.” Findustry is at a low ebb, with new the answer, or does the problem run even With initiatives like the new EU legislation molecules fi nding it ever more diffi cult to make deeper? on advanced therapies, he says, “we are it through to Phase III clinical trials Surveying the scene from his Canary Wharf moving away from pharmacology-based drugs and beyond. offi ce in London, Thomas Lönngren, executive and towards more personalised medicines The consensus is that bottlenecks in the director of the European Medicines Agency, and biomarkers. And preventive medicine is drug development process are the reason for says that many explanations have been offered becoming more important.” the high attrition rate seen with new drugs. for the low productivity rate, and that the Biomarkers are one area where the EMEA Two public-private consortia, the Innovative agency has a role to play in addressing the has been quite proactive. Mr Lönngren cites Medicines Initiative in Europe and the US problem. “We as regulators have asked what the 2008 joint qualifi cation, with the US FDA,

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of a number of biomarkers for kidney disease. So what about the numbers and kinds of antibiotics. This is a worry for everybody, not Now three new biomarker qualifi cation products that will be submitted to the agency just for us.” procedures have begun, and are under in future years? He believes the overall number evaluation by the two agencies, and the of applications will increase, while applications safety issues EMEA has been contacted by companies and for new active substances will stabilise, with a Another major concern, for companies and consortia on a number of others. higher proportion of biologicals. By 2010- regulators alike, is ensuring new drugs are as He also notes that the EMEA has modifi ed 2011, applications for new compounds will be safe as possible and getting the right balance its scientifi c advice procedure so that dominated by drugs for cancer, immunologicals between the benefi ts and the risks. This may companies can come to the agency for advice (including vaccines), neurology, endocrinology well become more diffi cult as applications for and feedback when they are starting their and cardiovascular. Oncology “is the big one, substances with novel mechanisms of action – biomarker project, and again later when they and it seems most R&D-based companies are gene therapy, cell therapy and the like – start have conducted their studies and want to rushing into this area”, he says. landing on the EMEA’s doormat. begin the qualifi cation process. The agency has begun a project that it says “The question is, will it help?” Hopefully, advanced therapies could improve evaluation of the real benefi t- these initiatives will help to make drug Advanced therapies will also fi gure in new risk profi le of new medicines. A new kind of development more predictable from a applications. These will be dominated by cell- benefi t-risk template is being piloted, with a regulatory point of view, says Mr Lönngren, based medicines, while applications for gene more structured list of the criteria used in but whether this will result in more new therapy and tissue-engineered products are making benefi t-risk assessments. The hope substances on the market is another matter. expected to be fewer in number. A limited is that it will provide a sort of “checklist” for Companies are now looking to more number of new applications are expected in assessors and rapporteurs to show that all the complex targets, right down to the molecular 2009, although on the basis of the increase necessary elements have been addressed. biology level, and “this is one reason why we in requests for scientifi c advice on advanced One of the problems with the agency’s see so many failures”, he suggests. “Maybe this therapies, the number of such products should current approach is that there is no proper is an issue the R&D-based industry needs to increase over the next few years. methodology, and no standardisation of address. Maybe it should adapt its business But not all therapeutic areas are rich in the parameters used to reach benefi t-risk model, maybe there is a new drug discovery research, and in some cases Mr Lönngren conclusions. It has no guidance on benefi t-risk tree related more to disease management.” sees a discrepancy between public health principles, or on how to describe how the Another possibility, Mr Lönngren says, is needs and what is coming through company evidence is weighed. The agency is not alone that industry is simply fi nding it increasingly pipelines. He is worried in particular about the in this respect: the US and Japan have no lists diffi cult to come up with new ideas. “Maybe lack of applications for new antibiotics in view of benefi t and risk criteria either. “Everyone mother nature is tricky – it is not so easy of concerns among experts about growing realises that there is a need to somehow anymore. The low-hanging fruits have been microbial resistance to current drugs. “We see standardise how we do it,” says picked.” anti-infectives for diseases like HIV, but not Mr Lönngren.

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In its pilot, the EMEA will retain the a couple of years we will see a lot more of a lot of questions to be looked at, and based emphasis on qualitative assessments but will these applications”, Mr Lönngren says. “This is on this we need to come up with some also test out some quantitative evaluation one issue in our 2009 work programme.” new models.” The medical devices angle is tools that could make decisions both more an interesting one, because there have been predictable and consistent with previous growing workload a problem suggestions that the European Commission These new responsibilities will only add to the evaluations. This would allow industry and is looking at eventually having a single drug agency’s growing workload, which has already assessors to hold more objective discussions and medical device agency for the EU. The on the benefi t-risks of drugs. been identifi ed as a problem. For example, in recent years, the proliferation of committees commission has consulted on the revision This will not necessarily be easy, says has been putting an increasing strain on both of the medical devices legislation and is now Mr Lönngren. “Some people say that its own capacities and the ability of member thinking about what proposals to make, quantifi cation is diffi cult.” People within the state agencies to spare enough staff to sit on says Mr Lönngren, although he says, “I don’t EMEA? “Well, there are different views on all these bodies. have any specifi c comment on this at the this. We need to do a lot of research, and As well as the committee that came moment.” see if we can come up with a concept that with the paediatric regulation in 2007, the So how does he see the structure of the could be useful. It could help to take decisions EMEA will have a new advanced therapies agency and the EU regulatory system in a about benefi t and risk, because you can easily committee (CAT) in place from the start few years’ time? “I think we can work with identify the parameters where there are of 2009. And the European Commission the existing architecture for a couple of years disagreements.” has proposed a new pharmacovigilance or so, but we will need to revisit it. I think Such an approach could also yield benefi ts committee for the agency at some point in it will come when the EU legislation is next in the post-authorisation phase. “If you can the future. establish criteria and these change over time, revised, based on the review of the EMEA in 2009. It all depends on what responsibilities you could say, OK, what is the magnitude of The EMEA will have a new this change for the benefi t-risk assessment? It the agency has in future.” is very complex and we are just starting, but advanced therapies committee He says a good indication of likely it is a priority for us.” (CAT) in place from the start developments will come from the commission’s communication on the future clinical trials of 2009 of the EU single market for pharmaceuticals. Another safety-related issue for the EMEA [This was supposed to have been published is clinical trials. With the trend towards “Certainly this does not make it easier,” as part of the “pharmaceutical package” on conducting more studies in emerging markets says Mr Lönngren. “Business is becoming October 21st, but the package was delayed in Asia and Latin America, the agency says more complex, as are the relationships and until the end of November so that some it needs to ensure that they are in full connections among the committees, and “technical questions” could be addressed – of course there will come a point where accordance with ethical standards equivalent Ed.] the system is so complicated that it will be to those in the EU clinical trial directive and “Then we will know more or less where diffi cult to operate.” the Declaration of Helsinki. we are going, and we can fi ne tune it and There is, he says, a need to take The agency is seeing a “dramatic increase” then maybe run a public consultation in a fresh look at the architecture of the each year in trials in countries like India, 2009. At the end of 2009 we will see the EU regulatory system. In fact, the process Taiwan, China, Singapore, the former Soviet results of the EMEA evaluation, then we is already under way, with an independent Union countries, and Latin America, could put this together in a new road map – evaluation of the EMEA to be carried Mr Lönngren says. He is also aware of a new long-term plan for the EMEA, similar out in 2009 at the request of the concerns raised about the ethics of trials to our existing road map.” European Commission. conducted in these countries. Overall, says the executive director, the “It will be interesting to see the outcome A major problem is how to inspect the outlook is bright. “But you never know. of the evaluation,” says Mr Lönngren, who rapidly growing number of trial sites and There could always be some drawback – believes a whole range of aspects need supervise the conduct and ethical standards for example the possibility that a centrally of studies. This has to be done on a selective to be addressed. For example, whoever does the assessment will need to look at authorised drug could be involved in a major basis. “We have to take a risk-based approach safety issue is increasing as the number of because we don’t have the resources to do it what work needs to be done centrally and such products rises.” Most of any other way. We are starting to plan to have what at national level, whether to maintain the safety problems so far have been the capacity to work outside the EU, so that the current agency network, and how far with nationally authorised medicines, we can guarantee that clinical trials are up to mechanisms like work-sharing should be he observes. standard.” brought into play. Just how many of the changes will take This is an area where more collaboration “The fi nancing of the system is another is needed with agencies outside the EU, issue. We need to match this against the place during his tenure at the agency is in countries where these trials are taking growing complexity of the environment and diffi cult to say. “My mandate runs out in place, says Mr Lönngren. The EMEA has the new science that is coming out. We need 2010, when I will have been here for 10 already established a contact point with to look at the international environment with years. I can’t have a contract beyond that.” the authorities in India, and is planning the future enlargement of the EU, and the It is too early for him to say what he will do similar moves in Asia-Pacifi c, Latin America requirements in terms of new competences, then. In the meantime, “there is a lot more to and countries in the Commonwealth of new product areas.” do in two and a half years. Time is fl ying by.” Independent States (CIS). It will also be important, he says, to see So far the number of marketing how best to integrate the agency’s work with authorisation applications submitted to disease management, preventive strategies, Ian Schofield is a principal analyst for the EMEA that include data from trials in other interventions like surgery, the interface Informa Pharma. emerging markets has been limited, “but in with medical devices, and so on. “There are

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Japan’s PMDA puts its house in order Dr Tatsuya Kondo and Dr Satoshi Toyoshima of the Japanese medicines regulator talk exclusively to Ian Haydock about some of the issues they face

The steady increase in the number of DR TATSUYA KONDO DR SATOSHI TOYOSHIMA reviewers (some of whom have joined from ince it was set up in April 2004, being granted to new products, said industry) and the rising number of clinical bringing together drug and medical Dr Satoshi Toyoshima, director of the agency’s trial consultations already appear to be paying Sdevice regulatory functions then split centre for product evaluation. Under these, dividends. The agency actively promotes a between various government bodies, Japan’s approval holders are required to carry consultation process with applicants and has Pharmaceuticals and Medical Devices Agency out comprehensive (usually all-patient) now largely overcome the bottleneck in the (PMDA) has not always elicited the kindest postmarketing studies for novel therapies in system that existed several years ago. Nearly of comments from industry applicants. their actual clinical setting and “to ensure their 300 such discussions took place in fi scal 2006. Frustrations have been expressed at lengthy safety to society”, he said. The programmes can According to internal PMDA data, median review times, non-transparent procedures and last for one or two years and – while companies total review times (which include stoppages diffi culties in securing slots for consultations. might grumble about the additional cost – the for questions and additional data) fell from PMDA sees them as an integral component of But helped by a gradual increase in staff, 22.4 months in fi scal 2005 (ended March 31st, its regulatory arsenal. and various initiatives to try and address such 2006) to 20.1 months in fi scal 2007. Actual Dr Kondo added that the PMDA is also complaints, things have improved markedly review times (excluding stoppages) over the taking other concrete steps to cut review times over the past few years. The tone of feedback same period fell slightly, from 12.0 months while making sure that its assessments ensure from the industry has recently become much to 11.6 months. While these gains might be product safety, effi cacy and quality. Continued more positive, although of course applicants modest, at least things appear to be moving increases in the number of reviewers are will always want to see further reductions in in the right direction as procedures under the review times. seen as critical to this effort, although the PMDA is notably keen to point out at industry new agency become established. Dr Tatsuya Kondo holds a similar view that conferences that it already manages to do a lot Dr Toyoshima explained that another the quest to improve performance is far from with resources that are very limited compared positive change had been the adoption over. One of the biggest challenges facing with some other leading regulatory bodies. of product review/management teams, the regulator’s new CEO, appointed in April which handle procedures from clinical trial 2008, is Japan’s much talked about “drug lag” recruitment drive consultation through to approval reviews. problem, whereby many major new therapies As of April 2008, the agency employed “These help to improve the consistency and do not reach the local market until several a modest 277 people in its review offi ce speed of reviews. But I want to stress that years after they have been approved in the US (including for generics, OTCs and devices, we are not only concerned with speed but and Europe. and for GLP/GCP inspections), an increase of with the quality of the staff and of the review Speaking at the PMDA’s offi ces in Tokyo’s 71 over the previous year, out of a total staff process itself,” he said. Kasumigaseki district, he declared: “Patients of 426. The aim is to increase the number of in Japan still do not have full access to new new drug reviewers by more than 200 over international scope drugs and they want us to approve products the three years from April 2007, which will Earlier in 2008, the PMDA published a “points quickly and safely. This is an issue that should virtually double the number of such staff over to consider” document outlining the type of be confronted squarely.” Dr Kondo can claim this period. The agency’s total workforce is information the agency is looking for from to have a good idea of patients’ expectations expected to rise to 582 by March 2010. applicants and how this should be assessed by when it comes to the newest and most “We are on target to achieve these planned its review teams. An English translation was effective drug treatments, having spent 40 increases,” Dr Kondo said, although he made available through its website. years as a practising neurosurgeon and conceded that fi nding suitably qualifi ed people “We believe this will be helpful to hospital director, and he is looking to bring this is not always easy. “We have had around 1,000 applicants and to improving the speed and physician’s perspective to his key role at the applicants so far, but are looking for people with quality of the review process,” Dr Toyoshima agency. high capabilities. After hiring, it takes around a said, noting that the document lays out basic Noting that the PMDA has a duty to try and couple of years for new staff to maximise their principles and checkpoints for reviewers, address the drug lag problem, he explained contribution following training, and we are now with the emphasis on clinical data. It also that the overall goal is eventually to cut overall placing a great deal of emphasis on this.” stresses the need for fl exibility and close approval times to around 12 months for The PMDA, along with the ministry of health, liaison with applicants. standard new drug reviews and to nine months labour and welfare (MHLW) – with which it Both of the senior offi cials see Japan’s for the priority reviews granted to high-need co-ordinates closely on regulatory matters – is increased participation in international therapies. “Looking at the data for last fi scal year, also seeking a big increase in the number of clinical trial programmes as another effective it was clear we made good progress in the area staff dedicated to reviewing side-effect reports way to reduce drug lag. The aim here is to of priority reviews,” Dr Kondo said. and postmarketing safety data. The aim is to generate clinical data suffi cient for Japanese As a trade-off for faster reviews, a greater better assess data coming in from both Japan approval by including sites in Japan within number of conditional approvals are now and overseas and to take any necessary action. global programmes.

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Figure 1: PMDA organisational chart

O ce of General Aairs/ O ce of Planning and Coordination Auditor Associate executive O ce of Relief Funds Auditor director O ce of Review Administration

Senior O ce of Review Management executive Review department director O ce of New Drugs I-IV Director (Center for O ce of Biologics I-II CEO Product Evaluation) O ce of OTC/Generic Drugs

O ce of Medical Devices Associate center (Inspections such as directors O ce of Conformity Audit GLP/GCP and GPSP)

------Executive director O ce of Safety Post-marketing Chief safety department o cer Executive O ce of Compliance director and Standards (GMP/QMS Inspection) Number of sta: 256 (April 2004) 319 (September 2006) 346 (2008) with approx. 900 external experts

Source: PMDA

Although driven more by commercial Dr Toyoshima went on to note that the can learn from their experience and hope considerations, a number of multinationals populations of Japan, China and South Korea that we will be able to exchange staff in the are already adopting this approach, aiming are seen as genetically relatively similar, future,” the CEO explained. to more or less simultaneously develop new although some differences – and with the As part of its outreach and transparency drugs in the major markets of the US, Europe wider Asian population – cannot be ruled efforts, the PMDA is also planning to translate and Japan. out. This is why the PMDA sees the inclusion more regulatory documents and guidance To help this process along, in September of some Japanese patients in multinational into English, a move it hopes may also 2007 the MHLW released a notifi cation and regional trials as necessary. Product help other regulators in Asia. For example, on basic principles for global trials, which type might also affect precise requirements. summaries of approval reviews for two outlined the type and quantity of Japanese “Some drugs, such as antimicrobials, may not products have already been made available data required. Again, prior consultation with be affected so much by ethnic factors,” the through the agency’s website. the agency is strongly recommended to offi cial said. ensure appropriate study protocols. “We The hope is that the new discussions will biosimilars want to encourage discussions at an early yield fi ndings of mutual benefi t. Although In common with many other countries, Japan stage and are willing to consider products there is no harmonisation of technical is still working on appropriate regulations for case-by-case, depending on type,” requirements between the three countries’ generic versions of biological products, or Dr Toyoshima explained. respective regulators as yet, data from one biosimilars. The health ministry is drawing up He pointed to a major related outreach should provide useful support for the other. a proposed guideline on what Dr Toyoshima initiative involving other regulators in China Some companies are beginning to explore conceded was a diffi cult and challenging issue. and South Korea, with which the PMDA has this approach in their regional clinical “Unlike generic chemical drugs, minor now started discussing the infl uence of ethnic programmes, with several now performing variations in protein structure can have a factors on clinical and other data. This has trials in the three countries in support of potentially big impact on pharmacokinetics long been a contentious area, although the planned submissions in Japan. and safety, which is why we must look International Conference on Harmonisation’s As one of the core participants, Japan has carefully at the appropriate regulation of (ICH) E5 guideline on intrinsic and extrinsic been a keen proponent of the global ICH biosimilars,” he explained. While variations for ethnic factors addresses many of the main regulatory harmonisation process and is some products such as growth factors may issues. encouraging other Asian countries to adopt not be that worrisome, for others it might be Explaining that: “we need stronger the initiative’s guidelines. As to whether there critical, he added. collaboration with other east Asian nations,” might be more harmonisation of regulations Opinions are being solicited on basic Dr Toyoshima said that the three countries between Asian countries in the future, proposals, which could lead to a basic began a dialogue in April, under which they Dr Kondo commented: “Personally I believe guideline being drawn up by the end of 2008. will share clinical data and conduct joint this is possible, but it is likely to take time and Until then, the policy is to treat products on a studies to elucidate better the infl uence of each country will want to retain their case-by-case basis, aided by close discussions ethnic differences on factors such as safety own systems.” with applicants. and effi cacy. Director general-level meetings As part of its expansion, the PMDA would between the three countries will be held also like to increase its interactions with peer annually on a rotational basis, with China to agencies such as the US FDA and Europe’s host the 2009 meeting and South Korea the EMEA, with which it has already established Ian Haydock is Scrip’s Asia editor. one in 2010. good links and exchanges information. “We

www.scripnews.com/supplements Scrip 100 69 POLICY & REGULATION

The expert third party Communication gaps between innovator pharma and the key European medicines regulators created a need for a different type of consulting fi rm, Professor Kjell Strandberg, chair of the NDA Advisory Board, tells Pete Chan

submission strategies with the aim of securing Q. Why was the NDA Advisory Board PROF KJELL STRANDBERG quick and positive drug application assessments established? at European level. Having Advisory Board members from First off we recognised that there was no industry as well as ex-regulators helps us independent group of former EU regulators to understand the pharmaceutical sector’s available to provide the pharmaceutical different pressures and to navigate a path industry with advice on strategy and their forward. In particular, the Board can help development programmes. We decided that clients to take a more objective view of their such a group should comprise leading experts own development projects. In this way the in regulatory affairs who had previously Board provides a forum that can deal with the occupied senior positions in European types of questions that clients can’t ask the regulatory authorities, or alternatively in regulators, as well as providing the answers industry. that the regulators can’t give them. The diverse mix of European expertise that The Board can also offer a highly qualifi ed we have created at NDA should be helpful in second opinion on how best to handle bridging the communication gaps that currently sensitive issues with currently marketed exist between regulators and the industry. products and to give neutral advice at times of NDA’s ultimate objective is to help its clients crisis management. Of particular importance is to improve their drug development strategies the internal quality assurance by non-involved such that they meet the needs of both members of the Board of all project reports. regulators and patients.

Q. When was this concept launched? Q. What are your current expansion plans? NDA was established as a regulatory affairs consulting fi rm back in 1997. The ‘Advisory Today we already have a client base ranging Board concept’ was created around 2001 and from start-up fi rms and SMEs to 70% of we went public with it in 2002. We started out the world’s top 20 global pharmaceutical small; in November 2003 there were just four companies. The NDA Group is also expanding of us on the Board, but we have grown steadily its services with a particular focus on the types since then into a nine-member team working of areas that are of strategic importance to its out of offi ces in eight European countries. clients. All Board members are experienced former From an industry perspective, for regulator and/or industry scientists, and as instance, there is an increasing number of such, are capable of giving strategic advice that biopharmaceutical products in development, refl ects the latest thinking and decision-making advanced therapies are becoming more practices of the various regulatory authorities established, risk management and quality in Europe. The NDA Group, with its offi ces assurance have risen to the top of the agenda, in Sweden, the UK and Germany, provides and in Europe, the paediatric medicines additional regulatory, industry expertise and regulation is raising some major challenges full regulatory functions. A network of external for companies and regulators alike. We have experts located in both the EU and the US has responded to these trends, establishing also been established. business units and recruiting expertise to the Advisory Board to help us address these issues. Q. What does the NDA Advisory Board do? Q. What improvements would you welcome in the regulatory environment? The NDA Advisory Board represents an independent third party that can objectively We strongly support the EU Innovative review clients’ projects, very often at phase Medicines Initiative and the US Critical transitions. The Board effectively functions Path Initiative and look forward to the as a strategic partner for clients wanting harmonisation of criteria for validation of, for to optimise their development plans and example, biomarkers. We expect many more

70 www.scripnews.com/supplements Scrip 100 POLICY & REGULATION

moves of this nature to come through. The situation with national procedures In our day-to-day work, we are regularly (mutual recognition procedures and confronted with regulators’ different decentralised procedures) is becoming opinions on, among other things, the critical. In principle, one member state appropriate design, choice of endpoints, could carry out the primary assessment duration, size of safety database, and that was previously done by 27 countries post-approval conditions for development individually. But instead, even with work- programmes. The EMEA/US FDA joint sharing and other initiatives, we have a scientific advice procedure must be flawed situation, including a slot system revitalised to ultimately become a regular with waiting times for submission of procedure for major new products, marketing authorisation applications of up including advanced therapies, with the to two years in the most popular member objective of reaching a joint agreement. states. EU regulatory systems based on Similarly, harmonisation activities should the principle of mutual recognition have be initiated to arrive at joint positions on been successful in many other fields, but in what constitutes a clinically-relevant effect, pharmaceuticals the track record is beginning with major areas of therapeutic not good. research. The EMEA has recently launched a project aimed at improving the assessment of benefit/risk profiles of new medicines. A EU regulatory systems based structured list of benefit and risk criteria is to be identified and used in a pilot testing on the principle of mutual phase. In this context it will be necessary recognition have been successful to clearly define what constitutes a clinically relevant effect in the specific condition in many other fi elds, but in investigated in order to make the proper pharmaceuticals the track judgement of acceptable risk. Leading record is not good European clinical experts need to be invited to participate in such deliberations. This work is also very important in light of criticism that medicines are being Successive regulatory reform (which authorised, but not recommended, for has about a 10-year cycle) has at each use in the healthcare system. In order stage since the 1960s moved away from to make the difference between clinical harmonisation as a desired outcome benefit/risk and societal benefit/risk (cost) to harmonisation as a legal imperative. understandable to laymen, politicians For example, note the move from the and media, it is absolutely critical for the (unrealised) expectation of mutual responsible authorities to convincingly recognition in the MR procedures from outline the criteria used for arriving at the 1970s and 1980s to a compulsory decisions that on the surface may look centralised procedure for NCEs in many antagonistic, but which are still correct important therapeutic areas today. The considering the different remits. move towards increasing centralisation In terms of the regulatory environment is inexorable and necessary. Many of our in general, we do not believe that the clients tell us that what was unthinkable system we have today is sustainable. Yet before – a European drugs agency handling we fully agree with the widely held view all regulatory assessments – would be a that the EMEA has been a success story. welcome relief. The agency’s procedures are by and large Another challenge is making newly transparent, predictable, and well managed, authorised medicines available to patients. and they provide opportunities for At a recent conference, a representative appropriate dialogue with industry including from one of the new accession member the provision of scientific advice. states made an excellent point: why Today about 50% of centralised MAAs should their regulatory agency volunteer have previously received scientific advice, to be the rapporteur or co-rapporteur helping sponsors avoid some of the most in the centralised procedure leading to a common problems, such as choice of marketing authorisation valid throughout dose, choice of endpoint and choice of the whole of the EU, when almost none of comparator. But we are also concerned that the new chemical entities authorised by the the political need for all member states to centralised procedure had been marketed be “at the table”, combined with the almost in their country? This problem will likely ad hoc creation of committees, may easily take longer to solve than rationalising create a situation in which administrative the EU procedures. bureaucracy takes more resources than what is really important – informed scientific regulatory debate leading to Pete Chan is editor of the Scrip 100. sound opinions.

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DISCLOSURE: Under the FDAAA, basic results from clinical trials have to be posted on the Clinicaltrials.gov database and can be used by the US regulator to request labelling changes for approved medicines

Safety issues to the fore In 2008, pharmaceutical companies came under increasing pressure to do more to ensure the medicines they put on the market are as safe as they can be. Ian Schofi eld assesses the impact of new US drug safety legislation and examines Europe’s plans for strengthening its pharmacovigilance system

ossibly the most signifi cant event of 2008 Under the law, the FDA is expected to develop benefi ts outweigh the risks. It can include in the drug safety area was the coming a systematic approach to the management of a a medication guide, a patient pack insert, a Pinto force of the US Food and Drug medicine’s benefi t-risk ratio throughout its life communication plan, elements to ensure safe Administration Amendments Act (FDAAA). cycle, especially in the post-authorisation stage. use, and a timetable for assessing the REMS. This gives the FDA unprecedented powers It now has greater powers to demand, and Drug approval will be withheld until the REMS to require post-authorisation safety studies monitor, safety-related post-marketing studies is in place. and changes to product labelling, including the and labelling changes for drugs and biologics. When post-approval studies are required, ability to impose fi nes for non-compliance with The ability to request such studies is not the FDA and the company will agree a post-approval studies. new for the agency; what is novel is that it can schedule for carrying out the studies, and In Europe a new, two-year work programme now impose fi nancial penalties of up to the company will submit periodic reports on came into play under the European Risk $10 million if companies fail to comply with progress with the research. Management Strategy, which is intended to post-authorisation study requirements. Another aim of the FDAAA is to widen ensure that the safety of drugs placed on the And the agency has not been slow in making public access to clinical trial results. Among market is constantly monitored throughout use of its new-found powers. Since March, it other things, from September 2008 sponsors their life cycle. Further improvements to the has approved 13 risk evaluation and mitigation have to post “basic results” from all clinical pharmacovigilance system are also expected strategies (REMS), and as of late September, trials of approved drugs in the federal soon in the form of new EU legislation. it had issued 21 letters to companies asking government’s Clinicaltrials.gov database. These This greater emphasis on pro-active safety for clinical trials, or epidemiology or other results include patient demographics and measures will have signifi cant effects on both population-based studies, to address post- baseline characteristics, primary and secondary sides of the regulatory divide, in both the US approval safety issues. outcomes, points of contact and certain and the EU, where regulators and companies The FDA has also required safety-related agreements between the sponsor and the are having to set aside resources to meet the labelling changes on four occasions, in all cases principal investigator; they can be used by the new requirements. for classes of drugs: conventional antipsychotics, FDA to ask for labelling changes. The FDAAA was signed into law by fl uoroquinolones, erythropoiesis-stimulating So what does the introduction of the outgoing President George W Bush on agents and TNF inhibitors. FDAAA mean in practice? One result for September 27th, 2007. It contained at least REMS are a very important aspect of the pharma fi rms has been the need to shift 200 specifi c provisions, of which more than FDAAA, and are used to manage a known resources towards areas such as post- 100 require agency action, including reports to or potential serious risk associated with a marketing research, epidemiology, safety Congress, public notices, guidance documents medicine or a biological product. The FDA monitoring and risk management, including and new regulations. The safety provisions can require a REMS for a new product if it REMS. This means that companies are likely of the law took effect on March 25th, 2008. believes one is necessary to ensure that its to fi nd that product life cycle management

www.scripnews.com/supplements Scrip 100 73 CLINICAL TRIALS

becomes more complex, and that the costs of concerned that everything would have a and communication of the risks of medicines drug development increase. REMS.” In fact, she observed, what the agency throughout their life cycle. Companies will also need to act quickly had required so far had been “probably very Among the aims of the programme are to if new safety signals emerge for one of their similar to the pace we would have been on if make the EudraVigilance system more fully products: the FDA can now ask a fi rm to we’d not had these authorities, and it’s simply functional, improve the workings of the EU submit a REMS for an approved drug within that these are [now] required by the FDA.” regulatory system network, and implement four months. the European Network of Centres for For its part, the FDA has many more Europe’s initiatives Pharmacoepidemiology and Pharmacovigilance Efforts are also under way across the Atlantic responsibilities in terms of ensuring safety (ENCePP) project. to implement a more proactive approach to and minimising risk. For example, it now The EU has other plans in store to strengthen managing product risks. Under EU legislation, has to integrate the REMS not only into drug safety monitoring, in the form of a directive companies have to provide risk management the drug approval process but also in the drafted by the European Commission. The plans (RMPs) with new product applications post-marketing phase. In fact, the agency can commission had planned to unveil the document and extensions, as well as at the request on October 21st as part of a “pharmaceutical mandate a REMS at any point in the product’s of the authorities and when new relevant package” that also contained draft legislation on life cycle if fresh safety information arises from, safety data emerge. RMPs consist of a safety anti-counterfeiting measures and information say, clinical trials, adverse event reporting or specifi cation and a pharmacovigilance plan to patients, although in the event its publication post-marketing studies. To support its decision- and, where appropriate, a risk minimisation was postponed. The pharmacovigilance directive making, the FDA will set up an active risk plan. was expected to put forward a range of ideas identifi cation network with a master database, Existing RMPs can be modifi ed if new for reinforcing and rationalising decision-making using data obtained from a wide range of safety information comes to light. One recent on safety issues. Many of the proposals will sources. example of this was Biogen Idec/Elan’s Tysabri bring new obligations for both regulators and The FDAAA also brings new requirements (natalizumab) for multiple sclerosis. In July in the area of paediatric medicines. Previously, 2008, the EMEA received two reports of companies. only products granted exclusivity under the progressive multifocal leukoencephalopathy They could include stronger obligations on Best Pharmaceuticals for Children Act had (PML) in patients with relapsing-remitting MS companies to notify regulators of any changes to to undergo a one-year post-exclusivity safety taking Tysabri. The two cases were reported their products’ risk-benefi t profi le, including new review. But now such reviews will be triggered information from clinical studies; giving regulatory when data from studies requested by the authorities more power to request post- agency under the Pediatric Research Equity Act The FDA’s increased powers authorisation safety studies; and an automatic pharmacovigilance referral procedure triggered are added to product labelling. This will mean could result in products a signifi cant increase in the number of reviews, by events such as inspections. Other proposals in the directive could with up to 40 products expected to be subject with safety concerns being include obliging member states to enforce to review in 2009, compared with 70 in the approved on condition that penalties when companies fail to comply with period from late 2003 to 2007. the manufacturer puts in place pharmacovigilance provisions, and introducing To help it to meet its new responsibilities, intensive monitoring for new products. the FDA has had to take on more scientifi c a REMS or conducts post- The delay to the “pharmaceutical package” and administrative staff. By October 2008 it authorisation studies disappointed the pharmaceutical industry was hoping to have added a total of 1,300 federation EFPIA, which said it was an “integral personnel. as part of the continuous safety monitoring of part of the process of ensuring and securing the Nonetheless, there have been suggestions medicines following marketing authorisation. supply of safe, non-counterfeit medicines and that the increase in the agency’s workload The EMEA’s scientifi c committee, the to improve health literacy among patients”. It will inevitably affect its ability to conduct CHMP, launched a review of Tysabri to is not clear what caused the hold-up, although its other activities. The result could be a determine whether any changes to the it is likely to be due to one of the other two, slowdown in the drug approval process or approved product information or the existing more controversial, documents on patient a fall in the number of meetings it can hold risk minimisation measures were needed. In information and counterfeiting, rather than the with companies. In fact, in August 2008 the September the committee said the existing pharmacovigilance proposals. FDA reported that action on some drug and warning on the risk of PML should be There has been speculation that elements biological applications had indeed been delayed strengthened, and asked for an update of of the proposals on patient information are beyond user fee deadlines while staff worked the “Physician Information and Management still being argued over within the commission’s through the new drug safety requirements, Guidelines for Multiple Sclerosis Patients on services. The commission said the package would including complex REMS proposals. Tysabri”. These guidelines are part of the be made public on November 26th, but declined Conversely, some believe that the FDAAA agreed RMP for the product, and set out a to give any explanation for the delay, citing could actually help some delayed drugs get series of risk minimisation measures. only “technical questions” that needed to be to market. The FDA’s increased powers could On a wider scale, the EU authorities addressed. But the package was then postponed result in products with safety concerns being are taking steps to strengthen the entire again, this time for “agenda reasons”. At the time approved on condition that the manufacturer pharmacovigilance system. At the end of of writing industry sources were expecting it puts in place a REMS or conducts post- 2007, the EMEA and the heads of national some time during December. authorisation studies. medicines agencies (HMA) agreed on a rolling And by November it appeared that the FDA two-year (2008-2009) work programme was applying the FDAAA in a fairly measured to further develop the European Risk Ian Schofi eld is a principal manner, and that the fl ood of requirements Management Strategy. The ERMS is intended analyst for Informa Pharma. some had predicted had not materialised. Janet to allow pharmacovigilance activities to be Woodcock, director of the agency’s drugs conducted in a more proactive manner by centre, told the DIA/FDA/PhRMA drug safety putting in place measures that allow for the conference in Virginia: “Everybody was very early detection, assessment, minimisation

74 www.scripnews.com/supplements Scrip 100 Did you know the US FDA’s drug approval rate declined by 13% in 2007?

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6819-KA-297x210-4col.indd 1 3/4/08 15:57:35 CLINICAL TRIALS

Europe’s watershed year for paediatric medicines Medicines developed specifically for children have long been rare in Europe. But, as Ian Schofield reports, an EU initiative to boost the number of such drugs has produced its first paediatric medicine, with the prospect of many more to follow

www.scripnews.com/supplements Scrip 100 77­­ CLINICAL TRIALS

he year 2008 marked a signifi cant granted to products developed specifi cally for paediatric research networks. In 2009 the step forward for the development of children. agency expects to have the resources available Tmedicines for children when new EU The regulation appears to be having the to identify these networks, and will set up a co- legislation bore its fi rst fruit in the form of a desired effect: by September 2008, the EMEA ordination group to take the initiative forward. paediatric drug for serious fungal infections. had received more than 290 applications To help achieve another of the regulation’s In September, the European Medicines for PIPs or waivers. 64% of these were for aims – increasing the amount and quality of Agency (EMEA) recommended the approval of products that had yet to be authorised for paediatric information available on drugs – the Merck Sharp & Dohme’s Cancidas (caspofungin marketing, while 34% were for approved commission is planning to make paediatric trial acetate) for use in children, on the basis of products, still under patent, for which data publicly available on the internet. clinical trials conducted in accordance with a companies were seeking a new indication, Two types of data will be involved: pre- paediatric investigation plan (PIP). The agency’s pharmaceutical form or route of administration. trial protocol information, such as the trial scientifi c committee, the CHMP, concluded However, a mere 2% of applications, six in design and exclusion/inclusion criteria; and that the data on quality, safety and effi cacy total, related to PUMAs. This suggests that one results-related information, including details of supported this extension of indication. of the aims of the regulation – to encourage outcome measures, randomisation, adverse The move was a small, but important, the development of paediatric forms of older events and data interpretation. fi rst step in the process of building up an products – is not being achieved. The data will be drawn from the existing armamentarium of therapies developed Nonetheless, the EMEA’s go-ahead for EudraCT database – a public website will be specifi cally for use in children. Over the coming paediatric Cancidas in September marked established containing a subset of information years many hundreds more medicines will a real step forward. The product is already regularly updated from EudraCT. available for paediatric use in the US, where it gradually gain paediatric indications in Europe, appropriate forms refl ecting the fact that in terms of drug dosing Another initiative launched during 2008 was and formulation, children are not just small In terms of drug dosing and a draft EMEA guideline to help companies adults. formulation, children are not just develop the most appropriate forms of Many medicines currently used to treat medicines for specifi c age groups. Some children in European countries have not small adults guidance is already available, covering been studied or authorised for such use, and physiological and pharmaceutical issues as well market forces alone have not been enough was approved by the FDA in August for use in as the use of excipients with known effects in to encourage pharmaceutical companies humans. But the EMEA says the documents to develop and test paediatric medicines. children aged three months and older. The PIP for Cancidas was fi rst OKd by the have limitations and that additional guidance is According to the European Commission, this EMEA in February 2008, on a recommendation needed. has caused a number of problems such as from the agency’s paediatric committee, Different subsets of the paediatric population inadequate dosing information, leading to a and then amended slightly in May. The – pre-term newborns, infants and adolescents higher risk of ineffective treatment, side-effects product will become available in Europe for example – often need different forms of and sometimes death. once the commission has issued a marketing drugs. The new guidance is expected to help all The US has had legislation in place authorisation (this has to be granted within two concerned, from industry through regulators for several years, in the form of the to patients, by introducing harmonised months of the go-ahead from the EMEA). Pediatric Research Equity Act and the Best recommendations on aspects of paediatric drug Pharmaceuticals for Children Act, both of positive mindset development. Importantly, children themselves which were recently re-authorised by the FDA The EMEA itself is pleased with progress on will see benefi ts in terms of convenience, Amendments Act (FDAAA). But Europe has the paediatric front so far. Its executive director, improved safety and better compliance with lagged well behind in this area. Thomas Lönngren, told Scrip that the PIPs therapy. To fi ll the gap, the commission drafted the submitted so far had been very satisfactory, Unfortunately, it will be some time before paediatric regulation, which was approved in and that companies had a “positive mindset” the guidance is ready, as the draft version is not 2006 and came into effect in January 2007. It towards the requirements. expected to be ready for public consultation offers a mixture of incentives for conducting Moreover, he said the agency was learning until the fi rst half of 2009. Moreover, because paediatric trials, together with mandatory “step by step”, reviewing the way it operates views in Europe on paediatric formulation requirements. and improving its procedures. It has updated appear to differ widely, these will have to be The incentives include a six-month extension its procedural advice to companies, and issued taken into account, so the fi nal version will to supplementary protection certifi cates new guidance on compliance with PIPs and a probably not be ready until the end of 2009, (which lengthen effective patent protection). new version of the application form. the EMEA estimates. As for the requirements, companies intending But the new responsibilities have put a In the meantime, companies should be aware to apply for approval of a new drug have to strain on the EMEA’s resources. The agency of the next major milestone in implementing produce a PIP, which outlines the trials they is receiving some 20-30 applications for PIPs the EU paediatric legislation. Since July 2008, plan to conduct in children, or otherwise seek a and waivers each month, and in all probability the PIP/waiver requirement has applied only waiver or a deferral. The PIP must be agreed by each of these will cover more than one to new substances not yet approved in the EU. the EMEA’s paediatric committee. The results of indication, requiring individual review. “We also But from January 2009, it will also apply to new indications, pharmaceutical forms and routes of the trials must be included with the marketing have regular meetings with industry, so it is a administration of existing drugs. authorisation application. lot of work,” Mr Lönngren said. The EMEA is Waivers can be granted if the company accordingly taking on more staff, and has got shows that the product is not appropriate for approval to recruit in both 2008 and 2009. Ian Schofi eld is a principal use in children (such as drugs for Alzheimer’s analyst for Informa Pharma. disease and certain cancers), or that giving it to better implementation children would be unsafe. Plans are also afoot to improve the For older, off-patent drugs, a PUMA – or implementation of the regulation, including paediatric-use marketing authorisation – can be the construction of a European system of

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Trial starts signal industry’s best bets Citeline directors analyse clinical trials initiated in six key therapy areas over the past year, outlining industry trends that may point to the way ahead

Figure 1: Oncology trials initiated in the past 12 months by disease

100 By Susan Danheiser, Citeline’s oncology director In the oncology therapeutic area, a total of 550 industry-sponsored Phase III Phase II to Phase III trials were initiated between September 1st, 2007 and August 31st, 2008. Breast cancer was the leading tumour type 80 overall, comprising 16% of the total. Non-small cell lung cancer (NSCLC) Phase II/III trials were a close second, accounting for 11% of all trial starts, with prostate cancer, colorectal cancer and non-Hodgkin’s lymphoma (NHL) rounding out the top five. Breast cancer, NSCLC and prostate cancer 60 Phase II comprised the highest proportion of Phase III starts, at about 23% of total late-stage trials for each. For colorectal cancer and NHL, the proportion of Phase II to Phase III trial starts was higher (Phase III trials

Trial starts Trial represented only about 8% of the total for each). Further analysis can determine if this reflects a larger number of drugs entering Phase II in 40 colorectal cancer and NHL, or a higher failure rate at the Phase II level in these tumour types. Outside the top five tumour types for overall late-stage trial starts, notably higher proportions of Phase III vs Phase II starts were observed 20 for chronic myelogenous leukaemia, gastrointestinal stromal tumour (GIST) and supportive care indications covered by TrialTrove. Phase III studies accounted for 71%, 50% and 46%, respectively, of late-stage trial starts in those indications. There were no industry sponsored Phase III 0 trials (single-indication) initiated in the past year for several tumour types including head and neck cancer, mesothelioma, myelodysplastic Liver Renal GIST Breast Gastric Prostate Pancreas Ovarian Bladder Thyroid syndromes, chronic lymphocytic leukaemia and acute lymphocytic Melanoma Colorectal Head/neck Mesothelioma leukaemia. However, the latter three cancers may be included in the few Supportive care Lung, small cell CNS, glioblastoma Multiple myeloma Phase III trials involving multiple hematologic diseases. Lung, non-small cell Soft tissue sarcoma Unspeci ed cancer Multiple solid tumours For hematologic cancers, the greatest number of late-stage trials were Non-Hodgkin’s lymphoma Myelodysplastic syndrome Multiple hematologic diseases Acute myelogenous leukaemia Acute lymphocytic leukaemia initiated in NHL, multiple myeloma, myelodysplastic syndromes and Chronic lymphocytic leukaemia Chronic myelogenous leukaemia trials involving more than one hematologic cancer type.

Source: TrialTrove; accessed September 22nd, 2008

Figure 2: Oncology trials initiated in the past 12 months by company (top 20; Phase II-III)

35 According to TrialTrove, industry initiated 550 late-stage oncology clinical trials (Phases II–III) in the past 12 months (September 1st, 2007 30 Phase III to September 1st, 2008). Not surprisingly, the vast majority (80%) of these were Phase II trials. Nearly 60% of late-stage trials were sponsored by 20 companies, with Pfizer leading the pack. Indeed, Pfizer’s latest 25 Phase II/III pipeline update highlighted the company’s commitment to advancing clinical development in “high-potential disease areas” including 20 oncology. Following closely behind Pfizer for late-stage trial starts were Phase II Bristol-Myers Squibb, Genentech, AstraZeneca, Roche and Novartis. Notable on this list are non-“big pharma” companies: Celgene, Abraxis 15 Trial starts Trial and Taiho. Pfizer, Novartis, GlaxoSmithKline and Genentech/Roche initiated the 10 largest number of Phase III oncology trials in the past year, followed closely by AstraZeneca and Sanofi-Aventis. Pfizer, Genentech and Roche led in Phase II starts. GSK, Sanofi-Aventis and Merck KGaA/Merck Serono 5 had the highest ratio of Phase III to Phase II trial starts. The majority of late-stage trials initiated by Pfizer were in renal cell carcinoma (not breast cancer as might be suspected), followed by 0 NSCLC, prostate cancer and small cell lung cancer. Breast cancer was Lilly P zer Eisai the fifth most frequent indication for Pfizer-sponsored trial starts. Roche Amgen NovartisCelgene Genentech However, breast cancer was the lead indication in trials initiated by AstraZeneca Merck & Co Sano -Aventis Schering-Plough Bristol-Myers Squibb, Genentech, AstraZeneca, Roche and Novartis. GlaxoSmithKline ImClone Systems Abraxis BioScience Genentech; Roche Bristol-Myers Squibb Taiho Pharmaceutical Bayer Schering Pharma

Merck KGaA/Merck Serono

Source: TrialTrove; accessed September 22nd, 2008

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Figure 3: Metabolic trials initiated in the past 12 months by disease

120 By Dr Cydney Brooks, Citeline’s metabolic/endocrinology director In the metabolic/endocrinology therapeutic area, a total of 265 100 industry-sponsored Phase II to Phase III trials were initiated between Phase III September 1st, 2007 and August 31st, 2008. Of these, the number initiated in type 2 diabetes and diabetic complications tops those in other indications, paralleling the overall growing diabetes market and 80 current lack of effective therapeutics. Fully 50% of trial initiations in type Phase II/III 2 diabetes, and 20% of all trials, involve approved or recently submitted drugs targeting the incretin pathway, either as GLP-1 agonists or DPP-IV inhibitors. Most (83%) of these incretin pathway trials involve 11 60 Phase II different drugs that are in late-stage Phase II/III or Phase III development. Conversely, nearly 80% of recently initiated trials for later Trial starts Trial stage disease, in the form of diabetic complications, represent earlier Phase II trials. 40 Two companies and two molecular approaches dominate in recent Phase III clinical trials activity in anaemia therapy; trials involving Roche’s recently-approved third-generation erythropoiesis-stimulating 20 agent Mircera, and the Takeda/Affymax collaboration to develop the synthetic erythropoietin-mimetic peptide Hematide account for 86% or 24 of 28 recent trials in anaemia. In obesity, development is weighted toward earlier stage trials and companies with more nascent pipelines 0 that are striving to overcome the lack of effective agents and steep challenges to commercialisation success in this area. Recently initiated GERD obesity trials involving pipeline drugs outweigh those for approved Anaemia Obesity agents 15 to 1. Moreover, approximately 50% of these obesity trials are Renal disease OsteoporosisConstipation Type 2 diabetes Type 1 diabetes Hyponatremia evaluating combination products, one or more components of which may be approved in other indications, reflecting the concept that Functional dyspepsia Diabetic complications targeting multiple metabolic pathways will be required for effective Type 2 diabetes; obesity weight loss.

Type 2 diabetes; type 1 diabetes

Source: TrialTrove; accessed September 17th, 2008

Figure 4: Metabolic trials initiated in the past 12 months by company (top 20; Phase II-III)

For diseases covered in metabolic/endocrinology in TrialTrove, 104 sponsors have initiated 265 Phase II, Phase II/III or Phase III clinical 20 trials between September 2007 and September 2008. Among the top 20 sponsors, Roche leads the list with 9% of trials, most of which stem from its Phase III programme for its recently-approved anaemia drug Mircera. Of note, Roche has no other drugs in Phase II Phase III metabolic trials initiating during this time span, and its late-stage pipeline in the metabolic area originates from Ipsen, in a 15 co-development of the GLP-1 agonist taspoglutide that recently Phase II/III entered Phase III. Targeting the incretin pathway as therapy for type 2 diabetes is a prevalent approach, and nine of the top 10 companies shown in Figure 4 have either a DPP-VI inhibitor or a Phase II GLP-1 agonist in Phase III clinical development. The smaller and predominantly metabolic-focused Novo Nordisk is balancing 10 development of the pipeline GLP-1 agonist liraglutide in type 2 diabetes and obesity with continued development of insulin Trial starts Trial products. Co-development practices are common, and of the top 20 sponsors of trials initiating within this one-year period, five programmes represent co-development efforts. Four of these are more “traditional” partnerships between a large pharmaceutical 5 player and a smaller biotech or pharma company. Noteworthy among this group of five, however, is the alliance between the two giants AstraZeneca and Bristol-Myers Squibb for late-stage development of two novel type 2 diabetes therapies, the DPP-IV inhibitor saxagliptin and the SGLT-2 inhibitor dapagliflozin. Apart from this collaboration, BMS has initiated one trial in the metabolic 0 area during this timeframe and AstraZeneca appears as solo sponsor of a few trials in gastroesophageal reflux disease. Also Lilly Vivus Eisai Roche Takeda P zer noteworthy is the lack of recently-initiated, earlier stage metabolic Novartis MDRNA trials from Sanofi-Aventis; trials initiated by Sanofi-Aventis in the Lilly; Amylin Merck & Co Ipsen; Roche past year are all Phaase III, half of which are for the company’s Novo NordiskSano -Aventis Takeda; Amylin MitsubishiProgenics; Tanabe Wyeth GLP-1 agonist AVE0100. Trial initiations from many of the larger Johnson & Johnson Boehringer Ingelheim pharmaceutical companies are weighted toward Phase III Orexigen Therapeutics programmes, while smaller companies such as Orexigen and MDRNA (formerly Nastech) weigh in on the Phase II side. Of the large pharmaceutical companies, Johnson & Johnson is the only firm with AstraZeneca; Bristol-Myers Squibb purely early-stage pipeline development during the examined timeframe.

Source: TrialTrove; accessed September 17th, 2008

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Figure 5: Autoimmune/inflammation trials initiated in the past 12 months by disease

50 By Dr Sylvia Marecki, Citeline’s autoimmune/inflammation director In the autoimmune/inflammation therapeutic area, a total of 311 Phase III industry-sponsored Phase II to Phase III trials were initiated 40 between September 1st, 2007 and August 31st, 2008. Of these, respiratory indications (asthma, COPD and allergic rhinitis) Phase II/III represent approximately 40%, with rheumatology (rheumatoid arthritis, osteoarthritis, psoriasis, other inflammatory arthritis, lupus and Sjogren’s syndrome) close behind. Combined, nearly 30 Phase II 75% of trials initiated during this timeframe involved these two areas. However, unlike the respiratory indications, trial activity in rheumatology is dominated by activity in rheumatoid arthritis, and to a lesser extent, psoriasis and osteoarthritis. New trial starts in the remaining indications lagged behind these high-activity Trial starts Trial 20 indications. For example, among the new trial starts in Crohn’s disease and ulcerative colitis, only Abbott and Novartis initiated trials in both indications; all other sponsors initiated single trials in one of these indications. Likewise, few companies initiated more than one trial in atopic dermatitis, cystic fibrosis or irritable bowel 10 syndrome. These observations contrast with the large number of trial starts per drug and per sponsor in respiratory and some rheumatology indications, suggesting that clinical trial activity will remain high in respiratory and high-profile rheumatology indications for the near term. This dearth of trial activity in these 0 lower profile autoimmune/inflammatory indications underscores the opportunity for companies seeking to enter this lucrative Lupus Asthma COPD Psoriasis market.

OsteoarthritisCystic brosis Allergic rhinitis Transplantation Crohn’s disease Ulcerative colitis Multiple diseasesAtopic dermatitis Sjögren’s syndrome Rheumatoid arthritis

Anti-ageing (dermatology)Irritable bowel syndrome Other inammatory arthritis

Source: TrialTrove; accessed September 16th, 2008

Figure 6: Autoimmune/inflammation trials initiated in the past 12 months by company (top 20; Phases II-III)

30 Novartis, independently and through partnerships, leads the pack Phase III in terms of new trial starts during this study period, the majority of which involve respiratory diseases (asthma, COPD and allergic 25 rhinitis). Among the remaining top five companies, development Phase II/III is concentrated in respiratory diseases and rheumatology. As a whole, the top five companies represent approximately 29% of all new trial starts in autoimmune/inflammatory diseases during this 20 Phase II timeframe; approximately 59% are accounted for by the top 20 sponsors. Trial starts were fairly balanced between Phase II and Phase III trials overall, but skewing in either direction hints at the status of ongoing development programmes. For example, 15 GlaxoSmithKline and Pfizer initiated mainly Phase II trials and both have several ongoing programmes in mid-stage

Trial starts Trial development, whereas Abbott initiated mainly Phase III trials targeting label expansions. Approximately 17% of all initiated 10 trials involve partnerships. Notable partnered programmes include the GlaxoSmithKline/Theravance Horizon programme (respiratory), the Novartis/Schering-Plough indacaterol programme (respiratory), the Roche/Genentech/Biogen-Idec 5 ocrelizumab programme (rheumatology), and the Serono/ ZymoGenetics atacicept programme (rheumatology) [data not shown]. This concentration of partnerships among the top 20 sponsors suggests that the collaboration strategy may play a 0 larger role in drug development in coming years.

P zer UCB Meda Abbott Roche Novartis Galderma Leo Pharma AstraZeneca Merck KGaA Merck & Co Sano -AventisCombinatoRx GlaxoSmithKline Schering-Plough Astellas Pharma Johnson & Johnson Laboratorios LETI Bristol-Myers Squibb Boehringer Ingelheim

Source: TrialTrove; accessed September 16th, 2008

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Figure 7: Infectious diseases trials initiated in the past 12 months by disease

100 By Karen Currie, Citeline’s infectious diseases director In the infectious disease therapeutic area, a total of 226 industry-sponsored Phase II to Phase III trials were initiated Phase III between September 1st, 2007 and August 31st, 2008. The 80 largest number of new trial starts occurred in vaccines. Reflective of the expanding global vaccines market, nearly 40% Phase II/III of all mid- to late-stage trial starts involved the evaluation of a vaccine (87 of 226 trials initiated). Approximately half of these involved Phase III trials. Leading the way was Wyeth, with its 60 Phase II extensive development programme for Prevnar 13, a pneumococcal vaccine which is being evaluated in all age cohorts and across a number of geographical regions. For Trial starts Trial Phase II trial starts GlaxoSmithKline was the leader, dominated 40 by its programmes in seasonal and pandemic influenza. New trial starts in virological diseases (HIV, HCV, HBV) outpaced those in the bacterial diseases, indicative of the well acknowledged challenge of identifying new targets to combat the epidemic of antibiotic resistant infections. 20

0

HIV HCV HBV HPV Sepsis Vaccines Otitis media Onychomycosis

Respiratory infections Bacterial skin infection Urinary tractMultiple infections viral infections Multiple bacterial infections

Source: TrialTrove; accessed September 16th, 2008.

Figure 8: Infectious diseases trials initiated in the past 12 months by company (top 20; Phases II-III)

During the 2007-08 period, the clear leader in infectious disease Phase III trial starts was GlaxoSmithKline, whose activities were 40 concentrated in vaccines for influenza, pneumococcal and meningococcal diseases. A notable exception was the start of 35 Phase II/III pivotal Phase III trials with eltrombopag for the treatment of HCV-induced thrombocytopenia. Positioned in second place is Sanofi, with its strong commitment to global vaccine 30 Phase II development and highly diversified portfolio of vaccines. All 21 trials initiated were with vaccines, 12 in Phase II and nine in 25 Phase III. A number of Sanofi’s tropical medicine vaccines are currently in Phase II, including vaccines for dengue fever, hepatitis A and Japanese encephalitis virus, among others. 20 Novartis began 17 new trials in this period, nine of which were

Trial starts Trial in Phase III, including two trials in infants evaluating Menveo 15 for the prevention of meningococcal meningitis. Novartis also launched two Phase II trials of its avian influenza vaccine acquired from Chiron. 10

5

0

Sano Wyeth Rib-X Roche Arpida Baxter Forest P zer Novartis Innocoll Intercell Merck & Co

GlaxoSmithKline Schering-Plough Protein Sciences Johnson & Johnson Bristol-Myers Squibb Boehringer Ingelheim

Vertex; Johnson & Johnson

Source: TrialTrove; accessed September 16th, 2008.

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Figure 9: CNS trials initiated in the past 12 months by disease 35

30 By Dr Christine Blazynski, vice-president operations at Citeline In the CNS therapeutic area, a total of 354 industry-sponsored 25 Phase III Phase II to Phase III trials were initiated between September 1st, 2007, and August 31st, 2008. Among these, the largest number of overall trial starts involved trials for pain symptoms 20 Phase II/III (neuropathic and nociceptive; 19%), followed closely by schizophrenia (17%), Alzheimer’s disease and depression. Of the 185 Phase II clinical trials started in the same 12-month 15 period, the largest number focusued on pain (neuropathic and

Trial starts Trial Phase II nociceptive), followed by schizophrenia. Among Phase III trial starts, epilepsy had the largest number, and a significant 10 number of these are likely to be registration trials. If trials focused on both neuropathic and nociceptive pain are combined, a total of 24 trials were initiated. Depression follows 5 closely. Epilepsy and bipolar disorder are notable in that nearly 80% of the industry-sponsored trials initiated in the last 12 months were Phase III trials; for depression, nearly 60% of the 0 starts were Phase III studies.

ADHD Autism Epilepsy AnxietyInsomnia Migraine Depression Schizophrenia ADHD; autism Bipolar disorder Pain (nociceptive) Multiple sclerosis Smoking cessation Pain (neuropathic)Alzheimer’s diseaseParkinson’s disease dependence Restless legs syndrome Insomnia; schizophrenia Stroke (neuroprotection) Multiple affective disorders Insomnia; bipolar disorder Amyotrophic lateral sclerosis

Alzheimer’s disease; schizophreniaSchizophrenia, smoking cessation Pain (neuropathic); pain (nociceptive)

Multiple sclerosis; amyotrophic lateral sclerosis

Source: TrialTrove; accessed September 16th, 2008

Figure 10: CNS trials initiated in the past 12 months by company (top 20; Phases II-III)

35

30 Phase III Among the companies with at least 10 trial starts in the past 12 months, Pfizer is the clear leader, with a total of 31 starts, of which 16 are Phase III. Nearly one-third (6) of Pfizer’s Phase III Phase II/III trials are for epilepsy, followed by four trials each for 25 neuropathic pain and anxiety. Pfizer continues to seek approval for and beyond the US. Four trials with Phase II Pfizer’s calcium channel opener, PD-0332334, were also 20 initiated in the past 12 months. GlaxoSmithKline follows Pfizer with 50% fewer trial starts; of these the highest activity is seen for Alzheimer’s disease and for bipolar disorder. Three of four trials in Alzheimer’s are investigating efficacy of an extended-

Trial starts Trial 15 release version of rosiglitazone, and for bipolar disorder, four trials involve lamotrigine in either specialised patient populations or are being run in Japan. Rounding out the top four companies are Johnson & Johnson, with four of 13 trials 10 for epilepsy, and UCB with all recently inititated trials focused on epilepsy.

5

0

Lilly Eisai P zer UCB Abbott WyethTakeda Anesiva Lundbeck Novartis Sepracor AstraZeneca Merck & Co Sano -Aventis Schering-Plough GlaxoSmithKline Takeda; Lundbeck Johnson & Johnson Boehringer Ingelheim Otsuka Pharmaceutical

Source: TrialTrove; accessed September 16th, 2008

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Figure 11: Cardiovascular trials initiated in the past 12 months by disease

60 By Gail Parziale, Citeline’s cardiovascular director In the cardiovascular therapeutic area, a total of 211 industry- Phase III sponsored Phase II to Phase III trials were initiated between 50 September 1st, 2007, and August 31st, 2008. Of these, hypertension, dyslipidemia and thrombotic disorders were the Phase II/III top three indications. In hypertension, 61% of the trials initiated were Phase III studies, with Novartis being the most 40 significant contributor, followed by Actelion, Takeda and Phase II Boehringer Ingelheim, all of which had three or more Phase III starts during the study period. In dyslipidemia, 53% of the trials 30 initiated were Phase III, with Sanofi-Aventis and Merck & Co each contributing at least four trials, and Abbott and the Isis

Trial starts Trial Pharmaceuticals/Genzyme collaboration each contributing three. In thrombotic disorders, 59% of the trials initiated were 20 Phase III programmes. Sanofi-Aventis accounted for 25% alone with eight trial starts, followed by Boehringer Ingelheim with four, and the Bristol-Myers Squibb/Pfizer collaboration 10 contributing three. As depicted in Figure 11, the majority of trial starts in the remaining cardiovascular diseases are more heavily weighted in Phase II.

0

Arrhythmia Dyslipidemia Hypertension

Multiple CV diseases Thrombotic disorders Congestive heart failure Coronary artery disease Haemostasis/haemophilia Peripheral arterial disease Acute coronary syndromes

Source: TrialTrove; accessed September 16th, 2008

Figure 12: Cardiovascular trials initiated in the past 12 months by company (top 20; Phases II-III)

15

Phase III Among the companies with at least 10 trials initiated in the 12 past 12 months, Sanofi-Aventis is the clear leader, with 15 Phase III starts. Almost 50% involve registrational studies of Phase II/III AVE5026 for thrombotic disorders and nearly 25% are registrational studies of AVE5530 for dyslipidemia. Novartis is in second place with 11 trials heavily concentrated in 9 Phase II hypertension. Most of the company’s Phase III trials are focused on label expansions for aliskiren, while earlier stage trials are focused on the new molecular entities LCZ696 and LCI699. Boehringer Ingelheim had 10 trial starts, most being evenly distributed between label expansions for dabigatran in

Trial starts Trial 6 thrombotic disorders and registrational studies of the telmisartan/amlodipine fixed-dose combination (FDC) for hypertension. Of the 10 GlaxoSmithKline trial starts, only one involved a pipeline drug – a Phase III study of the Coreg CR/ 3 lisinopril FDC for hypertension. The remaining GSK trials involved various marketed drugs scattered across various cardiovascular diseases. It is noteworthy that two of the top 20 companies by trial starts involve collaborations. Bristol- Myers Squibb/Pfizer had three Phase III starts involving 0 apixaban in thrombotic disorders and Isis Pharmaceuticals/ Genzyme had the same count for mipomersen in Eisai Bayer P zer Takeda Abbott Roche Wyeth Servier dyslipidemia. Novartis Actelion Merck & CoAstraZeneca Sano -Aventis Daiichi Sankyo Schering-Plough GlaxoSmithKline United Therapeutics Boehringer Ingelheim

Aegerion PharmaceuticalsAnthera Pharmaceuticals Bristol-Myers Squibb; P zer Isis Pharmaceuticals; Genzyme

Source: TrialTrove; accessed September 16th, 2008

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Cognition mission Graduate work conducted three decades ago led to the formation of niche specialty CRO Cognitive Drug Research and through organic growth the company is expanding its global reach, US-based vice-president Steve Satek explains to Caroline Richards

automated a wide range of standard cognitive How is Cognitive Drug Research STEVE SATEK Q. assessments that are well known to the industry, different from other CROs? but initially developed outside of CDR. In total, CDR offers over 50 computer-based cognitive Cognitive Drug Research (CDR) is a global assessments. Unlike many paper-based assessments specialty niche CRO that provides a full-service and some competitor systems, CDR’s battery was offering of computer-based cognitive testing designed to be employed specifically in clinical trials. systems. The company assists clients to develop The system is structured to precisely identify any new study designs and task selection, trains site staff, changes in various aspects of cognitive function that collects study data in real-time, manages study data, occur over time (hours, days, months or years) as a provides statistical analyses and produces final result of drugs or other study interventions. Tasks reports. A snapshot of the company is given in are very simple for subjects or patients to Box 1. complete. Children as young as six can be tested Over the past three years, CDR has invested and there is no upper age limit. Further, the tests heavily in further improving the programmes and can be used in a wide variety of patient databases that make it a market leader in cognitive populations, as shown in Table 1. assessment. It has also opened two offices in the US and Australia, complementing its European presence in the UK. CDR aims to maintain its pre- Q. Is the system compliant with regulatory eminence as the world’s leading supplier of requirements? automated cognitive tests to the pharmaceutical, biotech and food product/nutraceutical industries. The CDR system is GCP compliant and compliant The CDR System is a standard, proprietary with the US FDA 21 CFR part 11 requirements. series (or battery) of nine computer-based tasks CDR has been successfully audited over 35 times developed in the mid-1970s as part of the by biotech and pharmaceutical companies, as well graduate work conducted by the company’s CEO as UK regulator the MHRA. Professor Keith Wesnes. Over the past 30+ years, the tasks have been extensively-validated and used in the vast majority of the company’s 1,000+ Q. What types of cognitive processes does studies. the system test? In addition to the core proprietary battery, CDR has developed and validated new supplementary The CDR System measures the key cognitive tasks to meet client needs and has also computer- domains that are crucial for the conduct of the

Table 1: Therapy areas addressed by the CDR system Indication Patient groups dementias age-associated memory impairment (AAMI); age-related cognitive decline (ARCD); Alzheimer’s disease; dementia with Lewy bodies; frontal lobe dementia; Huntington’s dementia; mild cognitive impairment (MCI); Parkinson’s disease dementia; vascular dementia psychiatry/neurology ADHD; chronic fatigue syndrome; depression; epilepsy; bromyalgia; head trauma; Huntington’s chorea; insomnia; narcolepsy; neurasthenia; multiple sclerosis; Parkinson’s disease; restless leg syndrome; schizophrenia; sleep apnoea; sleep disorders; shift workers cardiovascular carotid endarterectomy; congestive heart failure; coronary stroke (+/– hemiparalysis); varicose veins artery bypass graft (CABG); hypertension other AIDS/HIV; cancer; diabetes; hepatic encephalopathy; hepatitis C; hyponatremia; kidney dialysis; kidney transplant; liver transplant; menopause; nutrition; obesity; orthopaedic surgery; post-operative recovery; urge incontinence; type 1 Gaucher disease

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activities of daily living. These include attention, submissions; the number of CDR speaking vigilance, information processing, short- and long- engagements across the globe; and, most importantly, Box 1: CDR fast facts term memory, executive function, motor function the unique aspects of the company’s proprietary • CDR is highly experienced, having conducted and postural stability. database (which puts new study compounds into more research projects using the CDR System The key cognitive domains are frequently true clinically relevant terms) we feel quite strongly than have been conducted with any other assessed by the following CDR composite scores: that CDR is far ahead of its competitors. Our focus available computerised battery – over 1,000 Power of Attention (acute attention); Continuity of is on continuously improving our systems and since the company’s foundation in 1986. Attention (long-term attention); Quality of Episodic delivery of a quality product. • Specifically in the area of cognitive enhancers Secondary Memory (long-term memory); Quality for Alzheimer’s disease or related conditions, of Working Memory (short-term memory); and CDR has completed over 188 programmes, Can you explain how CDR expanded into Speed of Memory. Q. resulting in well over 100 publications. The the US? company has also completed 72 trials for compounds in schizophrenia and 65 in the Q. What types of companies does CDR CDR was founded in 1986 in a UK office just west area of sleep disorders. partner with? of London and has been conducting trials across • The CDR System has proven sensitivity to the globe since then. In 2006 the decision was changes in cognition to millisecond accuracy. We have worked with the top 17 global made to set up a permanent office in the US to The system was designed to assess both pharmaceutical companies and we maintain handle all research activities for the company’s improvements and impairments in cognitive preferred vendor agreements with many of them – North and South American trials, in addition to function in the clinical trial setting, and the company has established itself as a world but the relationships need to be kept confidential. some Asian studies. The US office began with a leader in both cases. The high sensitivity can There are also a number of small to mid-sized single staff member in 2006 but will have 17 full- reduce the number of subjects/patients pharma and biotech companies that have set up time employees by the end of 2008. required in trials as well as study duration – preferred vendor relationships. And we have a non- The US workforce includes a key management both key benefits for clients. exclusive partnership with a handful of clinics team (office manager, operations manager, data • CDR has a long history; the research that led across the globe, allowing CDR to recognise manager), operations support (project associates, to the company’s formation began in 1973, operational efficiency for things such as training, project assistants), data support (data coordinator, and ever since then CDR has sought to be shipping and study oversight. data assistant), IT (IT assistant, IT programmer), QA innovative and “ahead of the curve” in its field. manager, two full-time business development • The company is global with offices in the UK, directors, and myself in the role of vice-president/ How do clients use the data that CDR the US and Australia, allowing full 24-hour Q. director to oversee it all. As a testament to a truly coverage every business day. collects from trial subjects? engaged team committed to providing a quality • The CDR System is currently validated in 60 service to its clients, the US office has not Clients use CDR data in various ways, often as a languages. encountered any employee turnover since its safety endpoint, for example in alcohol interaction • The company’s technology captures data that incorporation in July 2006. trials and to support product labelling. are clinically relevant. CDR can interpret results In other work, clients use CDR data as an in a meaningful way for regulatory authorities, clinicians, sponsors and patients alike. indication of early efficacy, for example to assess Q. What have been the company’s recent cognitive enhancement in healthy subject (Phase I) highlights? • CDR has the world’s largest database of trials. This research is often followed up by later normative cognitive data. • The validity, reliability, clinical utility, sensitivity phase studies in target patient populations – or in Over the past 18 months, CDR has conducted a and everyday relevance of the CDR System the case of smaller companies, they will often seek massive rewrite of its testing system. The partnerships with big pharma. have been documented in over 150 peer- programme is currently going through final reviewed publications. CDR data have been In Phase II and III, CDR data are used to validation testing and will be soon available for use presented in leading journals including the determine the effectiveness of products, and also in clinical trials. This was a necessary technical New England Journal of Medicine, Journal of the to monitor the outcome of treatment in a variety upgrade that allowed the company to incorporate American Medical Association and The Lancet. of indications on cognitive function. Some clients exciting new features into the CDR system making • The CDR System has been correlated with use the data in their advertising, such as with it better than ever. industry-accepted clinical measures, such as breakfast cereal producers. the ADAS-cog, MMSE, Activities of Daily Living, Global Impression of Change and Caregiver Where will the company be in five years’ Q. What benefits can CDR offer to Q. Indices. time? companies choosing to use its system? • Stimuli are never presented to a subject/ patient more than once per trial, hence The core CDR business is expected to remain the minimising learning effects. There are over 70 This often sounds like a cliché, but CDR can be a same: focusing on cognitive testing in the clinical parallel (alternate) forms of the CDR test truly flexible partner. As a small private company, trial setting (Phases I-IV). The market will expand so battery. CDR can quickly bend and flex to meet the needs we expect to see not only a greater volume of • Tests are simple and effective, and backed by of its clients. The knowledge of cognitive science work, but also larger single study programmes. We rigorous statistical measures. held in-house is second to none and can be expect our collaborative (academic) programme to invaluable for any development programme. • CDR supports a wide range of academic expand – particularly in Australia and the US. We research programmes, advancing cognitive see ourselves working closely with the FDA to science and enabling CDR to collect data Q. Who are CDR’s competitors? develop the best set of clinical test batteries for the invaluable to its clients. study of dementia and related disorders. Overall, • CDR offers scientific support and protocol Looking at the total number of trials conducted by we see CDR maintaining and consolidating its review process: advising clients on tests, time- CDR across the globe (1,000+ in 60 languages); the leading position in the area of cognitive testing points, trial design, expected effect sizes and number of ongoing trials; the vast numbers of through innovation, quality and unique business interpretation of results. different types of patient populations studied; the venture. • A team of over 70 motivated and dedicated unsurpassed number of publications (115+ research professionals ensures that CDR gives Caroline Richards is a reporter for Scrip. specifically in cognitive enhancement) and abstract unsurpassed quality and service.

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Will China live up to its innovative potential? In parallel with projections for the emergence of the country as a top five market for the global R&D-based industry and large investments by big pharma, attention is turning to whether China may also become a powerhouse for pharma research. Ian Haydock takes a look at its prospects

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nnovation is a word which has not been in China that is the main attraction. By 2010, cardiovascular disorders, and to launch associated with China’s pharmaceutical for example, GlaxoSmithKline expects to several of these outside China. The first Iindustry. Some observers have likened employ more than 1,000 people at its new round of 120 or so selected projects will its present state to that in Japan in the neuroscience R&D centre in Shanghai. receive support valued at Yuan1.5 billion. 1960s and 70s. Common generics and bulk “China’s growing talent pool of scientific A wide variety of infrastructure and other antibiotics dominate manufacturing output, expertise is leading to the rapid support is also available to both foreign and while R&D spending at the typical pharma development of excellence in life sciences in domestic investors, with biotech/high tech enterprise accounts for less than 2% of general and neuroscience in particular,” the parks and clusters near major cities typically revenues. company said upon unveiling the plan. providing tax breaks and tax deductions for But while it took Japan around 20 years to Executives also note that investments on R&D expenses for innovative technologies. develop its first innovative global products, the ground are indispensable to establishing will the breakneck pace of economic links with China’s huge network of state IP and VC development in China mean that this research institutes, where the quality of What are some of the other factors that timeframe could be halved or even science is seen as high. Novartis, for example, might spur innovation within China’s industry? quartered? The portents are positive but sees the value of its Shanghai facility for Stronger IP protection, access to business change is not going to happen overnight. research into virus-induced cancers as going development capital and shifting disease As the argument goes, as economies and beyond the scientific. “We view it as a patterns are all set to play a role. per capita incomes grow, there will be more wonderful tool for interactions with local There is little doubt that China’s IP regime to spend on healthcare, which in turn will government, universities and other groups, has been steadily improving since the country create demand for novel, effective drugs and and very important for building up long-term joined the World Trade Organization in 2001, drive the development of the industry. relationships,” the Swiss company’s head of and the Chinese government is now pushing Indeed, China has already carved out an corporate research, Dr Paul Herrling, domestic companies to use the patent important place for itself in the R&D sector, commented to Scrip. system to develop their own IP portfolios. albeit as a provider of cost-competitive “The government is already providing a lot of contract research services to the financial support on the IP side, although international industry, with a focus on The latent strategic value of obviously this is only available to domestic screening, medicinal chemistry and biology. China’s vast pool of talent firms,” Dr James Zhu, a partner at the US law firm Perkins Coie told Scrip. Companies such as Wuxi PharmaTech, seems to have been recognised recently renamed Wuxi AppTec, which For example, the state will provide financial floated in a highly successful US IPO in 2007, by the country’s top leaders support to domestic firms filing Chinese or have struck alliances with major firms international IP applications, with the amount including Merck & Co and AstraZeneca, and dependent on the company and the nature of there are numerous drug discovery tie-ups There is no arguing with the numbers. the protection being sought, he said. between big pharma and Chinese research Around five million people graduate from Meanwhile, the third major amendment to institutes. A recent survey of Asia by university every year in China, with many China’s patent law should be approved by the PricewaterhouseCoopers identified China as going on to doctorates and further end of 2008 and will introduce a new the leading location for pharma outsourcing education. On top of this, the number of requirement for absolute novelty. Together in the region, driven by a favourable mix of self-described “sea turtles” migrating back with an IP blueprint released earlier in 2008, costs, risks, expertise and market growth home after gaining valuable qualifications and “these really set the stage for a shift to prospects. experience abroad (often in the US) is rising innovation by aiming to nurture a culture of IP A growing number of foreign firms are all the time. Wuxi is one example of a highly creation and protection,” Dr Zhu observed. now also choosing to develop in-house R&D successful firm set up by such returnees. Besides Wuxi, a number of Chinese capability on the ground in China through Critically, the latent strategic value of this bioventures have already listed on western multi-million dollar bricks and mortar vast pool of talent seems to have been bourses to gain access to the new sources of investments. Roche, Lilly, Pfizer, recognised by China’s top leaders. Addressing capital essential to fund their expansion GlaxoSmithKline, AstraZeneca and Novartis the People’s Congress in 2007, President Hu plans. This is likely to continue, but experts are just some of those laying down serious Jintao highlighted the need for the country point as well to the growing availability of money. The latter two firms are planning to to shift to an economy based more on venture capital within China, including from pump in up to $100 million apiece, with innovation to secure its future growth and foreign investors. oncology as a focus. place on the world stage. Apparently reassured by the money being This desire to tap into local research Faced with continuing state R&D budget ploughed in by big pharma, several western capabilities was not something that was seen constraints at home, European and Japanese equity funds have already made sizeable in the early stages of multinationals’ push companies might well be envious of the investments in Chinese ventures. Among into the Japanese market, where the focus government support already being provided them is the US group TPG, which spent was on joint ventures for marketing to reach this goal. China has so far not shied around $30 million for a minority stake in purposes rather than basic research. away from backing up its grand the contract research services firm Admittedly the pharma environment was proclamations with cold cash from its ShangPharma. Whether the global credit considerably different back then, but booming economy. For example, a crunch will restrict such sources of capital obviously China has something that the Yuan6.6 billion ($971 million) fund under the should become clearer over the next few industry wants. government’s “11.5” plan, which runs for five months, although pharma is expected to While budget and political considerations years to 2011, has been set up specifically to weather the storm better than many sectors. have certainly played their part in these support innovative drugs R&D. More than $1 billion in venture capital and investments, rising labour costs are leading The overall aim of the programme is to private equity funding is already available in more and more firms to proclaim that it is develop 30 innovative drugs for major the China life sciences field, according to rather the availability and quality of expertise diseases, such as cancer, diabetes and Dr Marietta Wu, general manager for greater

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GeneTech made headlines in 2004 when it became the first company worldwide to commercialise a gene therapy. The product, Gendicine, is a p53 gene-based therapy for head and neck squamous cell carcinoma based on a recombinant adenoviral vector. The programme was a beneficiary of the 863 scheme, although observers outside China questioned the clinical development and regulatory process for the therapy. Other notable examples include the Group, which has commercialised a patent-protected drug Endu (recombinant human endostatin) for non-small cell lung cancer, and Shanghai’s Sunway Biotech, which is developing genetically engineered oncolytic adenoviruses for head and neck (including nasopharyngeal) cancer and other malignancies. China at the US life science investment bank have taken,” she said. Shanghai-based So what of the future? Hutchison’s Dr Du Burrill & Co. Addressing a Japan biotech Hutchison is developing a series of products is of the view that “the government learns meeting in October, she also highlighted in markets outside China, including through quickly, has good technical expertise and is moves by some pharma multinationals to set alliances with Lilly and Merck Serono. ready to support all phases of development”. up China-specific venture funds to invest in Is China going to produce a Pfizer or a Dr Zhao was similarly positive, saying: “I am and gain access to emerging technology and Novartis, a Lipitor or a Glivec? There are still pretty confident China will propel the products. very few companies with novel early clinical industry into one with more innovative Dr Wu told Scrip that government support stage products and there is a long way to go. products within the next decade, if not such as the 11.5 plan and IP changes would But many of the factors are in place, and the sooner.” also be key to developing China’s research far-reaching government support schemes According to an informal prediction by potential, although she noted that most firms have already helped several small enterprises members of the BayHelix Group, an remained at an early stage. to develop some innovative products. international network of Chinese life science The other shift that might encourage the business leaders, there could be at least 300 development of novel therapeutics is that in R&D-based firms in China by 2015, when China’s disease patterns. With increasing Is China going to produce a $400 million a year in venture capital could affluence, these are already moving away Pfi zer or a Novartis, a Lipitor or be going into the sector and three or four innovative drugs and 10-20 biosimilars might from infections to lifestyle disorders, such as a Glivec? diabetes, obesity and cardiovascular have reached the market. conditions, which are responsible for driving Obviously the Chinese government cannot much of the innovation in the west. Some Vaccines is an area where there has been continue to subsidise the industry indefinitely estimates predict Asia’s diabetic population an early emergence of expertise, helped by and will be looking for it to stand on its own will surge to 185 million people by 2030, the relative ease of developing such products two feet in due course. Such bullish creating a massive doorstep market. compared with conventional chemical drugs projections suggest that venture capital could Cancer types with a high incidence in Asia, and biologics. “China is already the biggest play an increasingly important role, with such as liver cancer (from high rates of user of vaccines worldwide but urgently product and licensing revenues helping to hepatitis infections) and nasopharyngeal needs to upgrade its production technology sustain development in the longer term. cancer, could provide other therapeutic and innovative capability, particularly for Innovation is already beginning to occur in opportunities for newly innovative firms. diseases such as HIV/AIDS, and encephalitis,” China’s homegrown electronics and Other factors include China’s crackdown observed Dr Linda Zhao, president and CEO automobile sectors, where international on drug regulatory standards in the wake of of the US-based China consultancy Draco acquisitions have also played their part in corruption scandals over the past few years. Healthcare. providing access to new technology, products The move to a more science-based The Chinese government had made and markets. regulatory process closer to international significant investments in vaccine research Given the current state of the industry and norms may help raise the capabilities of and production via various science and all the challenges of pharma R&D, it is those companies able and willing to comply. technology and disease-related funds, undoubtedly going to take time for China to This in turn may reassure potential providers Dr Zhao noted, with Yuan200 million set develop its innovative capabilities. But given of venture capital and facilitate the aside for vaccine R&D under the national the mix of positive factors and the overall development of products outside China. “863” high-tech fund, for example. pace of change in the country, things could Some believe this last factor will be crucial Among the success stories in the field is move more quickly than many expect. to determining the innovative future of Sinovac Biotech, which has developed an China’s pharma industry. Dr Samantha Du, H5N1 bird flu vaccine with government CEO of Hutchison MediPharma, told Scrip support and is working on others for various Ian Haydock is Scrip’s Asia that much of the research going on in China infections including severe acute respiratory editor. was still geared towards domestic market syndrome. needs. “The sector needs to look China’s research in the biotech area is also internationally, which is the approach we gaining attention. Shenzhen SiBiono

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Latin America: ripe for clinical research? As clinical trial sponsors increasingly shift their radars towards the emerging economies of Latin America, Francesca Bruce garners local knowledge from key industry figures in the region, uncovering some countries’ initiatives aimed at bringing their regulatory processes in line with traditional markets in the west

n recent years, clinical research activity has FDA audit results and they conduct a large higher enrolment rates (see Table 2). Patient seen a huge shift towards the emerging number of trials each year – so they clearly retention is also very good in Latin America, Imarkets of Asia-Pacifi c, Central and Eastern can be considered the region’s “emerged” which is vital for the sustainability of trials. This Europe and Latin America. In 2007, 42% of markets. is largely down to good patient/investigator patients taking part in clinical trials worldwide Meanwhile, the region’s up and coming relations, she adds. were from emerging economies, more than markets – in effect, its very own “emerging” double the fi gure in 2002, estimates Dr Dennis economies – include Chile, Colombia and the cost advantage Hurley, vice-president of Kendle’s operations Peru. “They are attracting more and more Emerging regions, Latin America included, offer in Latin America. And approximately 10% of FDA inspections and the results are good. a cost advantage compared with traditional these patients were from Latin America, he They are therefore gaining recognition,” says markets, a key consideration given the rising says. Dr Hurley. costs of pharmaceutical R&D. Developing a new Graciela Racaro, Parexel’s senior director of drug all the way to market now takes 10-15 clinical operations in Latin America adds: “Five emerging regions’ pros years and more than $1.2 billion of investment, years ago sponsors came to Latin America As in other emerging regions, the quality of according to the Tufts Center for the Study of mainly for rescue studies [when sponsors data generated throughout Latin America is Drug Development. Conducting a trial in Latin include an emerging region to meet good and it competes well with developed America costs about 70-80% of an equivalent enrolment targets on time]. Now the region is markets such as the US. study in the US or Western Europe, where involved in planning from the very beginning.” Since 2006, 5.4% of US-based clinical trials experience and expertise make clinical research Approximately 1,500 trial sites are set up in inspected by the country’s FDA have received more expensive. Added to this, “Latin America’s Latin America each year, based on the number notifications of official action indicated. “This pharmaceutical market is growing well, meaning of US FDA 1572s filed (forms filed by investigators if the product undergoing trial is Table 2: Variation in global patient recruitment rates to be marketed in the US), says Dr Hurley. Region Average number of patients enrolled per site “No one wants to go without Mexico, Brazil or Argentina because they have the strong Asia-Paci c 5.78 researchers, key opinion leaders and they are bigger markets,” he says. South and Central America 4.56 These three countries are the most Central and Eastern Europe 6.27 developed clinical trial markets in the region, in terms of the number of active, completed Western Europe 3.08 or recruiting studies listed on the US National US 1.92 Institutes of Health’s Clinicaltrials.gov database (see Table 1). Mexico, Brazil and Argentina Source: Lehman Brothers November 2007, as published in Parexel’s Bio’Pharmaceutical R&D Statistical Sourcebook 2008/2009 have been active on the global clinical research map for 15 years, they have excellent means that around one in every 20 sites that there is strong sales potential for the inspected in the US is considered by the FDA product after it is approved”, argues Ms Racaro. Table 1: Clinicaltrials.gov-listed inspector as having serious problems,” Retail pharmacy sales in Argentina grew by 20%, studies in Latin America comments Dr Hurley. For trials conducted considerably outstripping growth in Europe outside the US, this figure was just one in 187. (+3%) and the US (+1%). Argentina, Brazil and Brazil 1,039 Moreover, of the 90 inspections carried out Mexico together generate around 80% of Latin outside the US in 2007, 12 were conducted in America’s sales. Retail pharmacy sales in these Mexico 845 Latin America and all received positive results. three countries totalled $24 billion in the 12 Argentina 738 This disparity perhaps arises because most months to July 2008 (see Table 3). sponsors venturing into “non-traditional” Latin America also offers another unique Chile 377 regions put a lot of emphasis on monitoring advantage: the common language of Spanish Peru 366 and education. Investigators in emerging (except, of course, in Brazil where Portuguese is regions are also eager to learn and to be spoken). This factor can save time, money and Colombia 239 compliant. “They don’t take it for granted that HR requirements. “A CRA [clinical research Costa Rica 92 they have an opportunity to take part in a associate] coming from Argentina can work in clinical trial,” says Dr Hurley. Uruguay or Colombia and use the same Guatemala 88 Ms Racaro of Parexel notes that, like the language, but in Western Europe a CRA going Asia-Pacific region and Central and Eastern from France to Spain would need to speak two Panama 65 Europe, Latin America promises a large languages”. The common language also reduces Source: Clinicaltrials.gov, October 2008 number of treatment naive patients as well as translation costs, says Ms Racaro.

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Start-up can be very lengthy (see Table 4) and Box 1: Recent regulatory changes in the process generally involves three phases: Table 4: Total start-up times in Latin America regulatory review, contracts being signed by Latin America sponsors and investigators, and the logistics of Argentina Country Start-up time (months) In November 2007 Argentina published a getting everything into the country, says resolution which brought GCP guidelines in line Dr Hurley. Brazil provides an interesting case Argentina 6 with the Document of the Americas. study on this point. Despite the country’s size Brazil and potential to enrol large numbers of patients, Brazil 9 Brazil has not received its fair share of trials, he National Ethics Committee review and Competent Chile 5 Authority reviews for approval now take place in adds. This is largely because it is still the slowest parallel. This change could potentially reduce country in the region in start-up terms, despite Colombia 4 approval times from 10 months to 8.5 months. shaving six weeks off the process through recent Mexico 3-4 Mexico regulatory changes (see Box 1). “No one wants Customs authorities have removed the to wait that long to get started, unless the trial Peru 5.5 requirement for import licences for drugs or for has a long enrolment time,” Dr Hurley Source: Dr Dennis Hurley, vice-president of Kendle’s export licences on blood serum samples. This has comments. Latin American operations reduced the start-up timeline from 3.5-4.5 months However, as Latin America’s various regulators to 3-4 months, bringing Mexico’s figures in line begin to address this issue (see Box 1), another with the site’s informed consent process or with EU countries. bottleneck is already emerging – the issue of Chile GCP training at a local level. This can happen in getting sponsor/site contracts signed. Often, Brazil, Mexico, the US, Germany or Botswana,” Regulations on GCP compliance in line with the contracts must be drafted in Spanish (or Document of the Americas are being drafted. he says. Portuguese in Brazil) to be valid. Therefore, they Furthermore, regulators are taking measures Colombia must be translated back and forth between that A resolution making adherence to GCP compulsory to safeguard patients. Brazil, for example, language and English, for the benefit of sites and recently issued new guidelines on access to was published in June 2008. All bodies involved in the sponsors’ lawyers respectively. This is a slow clinical trials were given six months to define a after-care and the use of placebo in clinical trials. process, says Dr Hurley. “One word can change plan for development and implementation and Both elements comply with the declaration of compliance with GCP. They have two years to a lot depending on the translator you use, and Helsinki, the most widely accepted ethical obtain GCP certification. the document can be quite different by the end guidance for biomedical clinical research, says Peru of the process,” he says. Dr Kesselring. Meanwhile, the Buenos Aires Regulations were updated in 2007 to achieve full Nevertheless, the Latin American region is Declaration on Ethics and Clinical trials was compliance with ICH guidelines. Start-up times undoubtedly moving forward. One major step recently approved by the First Latin American have been reduced by 1.5 months. was the creation of the ‘Document of the Workshop on Ethics and Clinical Trials (which Americas’, which sets out the criteria for took place in that city in May 2008). The groups The region is also particularly attractive to harmonised GCP in the region, says Ms Racaro. behind the initiative hope it will become a North American-based sponsors because of It took representatives from Argentina, Brazil, reference for guidance on ethics in the region. its proximity. This means that sites can be Chile, Costa Rica, Mexico, the US and Venezuela However, it is yet to be accepted by the global easily visited; this is particularly important with 10 years to draft before the document could be pharma industry and national regulatory proof-of-concept trials in which companies approved by the Pan American Health agencies. need to access patients and data and to talk Organization in 2005. It now serves as a One additional challenge for Latin America to investigators, says Dr Hurley. guideline for investigators and agencies and is will be to increase its pool of highly trained staff, gradually being implemented on a country-by- including investigators, says Ms Racaro. regulatory progress country basis. Argentina and Colombia were Encouragingly, some progress has already been Dr Hurley believes Latin America’s clinical research among the first to incorporate it. made on this front. Associations including the “growth spurt” is a relatively new phenomenon, As in other emerging regions, concerns have Brazilian Society of Pharmaceutical Medicine and and one that has thrown up a number of also been raised over the ethical conduct of the Argentinean Society of Pharmaceutical challenges for its regulators. Much of the region’s clinical trials. Critics claim investigators may Medicine are addressing these training needs, legislation was drawn up in the 1990s and a recruit uninformed patients, who may be too says Dr Kesselring. CROs and pharma number of resolutions have since been drafted on easily enticed because of otherwise limited companies are also running training programmes, a country-by-country basis. “It soon became treatment options. However, such concerns are as are universities such as the Federal University obvious that some countries had so many layers exaggerated, says Dr Kesselring. Investigators all of Sao Paulo (UNIFESP) and the Sao Paulo and disconnecting processes in ethics and over the world are under pressure from pharma Santa Casa Medicine College. regulatory review processes. Reducing regulatory companies and CROs to recruit and the sites Sponsors will keep coming to emerging and start-up timelines has therefore become a that recruit the most patients earn the most regions, particularly as pharmaceutical companies priority,” says Dr Gustavo Kesselring, president of money, he says. “If uninformed patients are aim to increase the number of trials they the Brazilian Society of Pharmaceutical Medicine. included in a clinical trial, it is down to problems conduct outside of the US and Europe from 20-30% to 40-50% over the next few years, says Ms Racaro. “They will definitely come to Latin Table 3: Latin American retail pharmacy sales, 12 months to July 2008 America.” Country Retail sales ($ billion) % growth

Brazil 12.2 +10

Mexico 8.8 + 5 Francesca Bruce is a reporter for Scrip. Argentina 3.0 +20

Total 24 + 9 Source: IMS Health

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Ranbaxy buyout heats up Indian M&A

ntil two months before its sell-out “To many, Ranbaxy was a pioneering Dr VVLN Sastry, country head of Firstcall in June 2008, India’s largest company that could only go from strength to India Equity Advisors – who admits that the Upharmaceutical company, Ranbaxy strength and therefore should have been the Ranbaxy deal was much in advance of Laboratories, hardly showed any signs of last man standing rather than being the first anybody’s comprehension, and a trendsetter weakness, let alone its intention to exit. to capitulate in terms of a sell-out. We can – said that generics, though much publicised In fact, in its familiar, aggressive style of now expect some more exits over the next as the biggest opportunity, come with limited functioning, Ranbaxy was chasing the five years,” said Sanjiv Kaul, managing director marketing longevity overseas, thus restricting Chennai-based domestic fi rm, Orchid of India-focused investment firm the earnings cycle to a specific period. Chemicals & Pharmaceuticals, fl irting dangerously ChrysCapital, and an ex-Ranbaxian. “ANDA challenges are also becoming handy close to triggering a public offer for Orchid. Dilip G Shah, secretary general of the only in select cases, whereas expenditure on But on June 11th things changed Indian Pharmaceutical Alliance (IPA) – which their account is substantially increasing for dramatically and India’s somewhat frothy represents top domestic companies – and a companies,” explained Dr Sastry. M&A scene saw the wily predator turn prey. former director at Pfizer India, adds that the About a week or so after the transaction Ranbaxy’s founding family divested its deal puts pressure on Indian companies. with Daiichi Sankyo, Ranbaxy entered into an controlling stake to Japan’s Daiichi Sankyo, “There could be unsolicited bids as well as out-of-court settlement with Pfizer over the and the Japanese company said that it would increased temptation on the part of Indian company’s generic challenge against Pfizer’s further seek to acquire the majority of the firms,” Mr Shah said. lipid-lowering drug, Lipitor (atorvastatin). The voting capital of Ranbaxy at a price of Rs737 settlement, according to some industry ($17.14) per share, with the total transaction tough environment? estimates, could generate potential revenues value pegged between $3.4 billion and There are diverse views on what probably of $1.5 billion over a four-year term for $4.6 billion. Daiichi Sankyo now controls prompted Ranbaxy’s exit. Was it indicative of Ranbaxy, besides capping the company’s 63.92% of Ranbaxy’s share capital. the tough business environment that litigation costs across markets. Ranbaxy, Other medium-sized and innovative pharmaceutical companies operate in or was however, declined to confirm the figure on inbound/outbound deals marked the Indian it simply a smart business decision? potential revenues. The Indian company is pharmaceutical market in 2008, but none “It’s a tough business environment for estimated to have incurred litigation generated the kind of frenzy and interest as pharma CEOs globally. Intelligent and innovative expenses of about $25 million in 2007. Daiichi Sankyo’s acquisition of Ranbaxy. The collaborations across the world are a must to Some senior industry officials dispute the deal shocked many, raised a plethora of correct the situation which the pharmaceutical tough environment claim, however. They say questions and set the rumour mills grinding industry finds itself in,” said Tarun Shah of the pharmaceutical industry has always on the possibilities of similar sell-offs by Mehta Partners, the strategic business advisor operated in a challenging environment and other large Indian companies. to Daiichi Sankyo in its deal with Ranbaxy. things are not very different now. “We have

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Mid-2008, India’s wily predator, Ranbaxy Laboratories, turned prey in its deal with Japan’s Daiichi Sankyo. Anju Ghangurde gauges the temperature for more transactions on India’s deal street

always had to handle price interventions, Mr Shah of Mehta Partners said that the the globe, as pharma majors increasingly competition, regulatory vigilance, etc. It’s acquisition comes with “zero overlapping recognise the significance of pursuing a Ranbaxy that has been in a peculiar situation assets” adding that all assets are valuable for two-fold strategy of “dual revenue channels” with the FDA for the past two years or so,” both parties. “However, execution is the key from generic and patented products. said one official who declined to be in every design. The architecture and “This is a validation of the fact that identified. Ranbaxy is currently facing rationale is well thought out and sound and Glenmark had seen the change coming and increased regulatory vigilance across the we are confident that the implementation bifurcated its operations into two business world after the US FDA issued warning will be equally effective,” Mr Shah said. models – one that will pursue the pure letters for GMP deviations at the company’s Takashi Shoda, Daiichi Sankyo’s president generics business and the other focused on Indian plants in Paonta Sahib and Dewas. and CEO, had earlier said that the deal innovation/branded generics,” said Glenn The agency has since issued an import alert provides the opportunity to complement his Saldanha, managing director and CEO of for about 30 of Ranbaxy’s products citing company’s strong presence in innovation Glenmark. However, he admits that the GMP concerns. The company is also being with a “new, strong presence in the fast re-organisation was a “plucky” move and investigated for alleged fabrication of data growing business of non-proprietary that the company faces a path “strewn with for its generics to the FDA. pharmaceuticals”. It also gives Daiichi Sankyo challenges”. There is, however, no denying that it was access to low-cost R&D and manufacturing But with fewer NCEs and NBEs actually a cool deal for Malvinder Mohan Singh, in India and an opportunity to access making it to market, there could be more Ranbaxy’s CEO and part of the founding Ranbaxy’s expertise in drug delivery. firms that opt for the hybrid model family, who took home about Rs100 billion There is significant domestic support for straddling both discovery R&D and the ($2.4 billion) for divesting a 34.8% stake in the hybrid model; after all most Indian generics business. the company. Some of the money is companies were originally pure generic firms Mr Shah of the IPA explained said that expected to be used to finance growth and have for some years been focusing on since emerging markets are set to drive plans at Religare and Fortis, the group’s discovery research. Several leading Indian future growth, most innovator companies interests in the financial services and players have spun off discovery research are bound to look at these regions hospitals segments respectively. into separate entities, given the differences aggressively. “Generic companies will be in risk profile, timeframes to market and partnered or acquired by big pharma to odd couple resource requirements of this business maintain their toplines,” he said. Similar To many, Ranbaxy and the staid Tokyo-based strategy compared with the generics model. views were aired at the Generic innovator, Daiichi Sankyo, make an odd Glenmark Pharmaceuticals of India believes Pharmaceutical Association’s recent annual couple, but this hybrid combination clearly the acquisition by Daiichii Sankyo serves as policy meeting, where some experts said has its own advantages. “a cue” for a trend of consolidation across that big pharma companies were chasing

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generic drugmakers to access high-growth raw nerve expectations, several outbound deals markets, not their unbranded businesses. The Daiichi Sankyo-Ranbaxy deal also involving Indian companies seem to have Annual pharmaceutical sales in emerging touches a somewhat raw nerve – that of fallen victim to inadequate due diligence. markets are expected to exceed $400 billion right valuations and the right exit time – for Mr Shah of Mehta Partners is brutally frank by 2020, equivalent to current sales in the small and mid-sized family-owned business on this point. “A buyer needs to go beyond US, plus five major European markets, enterprises in India. accounts, legal and production due diligence. according to IMS. And Pfizer recently said “When a market leader sells out, it Understanding the business and government that it expects to garner an additional normally sets the other players thinking,” outlook in the country where the buyer is $3 billion in revenues by 2012, most of which said Jacob Mathew, co-founder of the Indian making an acquisition is very necessary”, he would come from the emerging markets. investment banking firm Mape Advisory explains. The hybrid model already seems to have Group. While firms like Mape do not expect Dr Reddy’s Laboratories, which acquired generated some interest. Novartis continues another sell-out on Ranbaxy’s scale right Germany’s Betapharm in 2006, has yet to to derive value from its generic arm Sandoz, away, there is increasing consensus that small derive maximum value from this deal, while Sanofi-Aventis has bid to acquire the family-owned pharmaceutical companies will grappling with pricing pressure and supply Czech generics company Zentiva. find the going tough. constraints in the German market. Sun Pharma, on the other hand, finds itself mega or niche? “As compliance gets stricter in the developed world, the cost of managing locked in litigation with the controlling 2008 saw several other Indian companies shareholders of Israel’s Taro Pharmaceutical engage in buyouts abroad. A recent study by compliance will make it difficult for small companies to grow and also remain Industries, after the latter decided to the financial advisory firm Grant Thornton unilaterally terminate the companies’ merger said that Indian pharma firms were involved competitive. In future, only a few large Indian companies would be able to compete deal in May. in 21 outbound deals between January and Mr Kaul is impressed with the “level of effectively in these markets,” said Mr Saldanha August 2008. conviction and self-belief” exhibited by of Glenmark. These include Biocon’s acquisition of companies like Dr Reddy’s and Sun Pharma, In April 2008, Fresenius Kabi acquired Germany’s AxiCorp, Jubilant Organosys’s which both showed great staying power 73.3% of the Indian oncology generics firm acquisition of Canada’s Draxis Health and when the going got tough. “A major lesson Dabur Pharma for Rs8,782 million Dr Reddy’s acquisition of part of learnt is that in addition to business due ($177.6 million), marking the exit of the Dowpharma’s small molecules business and diligence, one should also do environmental, Dabur group from the pharmaceutical the Italian generics firm Jet Generici. regulatory and people due diligences.” Also sector. Dabur Pharma was founded by the Glenmark acquired seven Actavis brands in important is contingency planning, should Burman family and had divested its domestic Poland, while Zydus Cadila bought Combix ‘Plan A’ not run its expected course, he non-oncology formulation business to the of Spain. Most of these niche deals were adds. local company Alembic in 2007. aimed at jump-starting business in the target Glenmark, meanwhile, stresses that it is Mr Shah of Mehta Partners notes that market and/or garnering access to marketing important to understand and illustrate the while the pharma industry is a safe/defensive front-ends or brands. benefits an acquisition brings to the table. investment, the Indian economy is growing at However, Mr Shah of Mehta Partners Questions such as whether the buyer would 9%. “Many businessmen may not prefer to believes that given the tough business have the “management bandwidth” to pull stay invested in a safe and slow sector. environment, it’s headline deals such as the off post-integration challenges and whether Sectors such as media, transport, education, Daiichi Sankyo-Ranbaxy transaction that will it would be possible to leverage the etc, are growing at 30-40% compound annual drive change. “Small restructuring and strengths of the acquired company to growth rate vs pharma growth of about 12%. interventions are not the solution. Those subsidiaries across the world are critical to who want to be in a different league will Smart money is flowing towards these any deal, the company notes. have to think and operate in a radically industries,” Mr Shah said, alluding to the fact changed way,” Mr Shah said. that investments in the pharmaceutical sector more in store? Glenmark, however, argues that much may not be the most rewarding after all. Most experts don’t expect much action on would depend on the company’s strategy. However, the global economic slowdown is deal street in India in the short-term future “Big ticket deals at right valuations are as now expected to dampen sentiment across and the recent chaos on Wall Street that saw important as niche ones, as big acquisitions sectors and some experts believe healthcare the fall of Lehman Brothers, Washington give you scale, products and distribution. The may be somewhat better insulated from Mutual and AIG is expected to dampen challenge in a big acquisition is in executing demand vagaries. sentiment further. post-acquisition strategy so that the But investment bankers claim that The public market is going to be under envisaged benefits accrue to the unrealistic valuation expectations are pressure, raising equity will be tough at high organisation in the estimated timeframe,” blocking many potential deals, despite the valuations, debt is going to be costly and said Mr Saldanha. timing being right. Valuations of Indian returns are going to be more circumspect, says But a few other active Indian participants pharmaceutical companies are said to be Mr Kaul. More pharmaceutical predators could on deal street claim they have never been more expensive than firms in Japan, the EU turn prey in such tight conditions. enamoured by size. “We have never chased and the US, the bankers contend. size, but only strategic fit,” said Lupin’s “Valuations in the public equity space managing director, Dr Kamal Sharma, have seen correction, but not [so] the justifying the string of niche deals struck by valuation perception in the private/unlisted his company in 2008. Lupin acquired the space, which still orbits at a crazy level,” said Anju Ghangurde is Scrip’s German sales and marketing company Mr Kaul of ChrysCapital. India correspondent. Hormosan Pharma, Generic Pharma of Australia and 60% of South Africa’s Pharma due diligence Dynamics, all within a timespan of about While some potential inbound M&A deals two months. may have been stalled by unrealistic

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Enter the ‘pharmerging’ markets The rapidly growing economies of China, Brazil, Mexico, South Korea, India, Turkey and Russia, with their increasingly well educated and affl uent middle classes, present attractive opportunities for global pharma, but what’s the best strategy for tapping into them? David Campbell explains

he year 2008 will be marked by to the potential of the pharmerging markets, DAVID CAMPBELL unprecedented changes in the global but in the year that ended September 2007, Tpharmaceutical market. For the fi rst the top 20 pharmaceutical companies time, the world’s seven key markets – the increased sales in these countries by about US, Japan, the UK, Germany, France, Spain 10.5%, a figure considerably above the total and Italy – will contribute less than 50% market growth. of the overall industry’s growth. In 2008, global pharmaceutical sales will grow 5-6%, China to reach more than $735 billion. While the With a population of 1.3 billion, more than US will remain the single largest market, the combined populations of the US and growth in the country is slowing. The US will Europe, China provides the most visible account for 33% of total gains in 2008, down opportunity in the growing pharmerging category. The Chinese pharma market has from 52% in 2002. more than tripled since 1997; by 2010 it is At the same time, growth will reach expected to double again, tying with the UK double digits in what IMS Health terms the for the position of the fifth largest market seven “pharmerging” markets: China, Brazil, for ethical and OTC drugs. In 2008, the Mexico, South Korea, India, Turkey and Chinese market will grow by 14-15% to Russia. These markets will grow at an $17-21billion. Traditional Chinese medicine is expected 12-13% (a total of $85-90 billion), now being balanced out by western accounting for about 24% of total global medicines. growth, and almost equalling that of the US. The Chinese government has taken a The pharmerging markets have several strong stance with regards to healthcare elements in common. Rising GDP in these policy, overseeing annual price cuts, enforced countries will increase access to better generic prescribing, and an anti-corruption medical care. Currently, the pharmerging campaign that targets promotional activity, markets rely primarily on generic drugs, but product approvals and manufacturing. as the socioeconomic and educational levels National health insurance will cover all in these countries continue to rise, the citizens by 2010. There is also a clear agenda growing middle classes are driving a market to grow the domestic pharmaceutical for more innovative and branded drugs. At industry, by working with western the same time, rising standards of living and pharmaceutical companies to establish drug increasing life spans will shift the focus away discovery and development centres. from infectious diseases towards Western companies have also expressed cardiovascular disease, diabetes and other willingness to license products in China to chronic illnesses. help ensure the success of domestic players. With populations of these countries Evidence shows that China is being numbering in the billions, this shift will have positioned as a centre of drug discovery. The a major worldwide impact on pharma. For country offers an attractive location for example, the World Health Organization R&D, with the costs of medical research and (WHO) predicts that by 2030 diabetes will testing typically 30-60% lower than in affect about 42.3 million people in China western countries. With education a primary and 79.4 million people in India, up from goal among Chinese people of all 20.7 million and 31.7 million respectively in socioeconomic levels, large numbers of 2000. scientists are becoming available to work in Protection of IP in the pharmerging drug development. However, the Chinese markets will improve with the ratification of infrastructure does not yet support the World Trade Organization’s amendment regulatory compliance, and questions about on TRIPS. And multinational corporations bureaucracy, quality of data and timeliness will be favoured because their marketing retard the progress of medical research. and sales skills are superior to those of local The drug distribution model in China is companies. In addition global companies also evolving. The Chinese government aims produce lifesaving, innovative drugs that may to reduce the current figure of not be available in developing countries. approximately 10,000 wholesalers and Until recently, little attention had been paid distributors to about 100. Hospitals charge a

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profit on drugs distributed, so physicians managing risks and challenges employed in the US or Europe return to tend to prescribe drugs that are financially Entering any new market, whether domestic their native countries demanding salaries favourable, but which may not be the best or international, involves inherent risks. Yet comparable with those paid in the west. choice for a particular patient. Physicians are only 64% of companies with headquarters in Setting appropriate drug prices poses a government employees who obtain and the pharmerging markets have documented major challenge in pharmerging markets. distribute products based on local risk management strategies that cover these Clearly, price must reflect the costs of requirements; they cannot be approached countries, and only 33% of firms in developed development and manufacturing, but drugs directly by pharmaceutical representatives. markets have such strategies. must also be affordable and acceptable according to the healthcare policies of local Risk management plans should consider India governments. Competing with local risk/benefit trade-offs based on short- and India is another country with a large companies must have a positive effect on the long-term revenue, investment required, population and a healthy GDP growth rate. local economy, balancing benefits for the capability and fit, technical risk and market Improvements in education and the growing company against benefits for the country. risk. Risks may also include abuse of IP rights, middle class will create increased purchasing Opportunities in the pharmerging markets contradictory regulatory issues, corruption power, leading to demand for innovative are not limited to drug sales, and companies and entrenched local competition for the drugs and medical treatments. Currently, the may benefit by reducing the costs of generic drug market. Additionally, Indian pharmaceutical market is under- manufacturing and providing additional pharmaceutical executives in developed penetrated and underserved. The supplies of product, rather than by increasing markets named infrastructure instability, government’s key policy priority of creating sales. Other options for western players political unrest, excessive regulatory wide access to healthcare will create include drug discovery and discovery requirements and the pool of inexperienced efficient infrastructures and increased servicing, including biology, chemistry, and workers as concerns. reimbursements that will help to foster screening services; local and global preclinical The varying infrastructures of the pharmaceutical growth and development. and clinical development; IT and pharmerging countries offer diverse The strategy of outsourcing support staff manufacturing services; drug ingredient opportunities for business development. For to India has been extremely successful for a sourcing; and local and regional medical example, South Korea is a highly developed number of western (non-pharma) support. country with a strong infrastructure. The companies, and the country is viewed as an Indian infrastructure supports the ideal venue for pharmaceutical outsourcing future of global marketing development of many small companies. It is as well. Indian companies have demonstrated As education and personal income in the rumoured that China has $2,500 billion to expertise in chemical engineering and cost- pharmerging markets improve, demand for invest in the pharmaceutical industry, but efficient manufacturing. For example, if the premium drugs and related services will disputes about IP rights are preventing indexed total manufacturing cost per unit in increase. Increasing presence and profits in disbursement of these funds and a typical European manufacturing plant is these markets will depend on partnerships unfortunately, this is having a negative effect 100, an Indian manufacturer, using 90% between western and local companies. Social on research. Indian raw materials, will be able to produce responsibility will require that healthcare the same product for an index total of 57. Political unrest is becoming less access be made available to people of any problematic as the benefits of maintaining In addition, Indian support for pharma’s age, health, wealth, status or location. Ensuring stability in today’s global marketplace become clinical research activities has increased ready availability of health services will more apparent. Marketing success requires an because of the wealth of local IT expertise, require cooperation with local and national understanding of the key local markets, but clinical trials have been limited because governments. cultural beliefs, and allowable practices to of the lack of medical expertise. Research Clinical research in the pharmerging ensure the integrity of a pharmaceutical physicians tend to have expertise only in markets should occur at local levels, product from the point of production to the selected therapeutic areas (such as employing experienced clinical research point of dispensing. oncology). workers who are familiar with both local and With strong government support for global processes and quality programmes. other markets reimbursement, South Korea has few Short-terms goals for success in the Smaller countries in IMS’s pharmerging problems with excess regulation; entire pharmerging markets should focus on markets classification offer advantages and departments are dedicated to processing preventing and treating communicable disadvantages similar to those of China and national reimbursement claims. This contrasts diseases in their vast populations. And the India. with the situation in China, where the long-term goals should focus on treating In Brazil, the recovering economy is manufacturer must apply to each local chronic diseases. Pharma may best achieve increasing the size of the country’s middle authority separately in order to obtain these objectives by exploring opportunities class and, correspondingly, decreasing the reimbursement. for growth through vertical integration of size of the lower-income population. Greater The pool of scientists and technicians in drug research and development, diagnostics, availability of disposable income is spurring pharmerging markets is growing, but growth clinics and pharmacies. renewed interest in healthcare spending on is more rapid in some countries than others. Ultimately, success or failure in pharmerging both self-care and prescribed drugs. South India has a wealth of talented, experienced markets will depend on the quality and Korea is a very strong reimbursement and well qualified workers, especially in IT, integrity of the data collected and accepted by key western regulatory authorities. market and traditionally its government has and strong capabilities in the production of supported major investments in healthcare. quality generic drugs. Likewise, South Korea is Russia has expanded clinical research strong in the area of generics. And the talent operations rapidly over the past few years, pool in China grows stronger every year. and this will continue with increased access But the salary burden is increasing, David Campbell is senior principal, portfolio to patients and improvements in research particularly in China and India, as local and product services at IMS Health. quality. workers who have spent some time

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Exit task in-sourcing, enter comprehensive outsourcing Marriage of convenience or long-term strategic partnership? Jonathan Hughes and Jessica Varni analyse the evolving pharma/CRO relationship, urging trial sponsors to increase ef ciency and better leverage external expertise through broader, longer-term, and more committed outsourcing arrangements

oday, 70% of clinical trials are managed in the case for change • Sponsors spend significant time, project whole or in part by CROs, and experts In contrast to outsourcing in other industries, to project, managing competitive bidding Texpect the $17.8 billion clinical outsourcing pharma companies have traditionally worked processes, and CROs spend reciprocal industry to grow by 15% per year for at least the with CROs in a manner that might better be time participating. All this time and effort next ve years.1-3 However, our experience, and called in-sourcing or what Andrew Bon eld, could be more productively spent publicly available research, indicate that the results former chief nancial of cer of Bristol-Myers between a sponsor and one or a few delivered through such extensive outsourcing have Squibb, has called “out-tasking”.7 Sponsors functional outsourcing partners been mixed. On average, sponsors bene t from a view each clinical trial as a stand-alone project, developing and implementing improved 30% reduction in cycle times as compared to trials break it into various activities, such as patient processes and procedures for more managed internally, which can lead to as much as recruitment and data management (tasks), efficiently and effectively conducting $150 million in additional revenue if and when a issue RFPs for those project tasks, and then clinical trials; drug is brought successfully to market.4 However, negotiate contracts with various suppliers. • Multiple hand-offs and transitions across for many, these gains in speed to market are offset Over the past 7-10 years, many pharma multiple suppliers over the course of a by increased costs.5 In fact, most pharmaceutical companies have attempted to form closer clinical trial introduces significant inefficiency and potential for error. sponsors view CROs as being comparatively “preferred” relationships with a smaller “Where you really lose the efficiency expensive,6 and according to a study by consulting number of CROs (often somewhere between gain is not so much on the transaction in rm Campbell Alliance, 50% of outsourced trials three and 10). However, despite the existence and of itself, but on the integration of go over budget.1 There are several reasons for of master services agreements, sponsors the steps in between,” says Genzyme’s this, as outlined in Box 1. Given that most clinical continue to bid out individual trials separately; CROs are not guaranteed any speci c chief financial officer Mike Wyzga.7 Fewer trials do not result in an approved medicine that amount of work; and sponsors have not shed CROs mean fewer hand-offs, which generates revenue, paying signi cantly higher costs assets or signi cantly reduced their internal means lower potential for error, (10-30% higher than using internal resources) for cost structures. increased efficiency, lower cost and faster faster cycle times is a dubious proposition. The lack of meaningful reciprocal cycle times; and towards strategic outsourcing commitments between sponsor and CRO • Using multiple CROs also means that sponsors and CROs do not build up The solution to more ef cient and cost- acts as a tremendous tax on productivity. effective management of clinical trials lies not in The traditional pharmaceutical outsourcing bringing more clinical R&D back in-house, but approach prevents companies from realising Box 1: Why outsourced clinical in outsourcing larger and more comprehensive the powerful bene ts of outsourcing entire trials go out of scope functions (rather than discrete tasks or pieces of work, and doing so through long- • Trial design and planning are typically conducted term, committed partnerships with CROs. individual projects) or entire programmes with insufficient involvement from CRO teams; What most pharma companies term clinical (a group of studies from Phase I through to • Sponsors too often conduct CRO negotiations “outsourcing” is radically unlike outsourcing in product approval) – bene ts that have proven by focusing on quoted bid price – relatively little every other industry. compelling (notwithstanding signi cant risks effort is focused on jointly identifying what could lead to changes in scope and increases in Outsourcing arrangements have been used and challenges) in other industries. When a CRO manages only one or a cost, and jointly planning how to manage extensively outside of pharma for decades, such factors; few discrete activities during a single phase initially with a focus on IT (for everything • Few sponsors and CROs design, implement, and of a clinical trial, they have very limited from data centre operations to software utilise structured processes and tools for application development), and more recently, opportunities to improve the process in ways managing changes to contract scope; with a broader focus on various administrative that decrease costs, increase speed or improve • Few sponsors have effective CRO scorecards and business processes (so-called “business process patient safety. Meanwhile, even with preferred performance measurement processes, which are outsourcing (BPO)”, typically focused on non- master agreements in place, CROs have no in turn linked to future sourcing and bid award strategic HR and nance functions). The hallmarks guarantee of, and usually very limited visibility decisions. Consequently, sponsors tend to award projects based on CRO bids, irrespective of the of these unique business arrangements include into, the amount of work a sponsor will award often very different track-records CROs have them. Such uncertainty greatly limits CROs’ long-term (often 5-7 years or more) contracts when it comes to delivery; and willingness and ability to make investments that with a single, or very small number of suppliers • Clinical research is a complex activity, and it (depending on the scope of work involved), would increase productivity (for a particular requires close collaboration among many and the shedding or transfer of internal assets sponsor, and in general), and compromises individuals with different roles and expertise. (including staff), such that external suppliers their ability to ef ciently plan work. Few sponsors or CROs have invested in providing assume broad responsibility for execution of Moreover, the current model of outsourcing their people with the skills to collaborate major business functions, and xed costs are discrete tasks and individual projects entails the effectively and seamlessly – as if they were members of a single organisation. transformed into variable costs. following additional costs:

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either the formal or the tacit knowledge • Endo Pharmaceuticals has hired a single that would enable staff on both sides to provider to manage all of its clinical trials. Box 2: Types of clinical outsourcing According to the firm’s senior vice- collaborate as seamlessly and efficiently • Out-tasking: Hiring providers to deal with as if they were members of the same president for research and development, discrete activities within a single clinical trial organisation (the hallmark of successful Roland Gerritsen van der Hoop, the (eg, patient recruitment or data management); outsourcing arrangements in other arrangement will allow Endo to “reduce • Functional outsourcing: Hiring a provider to industries). Even when sponsors have planning and start-up time” by “providing perform a specific activity for all (or a large worked closely with key CRO partners dedicated resources that [will be] more subset of) clinical trials; and 12 on a large number of trials, the CRO efficient… and Endo-aligned”. • Programmatic outsourcing: Hiring a provider to teams typically vary greatly project to manage a wide range of activities for all (or a The above examples of companies project. The use of customer-dedicated large sub-set of) clinical trials from initiation embracing a more expansive and strategic staff is still extremely rare in the pharma through to completion. approach to outsourcing clinical R&D, and early industry. Given the nature of clinical data on results, indicate what is almost certain even the most diversi ed pharma company. development, a complex set of activities to become the dominant paradigm in the Today, the outsourcing of clinical trials is heavily that depend significantly on the quality of pharma industry over the next 3-5 years. Those concentrated within a small number of rms – collaboration (communication, problem- companies that act quickly and aggressively to the top 10 CROs perform 80% of outsourced solving, etc) among team members, the negotiate such agreements with CROs will be clinical development work, and the top 20 current model of trial-by-trial staffing is rewarded with more favourable pricing and perform more than 90%.13 There will always be highly problematic. terms. More importantly, those companies that a need for niche providers with deep expertise In addition, pharma companies continue invest in building the capabilities to effectively in highly specialised elds, but this is no reason to retain large clinical development staffs. manage such complex business relationships not to move toward more comprehensive, The aggressive shedding of assets common will achieve step-change reductions in cost long-term, mutually committed outsourcing to outsourcing in other industries, typically and improvements in cycle time. Those that relationships with one or a few CRO partners. do not will be plagued by the challenges that Increasingly, IT outsourcing and BPO involving the re-badging of employees (transfer often af ict outsourcing arrangements in arrangements in other industries involve long- of customer staff to suppliers) is virtually other industries. term contracts with a handful of outsourcing unheard of in pharma. Sponsors pay for CROs providers – each awarded a major area of to conduct a majority of clinical research and functional responsibility. Governance structures development activities, and then, all too often, “The most ef cient way to are designed to minimise (but not eliminate – they pay again for their own staff to micro- produce anything is to bring since doing so would be impossible) overlaps manage CROs. In doing so, sponsors do not together under one management in accountability, while also facilitating seamless reduce risk so much as they introduce yet collaboration among providers in service of another layer of complexity, inef ciency and as many as possible of the customer needs. Additional specialised services hence cost. activities needed to turn out are contracted separately by a retained Supplier management costs remain the product.” team within the customer that manages the extremely high in the pharma industry – outsourcing provider relationships, or by over 20% of R&D outsourcing spend vs Peter Drucker, pioneering empowering primary providers to sub-contract the 4-7% recommended by outsourcing management theorist with niche suppliers for speci c services – as is advisory rm EquaTerra.8-9 Consistent with common in the aerospace industry. the pharma industry’s outsourcing model, barriers to outsourcing Pharma executives worry about losing supplier management is essentially redundant Despite the success a number of pharma control of proprietary knowledge, and about project management, as opposed to strategic companies have realised as they move toward the nancial, regulatory, and reputational risks governance and management of productive comprehensive outsourcing arrangements, of allowing a third party to own the process business relationships with key suppliers. many executives worry about the downsides. for clinical R&D. Such concern is by no means Over the past few years, leading pharma By looking at the experiences of organisations unwarranted. Hardly a day goes by without companies have begun to move in the in other industries, however, pharma companies announcement of a major outsourcing deal direction of comprehensive, programmatic can avoid the very real pitfalls of programmatic that is being renegotiated or terminated outsourcing (see Box 2), and have begun to outsourcing, and apply proven practices to due to customer dissatisfaction. However, realise signi cant bene ts, as illustrated by the maximise success.One of the reasons many research indicates that up to 70% of such following examples: companies choose to outsource tasks and failures can be attributed to a few key areas: • Wyeth estimates that its more strategic projects is to gain access to expertise in lack of supplier clarity about a customer’s approach to outsourcing clinical particular therapeutic areas or speci c phases expectations, contracts that set up a time-bomb development (in which the company has of the clinical development process. This gives of divergence in the interests of customer and outsourced trial monitoring, project rise to the question: is there any single CRO, outsourcing provider, poor governance, poor management and data management to or even a small number of suppliers, able to communication, and lack of trust.14 The good Accenture) has increased average overall effectively meet all the requirements of a major news is that while these challenges are not easy R&D productivity by 300-500% over the pharma company’s clinical trials? Probably to overcome, they are tractable. past seven years;10 not, or at least not today. But as sponsors Learning from the pitfalls of functional • Procter & Gamble has made long-term communicate a desire to enter fewer and outsourcing in other industries, pharma commitments to outsource pieces of its broader-spectrum outsourcing relationships, sponsors should: clinical trial function to a set of three the marketplace will inevitably respond, and providers and, according to Dave CROs will (continue to) invest in building more • Avoid the temptation to commoditise Webber, the company’s European comprehensive capabilities. suppliers and their services. Apples to outsourcing manager, they “expect real Moreover, if properly designed and managed, apples comparisons are certainly easier benefits [from] what other industries a stable network of relationships with a to conduct, but they rarely produce have been doing for a while”;11 handful of suppliers could meet the needs of the best outcome. Different suppliers

102 www.scripnews.com/supplements Scrip 100 STRATEGIC OUTSOURCING

have different business models, cost Instead, successful partnerships require structures, and capabilities. Companies Relying on who has most partners to work together to make should use the negotiation process to leverage at a given point in decisions in the face of disagreement or clarify their needs and goals (to the conflicting interests based on the merits supplier, and with their own time in a long-term relationship – to focus on what they ought to do, stakeholders) and to explore various to resolve differences is bad and how to meet each side’s needs in a ways in which different suppliers can reasonable manner. meet them. business practice • Work with CROs to jointly develop a • Avoid traditional approaches to robust governance structure. The key to “vendor” negotiation and designing effective governance is to take a As for building and managing successful management. Many such approaches bottom-up, rather than a top down, outsourcing relationships, we can offer to are simply inappropriate to approach. Too many companies treat pharma company sponsors the following comprehensive outsourcing. Instead, governance as an issue of diagramming proven strategies: these unique relationships must be reporting structures with boxes and lines, thought of, and managed by both sides, • Negotiate sustainable deals. Sponsors and arguing over the composition of as partnerships. need to analyse and be sure they committees. Outsourcing success begins • Be careful not to under-invest in understand the economics of the deal with a consideration of the range of change management. To date, few for the supplier and the incentives being scenarios in which customer and supplier sponsors have made more than created for them over the life of the staff will need to work together and perfunctory efforts to equip their contract. Customers have a great deal make decisions, and noting where employees to make the fundamental of leverage when negotiating large conflicts or difficulties are likely to arise. transition from doing work themselves, outsourcing contracts – but many use it Senior management from both sides can to managing and supporting external unwisely and later regret it. Once the then work together to design, not only partner staff to conduct work. This is deal is signed, significant leverage shifts governance structures, but also processes one of the key reasons for the high to the supplier. Relying on who has and incentives, focused on enabling staff costs associated with clinical most leverage at a given point in time from customer and outsourcing outsourcing and also a primary cause in a long-term relationship to resolve provider(s) to collaborate as efficiently of outsourcing failure. differences is bad business practice. and seamlessly as possible.

Figure 1: Spectrum of clinical development outsourcing

Task Project Trial Functional Programmatic outsourcing outsourcing outsourcing outsourcing outsourcing

Cost savings Low Low Medium Medium High

Conversion of xed costs to variable costs Low Low Medium Medium High

Focus on capabilities that drive Low Low Medium Medium High competitive advantage Bene ts

Access to talent/expertise Low Low Medium Medium High

Innovation Low Low Medium Medium High

Supplier complacency Low Low Medium High High

Supplier opportunism Low Low Medium High High Risks

Management complexity High High High High High

Any approach to outsourcing entails risks as well as benefits. However, while the full benefits of outsourcing can only be achieved through a programmatic approach, the risks of a truly comprehensive approach can in fact be largely mitigated, and at relatively low cost, through effective supplier contracts, governance and relationship management.

Source: Vantage Partners

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along with associated penalties for References non-performance. Unfortunately, such Box 3: Learning from other 1. G Tyson & T Dietlin. ‘Working with CROs’, metrics are selected primarily because they industries Pharmaceutical Executive, Vol 24, June 2004. can be measured with a high degree of 2. CenterWatch Monthly. ‘Global Growth Story Conventional wisdom suggests that companies objectivity and precision (the ability to should outsource non-core activities. As outsourcing collect penalties being a key design point), Remains Strong for CROs in 2008, Beyond’, practices mature, however, many executives are rather than because they reflect the March 2008. looking at their organisations and concluding that customer organisation’s true goals and 3. Frost & Sullivan Webinar. ‘CRO Outsourcing to even core activities – if they are not an area of needs. Again, customers need to work Grow 40%’, August 13th, 2008. expertise or a key competitive differentiator (eg, jointly with suppliers to ensure a clear 4. J Carroll. ‘CRO Crowing About Their Growth’, finance and accounting, management of procure to pay transactions or manufacturing), should be articulation of outsourcing objectives, and Biotechnology Healthcare, December 2005. outsourced. Southwest Airlines, which owns nearly to define performance metrics clearly 5. Tufts CSDD Approved NCE Database, PhRMA, three quarters of its fleet, outsources heavy aligned to those objectives. Measuring 2005. maintenance of its aircraft – inarguably a core what is actually important almost always 6. W Claypool. ‘Full Service EDC as an Alternative business function that is critical to maximising the entails accepting a degree of subjectivity to Outsourcing’, Next Generation lifespan of its planes and managing costs, as well as and approximation into the measurement ensuring passenger and crew safety. Since employing Pharmaceutical, Fall 2007. process. Better, though, to measure its outsourcing model, Southwest has maintained (or 7. CFO Research Services & AT Kearney. imperfectly what matters, than to measure improved) the safety and reliability of its aircraft while ‘Outsourcing Among Pharmaceutical and with great precision things that are not reducing costs by more than 30% on engine Biotech Firms: The Growing Imperative for a 15 actually important. maintenance and 18% on component repairs. More Aggressive Approach to Outsourcing’, • Make performance management a two- In the area of data management, the pharma September 2004. industry is beginning to follow suit. In the past year, way activity. In successful outsourcing pharma companies around the world have hired partnerships, both sides approach 8. H Glass. ‘Outsourcing: Where it is now and leading IT services companies such as Accenture, performance problems jointly. That is, they where it is going’, Partnerships in Clinical Trials Cognizant, and Tata Consultancy Services (TCS) to Conference, 2006. work together to diagnose problem causes process and manage all of their clinical trial data, and and contributing factors, and then work 9. ‘EquaTerra Study Concludes Direct Correlation to manage other technology-driven services as well. between Outsourcing Satisfaction and According to Vasudeo Ginde, managing director of together to develop and implement Investment in Outsourcing Management/ Mumbai-based CRO iGATE Clinical Research, “This is solutions. Issues of who will bear the cost of definitely a trend. More may follow.”16 solving or remediating problems are Governance’, Business Wire, May 2006. Meanwhile, inside and outside the pharma industry, resolved separately, and on the merits. As 10. L Knudson. ‘Finding the R&D Sweet Spot’, Next the traditional view of suppliers as simple providers with any high-performing team, customer Generation Pharmaceutical, July 2007. of goods and services (where minimising costs is and supplier staff focus on improving 11. D Webber. ‘Partnerships in Clinical Trials’, the overriding objective) has been supplanted by performance and learning, without the static, Partnerships in Clinical Trials Conference, 2006. the realisation that key suppliers are, and should distraction, and misplaced energy associated be treated as, business partners who have assets, 12. H Atkins. ‘Outsourcing Virtually Everything: expertise, and capabilities that can be leveraged with efforts to assign (or defend against) Making the Semi-Virtual Model Work’, The for competitive advantage. A well-publicised blame. Key performance indicators and BioPharm International Guide, April 2007. performance management systems need to example of this new way of thinking is Procter & 13. K Getz. ‘CRO Shifts in the Outsourcing Market’, Gamble’s Connect and Develop initiative – in which enable both sides to regularly share Applied Clinical Trials, May 2007. suppliers are seen as key partners in driving new feedback with each other, and focus on the 14. Everest Group. ‘Leading Causes of Outsourcing product innovation. performance and success of the relationship Failures’, August 2004. Supplier relationships need to be viewed and – rather than simply focusing on whether managed as critical assets of the extended the supplier has met its obligations or not. 15. AT Kearney. ‘Creating Value through Strategic enterpriser, and this requires re-thinking approaches Supply Management’, 2004. to working with suppliers. Leading companies now The pharma industry is unique in many recognise that relying primarily on competitive 16. G Kamath. ‘IT Firms Pop the Pill’, Businessworld, ways, and the outsourcing of a highly complex Issue 23, February 2008. bidding to drive down costs and ensure quality and strategic business function like clinical delivery is inadequate, and must give way to a more development poses special risks and challenges. balanced approach – one that emphasises Jonathan Hughes is a developing and maintaining closer, more But the question is not whether pharma partner and Jessica Varni is a collaborative relationships with key suppliers. companies should outsource clinical development consultant at consulting fi rm – they have already made that choice. The issue is Vantage Partners. • Measure what matters, not what’s easy to how to outsource. The sooner sponsors embrace measure. Having negotiated outsourcing a comprehensive, rather than a task or project- agreements in a manner that breeds based approach to outsourcing, the sooner they misunderstanding and mistrust, many can focus on learning from the experiences of customers then try to protect themselves companies in other industries, and building the by defining service level agreements that capabilities required to collaborate with CRO comprise literally hundreds of metrics, partners in a strategic manner.

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Joined up thinking Clinical supplies and investigational drug supply chain management, historically low priority areas for pharma, are beginning to capture the industry’s imagination as companies seek to optimise their development approaches. Astrid Frank, general manager of Fisher Clinical Services, talks up the opportunities for the clinical supplies sector with Caroline Richards

supply team can add value. I think there is a Q. How do clinical supplies fit into great opportunity for these two stakeholders pharma’s overall clinical budget? Do the to integrate more fully in the future, together same teams decide on supplies as on the tackling the challenges facing clinical trials. clinical programmes? Why do so many outsourced projects Clinical supplies are usually part of the overall Q. go over budget? clinical budget. As the length, complexity and geographical distribution of clinical trials has increased, so has the budget for clinical I think much of this problem has to do with the supplies, often disproportionately. No longer reasons I referenced above. Successful clinical is this budget just for packaging ambient drugs; trial conduct involves far more than nding a it now involves the handling of biologicals, patient population. It has to do with the ability often under special conditions, and distribution of the investigator population to support the and logistics which are more challenging in trials and, from our perspective, it has to do emerging markets. with being able to reliably deliver the right drug I am actually surprised to observe very little to the right site so that no patient misses a dose involvement of clinical teams in clinical supplies at the time expected. If you think of the role planning and decisions. This is true even within that logistics plays in the supply chain, and the many sponsor organisations. However, although unpredictable nature of drug distribution across drug distribution does not take place until after multiple borders and regulatory requirements, it sites are selected and patients are enrolled, is no wonder that such a large number of trials much of what we have to consider would be run into issues. more ideally suited to the early discussions over When these challenges are thought of after a protocol feasibility. problem arises, naturally the budget is impacted. We often encounter challenges with Another observation is that sponsors fail, in my regulatory or customs requirements because observation, to take advantage of forecasting countries have been selected without tools choosing instead to over-order as their consideration of the issues that may accompany primary fall-back plan. This leads to lots of import of the investigational drug, or because wastage that will not be feasible moving forward the programme is going to target a patient given the rising costs of drugs, together with population for which compliance tracking is overall awareness of the environmental impact critical. Both are areas in which the clinical of waste.

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to share best practices with our clients. However, for more than 20 years. Fisher has been focused Q. We read much about the escalating costs many clients have not built this type of collaborative on clinical supply chain ful lment for clinical trials of drug development. What approaches has approach to their clinical supplies needs into their for its entire existence. We have been able to Fisher taken to address this? Do you see timelines. I would imagine that most vendors share best practices that we establish at each timelines expanding and, if so, can you offer any supporting clinical development would say the of our different sites and use that to make our suggestions to help address this? same thing – that clients fail to ask us for what we service stronger and more innovative. would do, or for our recommendation, and instead I believe that when a customer comes to us Fisher has always invested in state-of-the-art simply ask us to complete a quote sheet. they can feel a level of con dence about quality; packaging equipment and processes to be able that they can feel that Fisher is a partner that can share its experiences with them. We are to offer its customers solutions. Fisher’s goal is to Tell us about your company’s business Q. dedicated to their success and do not see our deliver quality, and to our customers’ timelines. model. Factors that really drive up the cost of drug work as a one-off job assignment, but as part of development are missed timelines and quality failing an overall process. Fisher Clinical Services has grown via a two- to meet expectations. We have also invested in In support of these things is our capacity, prong strategy; rst organically, along with our complementary services, such as labelling, analytical which has to be one of the most extensive in the customers and the outsourcing market in general, testing, high-touch logistics providers; anything world, and our geographical reach. Not only do but also through acquisition. We have approached that will allow us to take more ownership for the we have facilities around the world, we also have acquisition carefully and looked for ways to fundamental goal of clinical supplies – getting the very tenured individuals who are seasoned in strengthen our service offering through the product to the site on time, as needed. the successful execution of clinical programmes. addition of unique services and broadening our I would suggest that sponsors share their Shipping an investigational drug is not like shipping service portfolio. goals with clinical supplies teams. When we other materials. It requires special handling, special We also look for management teams that are know what challenges sponsors anticipate, or the conditions and most of all, unique understanding solid and like-minded to enable a more effective milestones that are a must for a company, we of clinical development. integration into our business culture. We believe build our solution to try to take those points into that our customers are seeking assurance – wanting consideration and often we can offer options. to partner with service providers that take on Q. What are Fisher’s long-term plans? When we are only provided with basic information greater responsibility for the continuum of the drug under tight time constraints, our ability to offer supply chain. In our world, this means everything We will continue to expand to meet the needs value is greatly reduced. from the initial packaging design and execution, of clients and to support our reputation for through to labelling and drug distribution, to innovation. To do this, we need to remain at Q. What do you see as the most common assurance that the investigational drug was correctly the cutting edge of technology, to learn from mistake sponsors make when developing a plan delivered to the site. technical solutions used by other industries, to continue to expand geographically and to ensure for clinical supplies? What advice would you Over the past few years we have acquired state-of-the-art labelling providers, as well as that the professionals we hire and the facilities offer to them? high-touch logistics services businesses, all with the we support are of the highest standard. Our aim of assisting our customers in completing this goal is not only to be in a position to service our My experience tells me that many clinical teams mission-critical portion of drug development, clients well, but to be seen as one of their most do not see the different functions as part of an with high quality and assurance that it is done to successful partnerships. Our long-term plans overall solution. I am not exactly sure why this is so, their timelines. will be to invest resources in managing those but they tend to outsource and to decide on the partnerships and to supply our partners with different parts of a clinical programme as individual data and services to allow them to focus on their parts, and this includes clinical supplies. I know that Q. Fisher provides a wide range of services key milestones. we are most valuable when we are brought in to its customers; does this strategy work well? earlier to the process. When the clinical teams share country selection and their concerns about the As referenced above, we have grown in line with Q. Do you intend to expand patient or investigator population with us, we can what we have observed as the changing needs of geographically or make more acquisitions? then share our extensive knowledge of the on-the- our clients and added or acquired services intended ground logistics and investigator population. to offer our customers greater assurance of quality I believe we will continue to expand We have a tremendous amount of regulatory and delivery. This has worked well and has allowed geographically in line with the global expansion knowledge and our teams probably touch more us to develop ef ciencies and to be in a position of clinical trials overall. We have always invested clinical trials than any sponsor out there. We can to assume greater responsibility for our clients, as early in regions that show promise. It is one provide a signi cant amount of insight. We can they are sometimes beginning to ask us to take on advantage of working with so many different advise on packaging designs or plans that will work full responsibility for their clinical supplies services. sponsors; we get an early view into the next to assist with patient challenges or compliance In some cases, our services can be customised trend. I can assure you that we will continue to concerns. These are easily solved when addressed to meet the needs of individual customers – we expand to keep pace with our clients’ needs. early on in the process. It is much more dif cult to often use our engineering expertise to customise Acquisitions are always on the horizon at help when this is decided after many elements of manufacturing solutions or packaging solutions Fisher. We have demonstrated throughout our the programme have already been set in stone or suited to an individual trial. In other cases, we are history a willingness to strategically invest if an the dates and milestones are fast approaching. able to dedicate a portion of our capacity to clients acquisition could deliver enhanced value to looking to completely outsource their operations. our clients. We are in the fortunate position of having a parent company, ThermoFisher, which What is not being considered in Q. has been very supportive of our acquisition and outsourcing today? Q. What benefits do customers get from expansion strategy. working with Fisher? Sometimes I think the mistake our customers make is not realising how much experience we gain in The greatest bene t as a whole that we deliver working across multiple programmes with multiple to customers is our expertise, gained from our Caroline Richards is a reporter for Scrip.. types of clients. This exposure allows us to learn and unique focus on this portion of drug development

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The CRO turns transaction trendsetter Consolidation is not the sole preserve of the biopharmaceutical industry – one of its key service providers, the CRO, has a healthy appetite for deals too. Key drivers behind transactions include the need for enhanced service capabilities, stronger global footprints and nascent interest from the private equity sphere, explain Andrew Jones and Leo Gribben

ike their pharmaceutical and biotech development activity accounts for a large growth) and in the public markets have customers, companies in the CRO percentage of total annual costs and there is a outperformed adjacent industry groups. Lsector are experiencing rapid and large and mature base of service providers. The While the CRO industry in many respects signi cant change. This change is customer scale of outsourcing activity and divestment may be described as mature, the structure of driven, growth-oriented and is the driving of assets occurring in the drug development the sector remains fragmented in terms of force behind ongoing corporate alliances and space was recently highlighted by Lilly’s service offering, geography and capability and transactions across the sector. Analysis of outsourcing deals with Covance, Quintiles customer needs are ever changing. As a result, recent transaction and alliance activity reveals Transnational and i3 Research announced in CROs are forming alliances and joint ventures that expanding geographic coverage and August 2008. and undertaking acquisitions to increase their adding to service capabilities remain the two Under the agreements Lilly is to outsource geographic coverage and expand the scope of key objectives behind deals. clinical trials monitoring to Quintiles (which services and capability. Most major pharma companies are seeking will monitor data in the US and Puerto quest for geographic expansion to remove around $1-2 billion of annual Rico), and data management services to i3 Much of the transaction activity within the costs over the coming years and reviewing Research. Under the terms of its agreement CRO sector is occurring among the with Covance, the CRO will provide drug their capital allocation model. They no longer smaller and mid-market CROs for which desire to own the entire pharmaceutical development services including non-GLP acquisition presents a route to rapid value chain, are seeking greater  exibility in toxicology, in vivo pharmacology, quality geographic expansion. xed cost infrastructure and focusing on core control laboratory and imaging services and Regulation and the increasingly global nature competencies. Outsourcing processes and a committed level of clinical pharmacology, of the pharmaceutical marketplace mean that divesting assets to third-parties is a central central laboratory, GLP toxicology studies, and demand for international multicentre trials is plank of their strategy to achieve these goals. clinical Phase II-IV services. As part of the deal, growing. To meet this demand and to compete, At the same time, a ground swell of biotech Lilly is also to divest to Covance a 450-acre CROs need to be able to offer sponsors the and small-to-mid-tier pharma companies, often early drug development campus based in ability to conduct trials in multiple geographies with limited resources and/or operating virtual Indiana for $50 million. In total, the 10-year either directly though their own infrastructure business models are relying on providers contract is worth $1.6 billion. or virtually through an alliance partner. of outsourced services to support them in As a consequence of the uplift in demand As less traditional geographies grow in bringing products to market. for outsourced services, collectively, CROs signi cance as locations for clinical trials, Clinical trials in particular present a have enjoyed high growth rates (in many cases acquisition-led strategies have been adopted signi cant outsourcing opportunity as double digit to high-teens quarter on quarter by many western CROs to establish and/

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Table 1: Select trade deals in the CRO sector Target Country of target Buyer Country of buyer Date of announcement (2008)

Tangent Data Romania Nicholas Piramal India October

Simbec UK Algorithme Canada August

Msource Belgium TÜV SÜD Germany July

International Oncology Network US Veeda Clinical Research UK/India July (ION) Clinical Research

MediQuest Serbia Worldwide Clinical Trials US July

Prologue Research International US Encorium US June

DecisionLine Canada Kendle US June

Biologie et Industrie France Veeda Clinical Research UK/India May

Omega Mediation Group Europe/Israel SIRO Clinpharm India April

Lege Artis Russia i3 Research US April

Drug Development Solutions UK Chiltern International UK February

Healthcare Discoveries US Icon Clinical Ireland February

DUX Consulting Czech Republic/Slovakia Kiecana Clinical Research Poland February

InnoPharm Russia PPD US February Source: Ernst & Young

or grow their operational footprint and Clinical Research of the US. Through these Metrics Research thereby enabling Synergy to capabilities in new territories. With its large transactions, Veeda strengthened its capability conduct trials in the latter company’s home population (more than 300 million) and in Western Europe and added 50 clinical country Pakistan. In September 2007, Synergy strengthening economies, recent M&A activity research sites in the US. In a similar fashion, entered into a similar partnership with an has been focused on assets in Central and the Indian CRO SIRO Clinpharm acquired Indian CRO Neeman Medical International. Eastern Europe as companies seek to capitalise Omega Mediation Group in April 2008, a Another alliance forged between regional on the region’s high growth potential. business with presence in ve European players was Suven Life Sciences’ April 2008 Worldwide Clinical Trials (WCT) recently countries and Israel. In July 2007 SIRO deal with the Beijing-based company VPSCRO acquired MediQuest, a Serbian business acquired Global Client Partners, a US CRO. to conduct clinical trial services in India based in Belgrade, and Evidence Clinical and and China. Pharmaceutical Research, a company with JVs and alliance networks Alliances that bridge the West and presence in Russia, Ukraine and Georgia. Small regional companies have been building Eastern markets have also become more US-based i3 acquired Lege Artis which, with alliance networks in a bid to compete with common. Recent deals include US-based MPI operations in Russia, Belarus and Ukraine larger global CROs. This type of activity Research’s alliance with Shanghai Medicilon to complemented i3’s existing operations in the appears to be particularly prevalent in Eastern establish a preclinical research facility based Czech Republic, Poland and Serbia. In February markets and might be regarded as a defensive in Shanghai that will meet US FDA and other 2008, Pharmaceutical Product Development measure in light of growing competition from major regulatory standards. There was also (PPD) strengthened its presence in CEE with western CROs setting up operations in India the US rm Immtech and Beijing Capital the acquisition of Russia’s InnoPharm, gaining and China. Medical University’s JV established to provide operations in that country and Ukraine. In May 2007, for instance, a trio of contract research services in China. The entry of competition from well Chinese companies – Sundia MediTech, established western CROs is one factor United Pharmatech and HD Biosciences, adding depth and breadth driving local players to shore up their market all of Shanghai – entered into an alliance to Deals are also being driven by the need to presence, a good example being Polish Kiecana consolidate their position in the local market. build capability, for example in a particular Clinical Research’s acquisition of Czech In February 2008, UK-based NovaSecta clinical phase, therapeutic area, treatment DUX Consulting. joined the alliance and was followed two setting, patient population or technology. Yet the US and Western Europe remain months later by Tigermed Consulting, A key driver is signi cant customer demand critical pharmaceutical markets and another Shanghai rm, which added clinical for Phase I capabilities and high growth in this transactions are not solely being driven by development, data management and statistical segment. For example, in June 2008, Kendle Western companies looking to emerging support services to the alliance’s portfolio. announced the $24 million acquisition of markets; the reverse is also happening. In a similar initiative aimed at competing DecisionLine, a CNS-focused Phase I CRO Notably, Indian CROs are buying into Europe with the ability of global CROs to provide based in Toronto, Canada. The deal brought and the US. During 2008, the oncology- large multicentre trials, the Russian CRO Kendle an 82-bed facility, staff scientists, focused Indian CRO Veeda Clinical Research Synergy Research has been forming nurses and clinical development personnel. made two such transactions, acquiring the partnerships to extend its geographical reach, Similarly Chiltern International’s acquisition Paris-based CRO Biologie et Industrie and with a particular focus on Asia. In June 2008, of Scotland’s Drug Development Solutions International Oncology Network (ION) the company formed a partnership with secured Chiltern a Phase I unit with 42 beds

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Table 2: Select private equity deals

Target Country Private equity rm Reported deal size Date of announcement

Premier Research Group UK Pegasus Bidco (ECI, Indigo) €73.6 million March 2008

Quintiles US Bain Capital, 3i, TPG, Tamasek $3.0 billion January 2008

Synexus Clinical Reseach UK Lyceum Capital £18.1 million November 2007

Shangpharma China Texas Pacifi c Group $30 million November 2007

GVK Biosciences India Sequoia Capital $25 million November 2007

PRA International US Genstar Capital $797 million July 2007 Source: Ernst & Young

in a high intensity care setting and expertise would be possible in biotech pre-credit Re ecting the growing importance India in systemic drug phototoxicity studies. crunch. In addition, the service model also and China are playing as locations for R&D As trials have become more global and allows the CROs to take a portfolio approach outsourcing, private equity has also begun to complex, enabling technologies have become to those companies it serves, allowing it to make investments in these geographies. Texas more important for running trials more manage and mitigate any risk by avoiding Paci c’s $30 million investment in China’s effectively and ef ciently, improving quality customer concentration – it is quite typical Shangpharma and Sequoia Capital’s $25 million of data, providing visibility across studies, and for CROs to ensure that no more than investment in India’s GVK Biosciences highlight speeding up decision-making. ClinPhone, the 10-15% of total revenue is derived from a growing interest in Asian assets and the UK-listed clinical technology company recently single customer. potential they present for growth. caught the attention of rival suitors Parexel CROs often operate business models Businesses like the New York Stock International and Quintiles Transnational, capable of scalability which, with private Exchange-listed Wuxi PharmaTech highlight to which both expressed interest in bidding for equity investment, have the potential for investors the huge potential for Chinese-based the business. In June 2008, Parexel eventually rapid growth. It is these qualities that were CROs. Wuxi, which provides outsourced drug succeeded in reaching an agreement to buy cited as attractive when Lyceum Capital discovery and manufacturing services, has been ClinPhone for $182 million after Quintiles announced it was to take the AIM-listed one of China’s fastest growing companies, withdrew from bidding. ClinPhone’s offering Synexus private in November 2007. On the achieving high double-digit quarter-on-quarter combines data capture and supply chain other side of the table, the management of revenue growth and triple-digit net income management technologies, which are widely Synexus (which specialises in the recruitment growth since it announced the closing of its employed by CROs across the sector. and management of patients for late-stage IPO in August 2007. In July 2008 the private Looking forward, the market can expect primary care clinical trials) saw the deal as an equity player Warburg Pincus acquired 5.4% of further consolidation among small to opportunity for the company to complete outstanding ordinary shares in the company. medium-sized CROs. In addition, it seems international expansion plans as well as As private equity becomes more familiar likely that consolidation and organic market bene t from an investor experienced in with the CRO space, and the pharmaceutical growth in emerging economies, particularly supporting rapid growth businesses. sector in general, the marketplace is likely China and India, will give rise to CROs that Private equity investors are also attracted to see greater appetite for new types of can compete locally as well as with major by opportunities to capitalise on the shifts partnerships and funding models. Perhaps players on the global stage. occurring in the CRO marketplace described most interesting on this front was the August previously (globalisation, customer demand 2008 deal announced between Lilly, TPG-Axon enter private equity Capital and Novaquest, the venture arm of Attracted by strong growth fundamentals, for full-service offerings, opportunities for technological and service differentiation) by Quintiles. TPG-Axon Capital will invest up to private equity has been a particularly active $325 million to fund the development costs investor in the CRO sector. As service-based following buy-and-build strategies to achieve critical mass and scale as well as leverage for two Lilly Alzheimer’s programmes, with businesses, CROs present an opportunity Novaquest covering 10% of the costs and the synergies of complementary businesses. to gain investment exposure to the health conducting the clinical trials. Both will receive Indeed, the ability to follow a global buy-and- sciences industry with a different risk pro le development milestone payments and royalties build strategy was cited as a key objective for than that typically offered by biotech on successful commercialisation. the ECI Partners-backed management buy-out and pharma. This type of deal is becoming increasingly of Premier Research Group, completed in Thanks to the services-based model, CROs common between pharma companies and June 2008. are largely insulated against the pipeline risks CROs; note that Lilly had already partnered Importantly for private equity, the CRO faced by their customers. They operate a with Novaquest on the development of Lilly’s sector is relatively mature in so much as there business model with which private equity antidepressant Cymbalta (duloxetine). Such is already a signi cant publicly-traded CRO players are traditionally more familiar and arrangements have raised interest among segment, presenting exit routes at the end of comfortable, and have shown to be able to private equity houses in funding development the investment lifecycle through IPO or sale achieve pro tability early in their corporate programmes and, depending on success, they to trade. Indeed, initially brought to the public history. While CROs are still exposed to the could indicate the shape of things to come. risk of sponsors pulling or halting a trial, the markets in November 2004 by San Francisco- contracted nature of the revenue stream based mid-market PE house Genstar Capital, provides good security for any debt provider and raising $100 million, PRA International Andrew Jones is Ernst & Young’s senior and ensures that even in the current dif cult was taken full-circle when it was taken private pharmaceutical analyst and Leo Gribben is a debt markets, the banking of a private equity again by Genstar in a $797 million transaction director in the rm’s pharmaceutical team. deal should be more easily achieved than announced in July 2007.

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On the crest of the middle tier Chiltern has strengthened its global footprint through acquisitions, collaboration and geographical expansion. And in parallel with the rest of the outsourcing sector, the company is also bene ting from pharma’s current drive for cost-containment, CEO Glenn Kerkhof tells Caroline Richards

trials ongoing in these countries out of 62,000 In the past year, Chiltern has opened GLENN KERKHOF Q. being performed globally. Nevertheless, having new offices in Portugal, Russia and Argentina. recognised the huge potential of both regions, What are the benefits of having a presence our strategy is to expand operations in each in these countries? country in line with market growth.

Chiltern now has 23 of ces in 14 countries, What motivated Chiltern to purchase with employees in over 23 countries. We Q. the Scottish Phase I clinical trials unit Drug are continually reviewing our portfolio of geographical operations and thinking about Development Solutions (DSS)? how we can better serve our sponsors with them. By extending our reach in a controlled At a strategic level we wanted to expand and and sustainable way we can access new strengthen our Phase I offering. With the DDS investigators, study participants and potential purchase we can now offer complementary markets on behalf of sponsors, as well as services from , Scotland and our providing them with individual staff members 30-bed unit in Slough, just outside London. should they choose that option. The units now share the same leadership and Russia is an important and emerging operate in an entirely integrated way. pharmaceutical market. And for us Argentina In particular, we were attracted to the represents a gateway to all of Latin America 42-bed Dundee unit because it is one of the – now that we have established operations few Phase I units in the UK located at a large in the region we expect to see a lot of teaching hospital. This was a strong draw growth in coming years. The Portugal of ce for us in light of UK regulator the MHRA’s was established after having operated in that requirements for GCP accreditation for country successfully for some years with eld- rst-in-man trials, which indicated that more based staff. pharma and biotech trials will need to be We were also excited to announce in June hospital-based. We also felt the return to a 2008 our collaboration with a large Asian more predictable and ef cient regulatory CRO, EPS International, giving us experienced environment once again made the UK an and effective access to several markets in Asia. attractive place to conduct Phase I studies. And Our Indian operations are growing strongly recent falls in the value of the pound against and we may well see further of ces established the US dollar certainly reinforce that view. on the Indian subcontinent too. The Dundee unit comes with an expert, dedicated and stable workforce and a reputation for doing quality work that has Do you think expanding in emerging Q. been built since it was established in 1982. It economies, such as China and India, is has niche expertise in phototoxicity studies in important to a CRO in today’s competitive humans, which few units can perform, so that global market? also attracted us to the business. We are very pleased to have been able to build our Early Yes. Chiltern’s Indian operations, based in Phase brand in this way. Mumbai, have quickly become an important axis for the company. Not only is there a large supply of investigators and study Q. Do you intend to make any further participants, but there is also tremendous acquisitions? expertise available. We recognise the clear importance of the We do not see ourselves as a highly acquisitive Chinese market, but have not established company. We are attracted to pursuing organic direct operations there yet. Instead we have growth as much as possible, but will consider opted, as I’ve just mentioned, to access the acquisition where this strategy cannot allow us long experience and solid track record of EPS the access our sponsors require to geography, International in that country. scale, expertise or technology. Where we do It’s worth noting that India and China have make an acquisition we place great emphasis yet to make a major mark on the global clinical on successful integration and building a single research landscape; there are fewer than 1,000 ‘Chiltern’ identity.

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We always keep sponsor requirements for of our revenue base, helping us a great deal Q. Do you welcome the MHRA’s Phase I study expertise under review and respond from a strategic perspective. Another major accreditation scheme which came into effect as required; paediatric expertise, for example, success of 2008 has been our EDC platform recently? is a developing area. Building further areas of partnerships with both ClinPhone [now Parexel] therapeutic strength remains a priority for us. and Medidata. More than 70% of our studies are Yes and no. It is important that the accreditation now going into an EDC platform; we see this as a system establishes a “gold standard” for Phase I tremendous success. Why would a company choose to within the UK, applicable to all sectors of clinical Q. Other highlights have been the integration of research (NHS, charities and industry) alike. outsource its clinical research to you? DDS to strengthen our Early Phase brand and I However, in order to further improve the UK’s think what we’ve seen overall is validation of the position of rst-in-man studies from a global We have a good geographic network, strong globalisation and the focus of Chiltern in servicing perspective, the regulatory review process for expertise, highly controlled process, modern our clients’ needs. We’ve seen signi cant revenue investigational products manufactured outside the systems, well trained people and a hands on, growth of around 25% and a very signi cant EU needs to be more commercially realistic. The ‘can-do’ attitude. We are continually thinking increase in sales, so we have con dence in our about what we can do better and have a variety industry has addressed this issue with the MHRA. model moving forward. of different models available which would suit all clients’ needs. There is a real sense of enthusiasm Do you think any improvements are Q. in the company as we continue to develop. I think Q. What are your longer-term ambitions for needed in the regulatory infrastructure sponsors recognise and appreciate these features the company? governing the world’s major markets? and reward us with their trust. Although we’re not seeking to be the largest We believe the European and US regulatory CRO in the world, we’d like to stay at the top Do you have any long-standing strategic environments are suf cient to provide a safe Q. of the middle tier and continue to grow in a and ethical forum for the development of client partnerships at the moment? sustainable and successful manner. And we will investigational medicinal products. However, do that through a combination of organic growth variations between national territories call for We have a number of successful and and acquisition, but in the longer term we are experienced handling of the pan-European collaborative long-term relationships, but it’s really intent on continuing to build stronger client regulatory arena in order to ensure that really been over the past two years that we relationships and making Chiltern a successful and assessment time, multiple standards of care have seen more partnerships of the sort you great place to work for our people. and cultural evaluation of protocols meet refer to. While a lot of outsourcing continues to be done on a tactical basis, we have entered clients’ expectations. How has the credit crunch affected your The US FDA has strengthened its position into several strategic outsourcing partnerships Q. business and the CRO sector in general? regarding post-marketing commitments and are seeing these relationships move in two by sponsor companies. We believe there different directions. There has been considerable discussion is a need for the EMEA and the European One direction is partnering where we run all recently about the impact of the tightening Community also to critically evaluate and provide or part of a pipeline of trials. These trials may be of the capital markets on biotech VC funding, formalised guidance in this area. Our clients are managed and staffed exclusively by Chiltern staff pharma pipelines and ultimately on outsourcing proactive and are really pressing forward with or may be a hybrid approach where we manage to the pharmaceutical services sector. In short, commitments. But the legislators in Europe aspects of the trial and provide staff to pharma we have not seen any impact to date either in are less equipped to deal with that on a pan- af liates, via our Resourcing Solutions group, to terms of cancellations or a slowdown in new European basis at present. support projects. The other form of partnering that we’ve business volumes. seen is functional service provider outsourcing The CRO sector appears to be growing at Q. How is Chiltern’s client work broken (or FSP) partnering, ie, Chiltern running and a steady rate and has bene ted from cost- down by therapy area and clinical phase? staf ng internal departments or supporting containment initiatives and the drive to outsource a service within sponsor companies. For us, from within the pharma sector. I would expect We work across a wide range of therapeutic this has taken the form of running a European this to increase over the next few years. However, areas, our largest being oncology, which makes pharmacovigilance team for a large pharma player, I don’t believe any sector is bullet-proof in tough up about 20% of what we do. Respiratory, CNS running a global EDC implementation team times and we will certainly watch how this plays and cardiovascular trials make up around 15% for two large pharma companies or wholesale out with great interest. each and infectious diseases around 10%. We staf ng of clinical development departments. With respect to consolidation, there has been also have a strong presence in ophthalmology, Clearly many companies in the pharma a drive to globalise CRO services with a focus on although that is a relatively small area of sector are facing R&D cost pressures and drug expanding our therapeutic expertise, our global research. To support these efforts we have development challenges, driving the current reach and the quality of our service. Additionally, established ve specialist therapeutic area trend for outsourcing and cost-containment. It’s with further consolidation within the pharma teams, with a sixth, devoted to cardiovascular, in also clear that the CRO sector, in supporting its and biotech sector this will inevitably lead to preparation. The teams look at study feasibility pharma clients, is bene ting from that and we’ve consolidation within the CRO sector. We intend to be a player in this space and will, of course, to ensure superior country and site selection, been a player in this space. develop training templates for use by our consider all strategic alternatives necessary to project teams and develop deeper relationships improve our position in this busy arena. with our clients and sites aligned to a particular Q. What were Chiltern’s main successes therapeutic area. of 2008? The Early Phase business presently brings in around 5% of our revenues, Global Clinical Our major successes have been the acquisition Development around 48%, Biometrics 14%, and integration of CTMS in North America, Resourcing Solutions 24% and Late Phase around which has transformed Chiltern into a more Caroline Richards is a reporter for Scrip. 5%. The remainder is regulatory affairs work. global CRO. The US now delivers around 30%

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Fine Chemicals

Risk: assessment, aversion and denial Since its foundation the European Fine Chemicals Group (EFCG) has highlighted the risks and rewards globalisation brings to its members and to pharmaceutical ne chemical industry stakeholders. Guy Villax discusses the options faced by large pharma and regulators alike to meet the challenges of a fast changing industry

ver the past 20 years, the pharma advantage of growth in emerging economies. from innovative small pharma companies industry has changed beyond Traditional markets may be where pro ts and biotechs. Merck & Co and AstraZeneca Orecognition. Certain trends have are made today, but they are experiencing have made their exit from API manufacturing accelerated, while others have inverted sluggish growth. So what can be done to clear as a strategic option.4-5 These 180º. Europe, once the cradle of chemistry take advantage of fast-growing Brazil, India, companies have/will sell/close plants, while and pharmacy, is no longer at the forefront Mexico, India, China and Turkey? These others, such as Roche and P zer, have gone of R&D innovation. In 25 years, Europe has markets may not accept the high prices the same way because of excess capacity. gone from the world’s leading producer of charged in the West, but they do have GDPs This is precisely what has happened in the APIs to an also-ran player supplying only growing at triple the rate of traditional automotive industry. Car makers today focus a fraction of the ingredients that make up markets. on design and marketing; only occasionally EU medicines today. Generic medicines, a Andrew Witty, GlaxoSmithKline’s CEO, will they actually look into manufacturing or non-existent industry before the 1980s, now has spoken about a branded generics plan technology. Even at Porsche, the assembly ll the majority of prescriptions across the for emerging markets – countries where of the Boxster model is outsourced. globe. Regulators are continuously elevating enforcement of regulations is weak, and Furthermore, it is in industries under severe the bar and setting standards that just a where a GSK brand on a generic blister pressure that one nds best practices and where managers become the most aggressive decade ago would have been inconceivable, pack may gain a patient’s preference at cutting fat and becoming “lean”. if not impossible to achieve, because the despite a mark-up.2 David Brennan, CEO of In relative terms, pharma is still very technology was not there. AstraZeneca, is considering similar options.3 pro table, so it’s no wonder that 6 Sigma Large pharma’s investors are unhappy; Therefore, convergence of innovators and and lean manufacture are still in their total shareholder return has been negative generics, with heavy emphasis on branding, 1 infancy in GMP operations. On the other at –2.4% a year between 2001 and 2007. may well be part of the new pharma model, hand, if we can drive very affordable, At the time of writing, performance can be especially in fast-growing markets. expected to be even worse and the future reliable, comfortable, good-looking and outlook no better. Whatever your crystal lean and mean high-performance cars, it is because ball tells you, the inescapable reality is that Many believe the future business model will globally the automotives industry faced pharma’s current business model is broken, see big pharma companies retaining their strong competition – pressures that led to and that its new strategy must, regardless development and marketing/distribution restructuring, consolidation and specialisation, of its shape, include low-cost manufacture, functions, but shedding both primary and for example in component suppliers. A new better returns on capital and new ways secondary manufacturing. Eventually, big car model today is rst conceived, then to create value. The big pharma industry pharma may also shed its R&D, choosing actually put together, by parts suppliers also needs to re-invent itself if it is to take instead to in-license aggressively compounds under the baton of the car manufacturer. All

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need to excel at “design for manufacturing” tax strategies manufacturing has traditionally and Portugal were on line. Together with concepts and methods to ensure afforded them. building block manufacturers this product compatibility – in this respect pharma has a mobilised 1,000m3 of reactor capacity. Within long way to go. new partnerships four years, continuous improvement and The US FDA has opened the door to Today not many contractors can offer this competition had reduced the API’s price a new paradigm of ef ciency in terms of value proposition and, similarly, big pharma per kilo to levels generic rms would balk development and manufacturing, whether companies do not realise how much they at. Agouron was later taken over by large this is in the production of an API or of a will need to change to be able to capture pharma and API production was brought tablet. “Quality by Design” (QbD) now makes these bene ts. Focusing on small-molecule in-house. 6 Sigma and lean manufacture a practical new product introductions, going forward reality; process analytical technology (PAT) there will have to be signi cant consolidation looking east or west? and parametric release allow trending, of the API industry because few such rms A current trend in pharmaceutical ne eliminating dead time from samplings and currently have suf cient production capacity chemical manufacturing seems to be a analysis, and avoiding rejections, deviations to truly serve the API needs of any large geographical shift eastwards – even Lonza and reprocessings. So expect a step change pharma player. is building small molecule manufacturing in in pharma manufacturing: far greater China. Yet if Merck & Co and AstraZeneca scienti c understanding of the process, with Ireland, unfortunately, has are going to entrust their next launch to signi cantly higher investment in process anyone they will prefer the API to be made chemistry, data collection and sophisticated allowed its cost base to spin in a familiar setting. Irish facilities have not process automation. The introduction of car out of control, probably in received a warning letter since the mid- 1990s. Cork has the highest density of API industry production techniques and great part because the magnitude innovation in the ne chemicals industry producers anywhere in the world (mostly itself, such as Britest,6 will result in dramatic of tax-savings dwarfed plant tax-driven captive manufacturing for US reductions in per kilo cost, in operating costs operating costs and Japanese large pharma), but even of plant, in costs to build and improvements after stripping out the tax effects (about in speed and  exibility and reduction of two-thirds of the export value) and the inventories. Contractors and pharma companies manufacturing inef ciencies of captive This shift is contingent on pharma are still discovering QbD,7 and few have manufacture (about 50%), Ireland is still as big manufacturing ceasing to be captive and supported QbD lings. But to do this, and to as China or India (see Table 1). instead becoming mostly contracted out. It capture all the possible value, large pharma Today there are virtually no contract is the test of the market, and the demands must become a more creative purchaser and manufacturers in Ireland, mostly the result of powerful customers, that will drive the it needs to establish true partnerships with of big pharma buying up their plants in the API industry to consolidate, specialise and API suppliers. Relationships need to be long heyday of the 1990s. Ireland, unfortunately, excel at compliant but low-cost manufacture. in term and wide in scope, starting at the has allowed its cost base to spin out of The savings large pharma is looking for are process development stage, with IP captured control, probably in part because the not related to lower labour costs or lower in ways that contribute to a tax-favourable magnitude of tax-savings dwarfed plant overheads driven by lower HSE standards. structure when it comes to manufacture, that operating costs. The reality is the current cost In the world of new product introductions, will have to take place in the usual places. base is tough for contractors. large pharma will be facing an acid-test. Forging such relationships requires major Although Ireland has a talent pool that Will big pharma look to have its cake and changes in mindset. We are talking about cannot be ignored, what remains to be seen eat it too? For new product introductions, very close and long-term collaboration, data is whether its stakeholders, from Ireland’s companies will not compromise on standards. integration and a level of transparency that is Industrial Development Agency (IDA) to the They will expect to speak at their usual currently unknown within big pharma itself trade unions, will confront the cost issues, scienti c level with contractors, and they will – creative solutions require a high degree working with contract manufacturers to seek to verify compliance with high standards of trust. provide their industry with a new lease of of quality, GMP, HSE and ethics. Yet they Small pharma companies have shown life. Buyers will be asking whether custom will also want to avoid capital investments how this can be done. Almost 10 years synthesis producers in Ireland can offer APIs and expect a low (and constantly lowering) ago, Agouron saw the FDA approve its HIV to the usual Cork standards at Indian prices. cost-of-goods-sold. They will want someone protease inhibitor NDA in a few months, Yet the telling factor will be, for instance, else to keep their inventories and they will and a 20-ton API forecast became a 100-ton what David Smith, AstraZeneca’s executive want just-in-time delivery. And yes, they will per year manufacturing challenge. Within 12 vice-president of operations, expects the still want to be able to take advantage of the months of approval, API plants in Japan, Italy right price to be.

Table 1: Geographical shift in manufacturing For 2007 ($ billion) Actual pharma Tax e ect Manufacturing API in % Finished form in % exports netted out ine ciencies netted out

Ireland 34 11 6.5 – –

Singapore 11.5 5.5 2.8 – –

China 6.5 6.5 6.5 90 10

India 6.5 6.6 6.5 30 70 Source: Ireland’s Industrial Development Agency (IDA)8, Singapore’s Economic Development Board (EDB)9, PricewaterhouseCoopers10

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Will Ireland remain the number one place for validating and launching NDAs? Nowhere else comes close in terms of compliance with GMPs and HSE. And will other places in Europe be producing intermediates for the rst generation process? Will India and China be limited to providing the building blocks for the second generation process? As for the generics sector, the answer is simple: the generic drug is already a mostly Asian product, and only effective enforcement of regulations can stop a worrying trend towards a level of risk that is becoming unacceptable. Absent the imposition of quality standards by a regulator through deterrence and effective inspections of being discussed in Washington right now pharma’s globalisation. The correct options primary and secondary manufacturing (and contemplates mandatory disclosure are not the most obvious – yet it is clear that across the distribution chain) competition will of the country of origin of the API in the deliberate and decisive actions are urgently make sure the purchasing department will drug product packaging. The EDQM has required to meet challenges and discharge win every time over the quality unit. recently altered its policy,12 and its DMF responsibilities. database will disclose for each API all the patient safety References sites used, not just the one involved in the For the regulators, 2008 was a turning point, nal step. Is it not time for the EU to have a 1. The Changing dynamics of pharma even before the heparin disaster broke out. foreign inspection service? outsourcing in Asia: Are you readjusting your On both sides of the Atlantic, politicians sights?, PricewaterhouseCoopers, and lawmakers had started to point out www.pwc.com/pharma that the regulatory infrastructures, insofar as There is still no system in place 2. www.gsk.com/media/ supervision of generics was concerned, were to ensure that EU customs woefully obsolete and unable to maintain pressreleases/2008/2008_ effective oversight over this globalised block the entry of APIs coming pressrelease_10086.htm industry. Built to keep an eye on a national from producers known to be 3. www.marketwatch.com/news/story/ industry, Europe’s medicines agencies today non-compliant -ceo-says-firm-mulls/story. stare impotently over billions of parallel aspx?guid=%7B922F9FAD-A243-4379- imports within the EU and over a  ood of A019-3B75FF78E159%7D APIs pouring into Europe after DMFs are Another statistic likely to raise some 4. www.reuters.com/article/pressRelease/ approved on a “paper-only” review. When idUS36338+01-Jan-2008+PRN20080101 inspections to plants identify non-compliant question marks relates to how, whenever 5. http://business.timesonline.co.uk/tol/ situations, a “rapid alert” is raised and we there is a major quality issue with an API business/industry_sectors/health/ have seen recalls, but there is still no system (which is global, by the very nature of article2468741.ece in place to ensure that EU customs block the the supply chain), it only seems to affect entry of APIs coming from producers known Americans – Europeans appear to be immune 6. www.britest.co.uk to be non-compliant. to such events. If we look at the disasters 7. http://www.fda.gov/ohrms/dockets/ac/06/ After around 150 inspections worldwide caused by sub-standard APIs (for instance, slides/2006-4241s1_6.ppt; http://www. (>65% in Asia, most others in Europe) L-tryptophan, gentamycin sulfate and heparin/ emea.europa.eu/Inspections/PAThome.html oversulphated chondroitin sulphate (OSCS)) conducted over a period of under 10 years, 8. http://www.idaireland.com/home/index. deaths were only reported in the US. What the European Directorate for the Quality of aspx?id=3 Medicines & Healthcare (EDQM) has in total are we supposed to conclude? That Europe 9. http://www.edb.gov.sg/edb/sg/en_uk/index. suspended or withdrawn almost 40 CEPs has safer generics? That European data html (Certi cate of Suitability). This means that gathering has  aws? Or is it something else? large quantities of 40 very unsafe APIs have At present, and for the foreseeable 10. http://www.pwc.com/ for years been administered to patients in future, large pharma will remain the major 11. http://ec.europa.eu/enterprise/ the EU. driver, and valuable contributor, to the pharmaceuticals/counterf_par_trade/ From a patient safety perspective those pharmaceutical standard-setting process. conterfeit_doc/2008_04_presentation- CEPs should never have been granted in The consultation process over regulations, counterfeit.pdf guidelines, monographs, ICH standards, etc, the rst place. All the CEP suspensions and 12. www.edqm.eu/medias/fichiers/NEW_Policy_ has limited generic involvement. However, the withdrawals by the EDQM related to API on_stating_manufacturing_sites_on_CEPs. big pharma industry is no longer the major manufacture in Asia, compared with zero in pdf Europe. But the EFCG has always applauded player: generics now ll more than half of the EDQM because until recently it was the all prescriptions worldwide. Is this not likely only European entity that arranged for API to lead to an increasing disconnect between standards and the fastest growing part of the inspections outside of Europe. Guy Villax is the CEO of In April 2008, we saw for the rst pharma reality? Could this disconnect cause Hovione and a board member time the European Commission aiming for the credibility of our drug system to erode? of EFCG. “mandatory inspections in third countries Companies and regulators are short of without equivalent GMP and inspection much needed expertise to understand the standards”.11 Over in the US, one of the bills new shape and forces that are accelerating

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Chemistry class Zach System, a European ne chemicals player, has spent the past year digesting an acquisition and redesigning its organisation. Jean-François Marcopoulos, the company’s CEO, tells Caroline Richards about his longer-term plans

making these deals work is different. The M&A/consolidation is a prominent JEAN-FRANÇOIS MARCOPOULOS Q. partners must have very different pro les for feature of the R&D-based pharmaceutical collaborations to make sense: they should industry. Should we expect similar not overlap in terms of location, markets, consolidation in the fine chemicals sector? technologies, or competencies, etc. Even when companies do differ, working together We should expect a similar trend because the can be tough; the parties’ interests are never pharma industry needs fewer suppliers with exactly the same, and the company cultures broader competencies and enhanced ef ciency. are different. So a partnership requires a lot of The pharma industry is experiencing not energy from both sides. only consolidation but also a revolution in At Zach System we have been involved in its business model, mainly because it has not a range of partnerships, especially in Asia, but been able to sustain historical levels of growth, only one of these is currently of strategic value. with fewer products now reaching regulatory But going back to the consolidation angle I approval. The US market grew by only 3.8% mentioned earlier, a partnership might provide in 2007 and 67% of prescriptions were for a good precursor for a full M&A deal. generics. So pharma’s blockbuster business model will partly disappear. Companies are changing their approach Q. Is Asia a threat to your business or an to R&D, embracing external partnerships opportunity to be exploited? What is the with biotech companies and start-ups. They best strategy for working in this rapidly- are also changing their therapeutic focus growing market? and drug pro les. Today more than 40% of potential drugs entering clinical development Asia is not a threat per se but just another are of biotech origin, more than one third piece in the overall puzzle. Asia would be a of the drugs in development are targeting threat if its currencies were set to devalue oncology indications, and less than 26% are against the Euro and the US dollar and if focused on CNS and cardiovascular areas, for companies there were able to offer exactly the example. On the positive side, big pharma will same type of services as western companies most likely outsource more work, although do – but we don’t foresee this happening soon. this switch will take time. At the same time, One main issue for European-based pharmaceutical multinationals are starting suppliers is that a big chunk of the market is to prioritise emerging markets, so they will in US dollars. Even taking into account the demand competitive supply chains to achieve current nancial crisis, which has pushed the this new objective. dollar more in line with the Euro, in Europe All these changes will have a major impact we have lost 40% of our competition since the on ne chemicals companies if they are not beginning of the decade, when the Indian and able to revisit their capabilities taking these Chinese currencies were closer to the dollar. shifts into account. Fine chemicals companies As these countries’ currencies strengthen, their that lack the scale and global reach needed to companies may lose this competitive gap. implement these changes will either disappear Zach’s Asian’s strategy covers several or be taken over. Small companies in the fronts. Firstly, we will continue to buy from $50-100 million turnover range, meanwhile, Asia, despite expected long-term pressures will have to specialise very much to survive. on prices from rising costs in China and India, So consolidation will come in the form of creating price in ation for raw materials. medium-sized companies acquiring smaller Secondly, we want to manufacture in Asia, rms or alternatively merging together. particularly in the case of products that are not convenient for our western facilities; this Q. Could partnerships with other may be the result of lower added value or chemicals companies be used as an complexity or because they do not involve our alternative to acquisitions? core technologies. Thirdly, we want to sell in Asia! And we are starting to penetrate Asian Partnerships are a dif cult alternative; they markets with products for which we have a look very nice on paper but the reality of strong process advantage.

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Q. Is the industry right to focus on China and India? What about other rapid-growth economies?

China and India are the correct focus because no other countries (besides perhaps Russia in the mid-term future) share the same characteristics in terms of population size, internal market growth and access to a pool of well educated scientists. , Mexico, Brazil and Turkey are playing a role, but they have some way to go before they can boast all of India and China’s strengths. I think Russia will become a major player, but the country still has a lot of political and social challenges to overcome.

Q. Do you think that western concerns over compliance with international standards in Asian-based priority targets. The impact is that we are now What advice would you give to a fine manufacturers is justified? Q. recognised by the market as a consolidated chemicals manufacturing business on how player and we are getting more projects. There It is very justified because in Asia you have to build and sustain successful relationships aren’t any more similar deals on the cards, but both the best and the worst in terms of with clients? we may do some more specialised deals for speci c technologies. GMP, environmental issues and safety. A common mistake when analysing China and Do what you have committed to do. Our clients India is to think of the two as homogeneous, need to feel comfortable and to trust that we Q. What are the benefits of now being but that clearly is not the case. Our people will deliver on our commitments, whether they part of a larger organisation? are constantly travelling to these two are related to con dentiality or ef ciency. Other countries and they observe very different advice is to be patient; building up a strong Being part of a bigger organisation allows a realities in terms of plant modernity, GMP relationship requires a lot of time and effort. company to offer a broader value proposition culture, efficiency, safety and environmental You need to take a step-by-step approach to to potential customers, which in turn gives you protection. Hopefully the weaknesses will make sure that you upgrade your relationship the opportunity to attract bigger and more disappear over time, but in the meantime only when you have been successful with the sophisticated projects. It also provides you with we should be very careful in the way we previous step. many more industrial options and access to select our suppliers and which goods to increased R&D resources. It is like suddenly having a bigger engine in your car! But when import. Zach System has facilities in Italy, Q. increasing the size of the organisation you France and the US – do you intend to have to make sure that you do not reduce Q. In light of the heparin scare of 2008, expand further? reactivity or your ability to respond to customer what do you think needs to be done requirements with speed. specifically to prevent sourcing of Besides these countries, we are increasing our partnerships with the aim of producing in India. substandard ingredients? What are your priorities for 2009? The goal is to have a diversi ed production Q. platform in order to choose the best option for We should ask Chinese and Indian In 2008, we met our objectives – no mean feat each product. Not all countries are equivalent exporters to follow exactly the same rules following an acquisition. We have redesigned the in terms of expertise and capabilities so as we do in terms of GMP and regulation. organisation, enhancing our market penetration, diversi cation is a big advantage. Our authorities should carry out rigorous meeting our sales targets and creating a local inspections, but we should also urge homogenised culture. importers to take responsibility for the Q. Tell us about the 2007 acquisition of Looking ahead, we want to select quality of what they import. PPG and the integration process one year on. more projects by improving our customer relationships, select new long-term technologies At governmental level we should oblige What impact has it made on your business? that can be offered to the marketplace countries to take control of the quality of and optimise our ef ciency. Zach’s growth their exports through GMP inspections The PPG deal was all about gaining technologies, model is based on being very innovative with and certificates. customer relationships and skilled people. The sophisticated projects developed with preferred When we manufacture in Italy for export rst phase of the integration process is over customers and partners. The focus is on very to the US, we need authorisation from the now and we will enter a second phase, aiming high added value projects and getting the timing Italian ministry of Health. This guarantees for continuous improvement and optimisation. right in terms of choosing, developing and compliance with GMP, even when we are This means making better decisions over where marketing them. Timing is essential when you not selling in Europe! I wish somebody to produce what product because not all have such long development cycles. would explain to me why this is not the plants are equivalent; each one offers different case for companies exporting their products skillsets. This optimisation must also continue Caroline Richards is a reporter for Scrip. into Europe. to align our structure and resources with our

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Careers & People

Knowing your unknowns Recent research across multiple industry sectors shows that pharma is one of the most vulnerable in terms of the potential costs of employee misunderstanding – the issue of staff misinterpreting company policy or their own job functions, explains Mary Clarke

hese are challenging times for the UK those risks. With this in mind, all companies misinterpreted company policy, business pharmaceutical industry. In March are now looking at their major assets process, job function or a combination of all T2008, a survey by the Confederation and costs with more scrutiny. One of the three. It doesn’t mean someone deliberately of British Industry (CBI), in conjunction with biggest costs that all UK pharma companies ignoring company rules or doing something industry association the ABPI, found that are potentially faced with is the risk of they didn’t mean to, for example forgetting more than 80% of companies expect the employee misunderstanding. However, it can to back up computer storage or putting a market environment to deteriorate. Since be mitigated against if companies are able decimal point in the wrong place. then, levels of confidence have been further to identify those employees that pose the For any pharma company, having a affected by the failure of large financial greatest risk. competent and skilled workforce is arguably institutions both in the UK and the US. To reduce the impact of employee its greatest asset. However, having just a In an era of uncertainty, it is vital for all misunderstanding pharma companies need to small number of employees who lack the senior level management to evaluate the understand its context. The term employee necessary skills, or misunderstanding even a internal and external risks facing the business misunderstanding refers to actions taken minor aspect of their job, can have a dramatic and to put steps in place to protect against by employees who have misunderstood or impact. Misunderstanding can occur at all

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downtime. More than one third of pharma Table 1: Cost of misunderstanding per employee companies reported loss of business as a result of downtime caused by employee Banking $742 89% of pharmaceutical companies reported exposure to misunderstanding. This has the potential to the risk of reduced productivity cripple a business, particularly in a dif cult Petrochemicals $680 81% of banks reported exposure to impaired brand image market. A prime example was one pharma and reputation Pharmaceuticals $600 company that reported a misunderstanding 36% of transport organisations reported exposure to the which resulted in the Enterprise Resource Transport $349 risk of fatalities within the workforce or public 52% of petrochemical organisations reported a risk to Planning (ERP) system alert ticket being Other $610 health and safety compliance overridden. That company lost four days’ production time on a line that outputs over Source: IDC £200,000 per day. Nearly one in ve (18%) UK and levels, but its implications for the business can their jobs – is increasingly being recognised US pharma companies said employee be more extreme if it occurs within senior as a business-critical issue, rather than misunderstanding also affected their management. It should, therefore, be a vital purely an area for HR directors to consider. procurement practice. The impact of part of any organisation’s operational priorities Its importance was highlighted in recently procurement misunderstanding can be to quantify all risks including the impact of commissioned research by independent equally as devastating as it has the potential employee misunderstanding. analysts IDC. to affect a vast range of vital operations. Work over the past 10 years with hundreds The white paper, ‘$37 billion: Counting For instance, a procurement error at one of companies, including 12 of the world’s top the Cost of Employee Misunderstanding’, UK pharma company resulted in signi cant 100 brands, has produced a wealth of data revealed for the rst time the scale and production downtime when a dedicated based on more than 1.2 million employees. impact on UK and US businesses of production facility could not function without The research will shock many – on average, employee misunderstanding, speci cally a chemical catalyst that had not been 23% of employees do not understand at least among the banking, petrochemical, ordered. one crucial aspect of their job. This has massive pharmaceutical and transportation sectors. Other manifestations of employee implications for any organisation regardless of Shockingly, IDC found that the pharma misunderstanding cited by the survey size or industry sector. industry had one of the highest potential respondents included industrial tribunal Employers have a responsibility to their costs of employee misunderstanding. When settlements (17%) and personal injury (11%). staff and customers to ensure that each extrapolated to the whole sector, research If any of those personal injuries resulted and every member of their workforce found that UK pharma companies could in death, then the senior management would understands the requirements of their job, lose £23.9 million ($46.8 million) each year. be liable under the Corporate Manslaughter and that they are assessed regularly to identify (The average cost of misunderstanding Act introduced in April 2008. Under the Act, underperformance and skills gaps. If nearly a per employee in the pharma sector was courts now look at management systems quarter of staff are underperforming in their £307/$600. The ABPI estimates that 73,000 and practices across the organisation and job, what impact is that having on company people are employed directly by the sector.) pro ts and business risk? The biggest impact of employee The opposite of misunderstanding – misunderstanding for pharma companies Box 1: Top tips to address employee understanding and competence in surveyed by IDC was unplanned employee misunderstanding 1. Accept that it is the senior management team’s responsibility – do not presume it is the sole Figure 1: Breakdown of costs resulting directly from misunderstanding domain of human resources; Thinking of your company’s total exposure to unforeseeable risks and ef ciency shortfalls, 2. Look beyond training as the solution – some staff are good at learning by repetition but what proportion would you say was due to employee misunderstanding? cannot put the lessons learnt from training into practice. Simply relying on the learning and Tax/revenue penalties 3% development team will not identify or address misunderstanding; 3. Regularly assess employees’ understanding of Inef cient nancial practice - eg. treasury or tax 5% their jobs – this should cover each employee’s level of knowledge, understanding and confidence in the areas important to their Regulatory penalties 6% organisation’s overall operational performance; 4. Evaluate confidence as well as competence – Loss of business due to disaster 10% high confidence when employees are right is good, but confidence combined with misconceptions can put an organisation at risk; Personal injury claims settlements 12% 5. Assess every employee – unintentional human error occurs at every level from the shop floor to Industrial tribunal settlements 16% the boardroom; 6. Look to automate assessments as a cost- effective solution providing greater objective Poor procurement practice 17% analytics as opposed to the subjective measures seen in many performance reviews; and Loss of business due to downtime 32% 7. Remove blame – employee assessment is not about pointing the finger, it is effective risk management. Source: IDC

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Table 2: Breakdown of costs resulting directly from human error by industry sector (%) Banking Petrochemicals Pharma Transport Other Total

Downtime 37 23 37 33 32 31

Procurement 7 19 18 22 19 17

Tribunals 12 18 17 17 15 16

Personal injury 4 19 11 14 10 12

Disaster 15 4 5 4 16 10

Regulatory 19 2 6 3 4 6

Financial practice 5 8 5 5 4 5

Tax 1 6 1 2 2 3 Source: IDC

Table 3: Intangible risks over the past 12 months (%) Banking Petrochemicals Pharma Transport Other Total

Tighter, more stringent regulation 40 5 12 4 3 10

Fatalities in the workforce or public 2 21 6 36 11 14

Impact on share price 29 10 14 18 20 18 Health and safety interests/inspections/ 7 52 39 46 22 31 greater regulation

Impaired brand image 81 61 75 69 53 64

Impaired reputation 83 74 85 78 64 74

Impact of employee morale 76 76 77 75 73 75

Reduced productivity 91 82 89 96 94 91

Loss of sales/reduced customer satisfaction 100 100 96 98 100 99

Injuries to personnel or public 100 100 98 100 100 100 Source: IDC

will prosecute failures to manage health and recognises that a face-to-face approach to identi cation of any problem areas before the safety properly. employee assessment in a large organisation, worst should happen. The ndings also highlighted that the real often with staff dispersed across different Finally, employee misunderstanding is cost of employee misunderstanding may be locations and geographies, could be logistically an issue that every senior level manager even higher when costs, such as impact on dif cult, expensive and liable to errors. or director should be aware of as it has a brand, reputation and customer satisfaction Nevertheless, it suggests that the problem bearing on the achievement of all business are taken into account. can be overcome by online assessments objectives and the relationships with key 98% of pharma companies said employee that employees can complete in their own stakeholders. misunderstanding increased exposure to time and which enable directors to assess Putting in place an employee assessment injuries to their personnel or the public, quickly and cost-effectively the location of the programme will ensure that companies and 96% reported exposure to loss of source of problems. Surprisingly, the research are in a position to assess and control sales, over the past 12 months. In addition, revealed that only 6% of the surveyed misunderstanding, giving organisations a around 89% said they had been exposed to organisations had such a solution in place. superior competitive advantage. reduced productivity and 85% cited impaired An employee assessment should be a vital reputation. part of companies’ risk management and The research shows that while compliance strategies, as well as a key talent organisations are often aware of the costs of management tool. If companies regularly employee misunderstanding, only one in three assess their employees’ performance, they claims to have taken any action to close the can identify what employees understand and Mary Clarke is CEO of gap. However, those organisations that did what they misunderstand, identifying where Cognisco. take action by having an employee assessment training is needed and where skills gaps exist. programme in place reported fewer human Careful assessment of these factors will help errors, lower employee turnover and to ensure that any strategy implemented is reduced health and safety breaches. The study as effective as it possibly can be, allowing the

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Careers & People

“You have an opportunity to present yourself [to investors] ] if you think you are a good company, and say now is your ] chance to have a look at us, and the market reacted ] favourably. We could have oated at a better time, but the ] result could not have been more pleasing.”] Ablynx CEO Dr Edwin Moses on the company’s successful IPO in the second half of 2007 “If the pharma industry doesn’t succeed in changing ] the fate for these patients, we would see a tripling ] of the costs and productivity losses in the next ] “The UK’s lead over the rest of ] 15 years… The best cost saving for society is to ] Europe in biotech shrinks every year. ] make sure that investment in innovation is paying ] We should worry that we’re not ] off so that companies do invest in changing ] stretching out the lead. The real ] the course of these  ve diseases.” ] challenge is to ensure the seedbed ] of the sector continues to be nourished.” ] Novartis’s CEO Dr Daniel Vasella on the ageing population, modern unhealthy lifestyles and pharma’s role in combating diabetes, Andrew Witty, CEO of GlaxoSmithKline, calling on the Alzheimer’s disease, cancer, cardiovascular disease and obesity UK government to ensure the ongoing pre-eminence of the UK in the biomedical field “In the past we could consider that ] amlodipine [P zer’s antihypertensive ] Norvasc, now generic] was bringing ] “I don’t know who it is, ] something and is a very good drug, ] but it begs the question: ] but it was maybe the 12th calcium ] Why would anyone want ] antagonist drug introduced to the ] to be BMS’s brother-in-law?” ] market. I don’t think that in the future ] Unnamed observer commenting on there will be a lot of number 12s ] speculation over the takeover of introduced to market that become ] ImClone Systems, before Lilly emerged very successful.” ] as its mystery bidder Dr Marc Cluzel, R&D chief of Sanofi-Aventis, on the end of the me-too drug The year in quotes

“Patients in Japan still do not have full ] access to new drugs and they want us ] to approve products quickly and safely. ] “Whether drugs are patented or not, they are ] This is an issue that should be ] equally important for patients.” ] confronted squarely.”] Daiichi Sankyo president and CEO, Takashi Shoda, PMDA chief executive Dr Tatsuya Kondo on on the Ranbaxy acquisition Japan’s continuing drug lag problem

“Risk-sharing can lead to tremendous ] “We must be able to respond ] rewards and provide a company with ] to new science so that as new ] the exibility to focus efforts on other ] technology comes over the ] areas. But you must be willing to ] horizon and becomes ready ] accept the loss of some control that] ] for clinical application, our ] comes with that decision. If you’re not ] system can come up with a ] comfortable relinquishing some of the ] sensible, balanced regulatory ] decision-making in a project, you need ] structure to deal with it.” ] to rethink that approach.” ] Professor Kent Woods, CEO of the John Goddard, senior vice-president of strategic MHRA, on future challenges facing planning and business development at AstraZeneca, the UK medicines regulator on industry’s emerging partnership models

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ODT and

Tel: +41 91 935 5110 Tel: Email: [email protected] www.alpex.com Web:

ablets

isintegrating T Emesis; disease; and Parkinson’s (MS). (ALS)/multiple sclerosis lateral sclerosis Amyotrophic No stirring required for tablet disintegration; No stirring required formula; and Sugar-free Safe for diabetics. formula (safe for diabetics); Sugar-free matrix; Highly hydrophilic Highly soluble matrix; Suitable for those who dislike swallowing tablets, and the elderly; such as children Ideal for acute conditions; and hay including allergies migraine, treat to used be Can disease, pain. reux diarrhoea, gastro-oesophageal fever, Administration at onset of symptoms; faster onset; Perceived Patient hydration: 150-200 ml of water required; (APIs) in suspension/solution; Active ingredients Potential faster adsorption; for tablet disintegration; Stirring required formula; and Sugar-free Safe for diabetics. formula (safe for diabetics); Sugar-free matrix; Highly hydrophilic Highly soluble matrix; Drugs can be adsorbed avoiding stomach degradation; and Ideal for acute conditions. r r r r r r r r r r r r r r r r r r r r r r r r r Alpex Pharma SA 6805 Mezzovico Switzerland These products are also ideal for conditions in which are These products Buccal tablets proprietary patented this to according formulated Tablets able to dissolve in the oral technology are INFORMATION CONTACT Granular in sachets containing moisture Granular in sachets containing moisture sensitive products can be formulated with the Products following claims: Orally D to this pat- formulated according Tablets able to dis- technology are ented proprietary solve rapidly on contact with saliva releasing a highly soluble matrix. the drug from include: features Product including: swallowing is compromised, the buccal the drug to be absorbed through cavity releasing include: features mucosa. Product

chewable – products products –

O 2 H

+

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the company can carry out

moisture-proof packaging such moisture-proof CO

. The predominant focus for Alpex is the development The predominant focus for .

O 2 (heat) - + H 3

Administration at onset of symptoms; faster onset; Perceived Patient hydration: 150-200 ml of water required; (APIs) in suspension/solution (this can Active ingredients in better absorption); result of CO2; solution because of presence Buffered of gastric mucosa; Protection Potential faster adsorption; Fizzy solution (taste improvement); Manufacturing of solid dosage forms include orally disintegrating tablets (ODT), Packaging of products – Packaging of products as aluminium-aluminium blisters, aluminium-aluminium strips, aluminium-aluminium sachets, plastic tubes and plastic bottles with desiccant in the cap. Development capability – compatibility studies on actives and excipients, formula- analytical tion work including taste masking capability, development and validation, scale-up, stability studies, of bio-batches, validation of manufacturing preparation batches – all in GMP-compliant environments. tablets, effervescent tablets, buccal tablets, effervescent granular in sachets, granular in sachets and moisture- tablets. sensitive regular Fast release technology from Switzerland from technology release Fast HCO

H Effervescent Tablets. The Effervescent predominant focus Tablets. for Alpex is the development of solid dosage Alpex Pharma Alpex r r r r r r r r t t t summarised as below: granular in sachets of the residual is characterised by strict control The reaction in the ambient and produced present amount of moisture as well as on the nal dosage form. during the process, form can be The advantages of an effervescent Effervescent products are characterised by a are products Effervescent of chemical incompatibility between a source CO2 (normally sodium bicarbonate) and an acid (e.g. citric, tartaric or malic acid). organic catalysed This is an autocatalytic reaction, of water and heat, which by the presence generates CO2 in solution: PRODUCT CHARACTERISTICS tablets and effervescent Effervescent PRODUCTS/SERVICES COMPANY DESCRIPTION COMPANY Alpex Pharma is a Swiss drug delivery company specialising and production in the formulation, development, registration in water of solid dosage forms characterised by rapid release Alpex Pharma collaborates with in the oral cavity. or directly its of distribution the for companies medium-sized and large in various markets. products

For more information, please contact: of the solid dosage forms to deliver drugs directly into the oral cavity in order of the solid dosage forms to deliver of drugs and at the same time, to potentially improve the bioavailability and convenience. improve the patient compliance formulation development team cient 1985, has an effi established in The company, track record. site with an excellent cGMP and a well experienced manufacturing pipe-line Alpex products are marketed worldwide and has a consistent of new formulations for the European and the US market. of Lugano Its state-of-the-art facility is conveniently located in the north and packaging and houses two independent dedicated plants for manufacturing pharmaceutical and nutraceutical products. Effervescent Tablets Effervescent Alpex Pharma SA Alpex Pharma is an independent Swiss drug delivery company specialised in the is an independent Swiss drug delivery Alpex Pharma of proprietary solid dosage forms such as development and manufacture Via Cantonale, Via CH-6805 Mezzovico (Lugano) Switzerland +41 (0)91 935 51 10 Tel: Fax: +41 (0)91 935 51 20 Email: [email protected] www.alpex.com Website:

the environment makes the difference! Melting… Melting… is not a novelty….

the environment makes the difference! Melting… Melting… is not a novelty…. Alpex Pharma SA – Via Cantonale CH-6805 Mezzovico (Lugano), Switzerland +41 (0) 91 Tel: 935 51 10 Fax: +41 (0) 91 935 51 20 Email: [email protected] Website: www.alpex.com For more information, please contact: Its state-of-the-art facility is conveniently located in north of Lugano and houses two independent dedicated plants for pharmaceutical and nutraceutical products. Alpex products are marketed worldwide and has a consistent pipe-line of new formulations for the formulationsfor new of pipe-line consistent a has and worldwide marketed are products Alpex European and the US market. Alpex has an efficient formulation development team and a manufacturing site with an excellent cGMP track record. The company, established in 1985, was managed from 1992 by Elan established Corporation as in Elan 1985, Pharmawas managed from The company, SA. It became independent in 2004. forms forms to deliver drugs directly into the oral cavity in drugs order and at the same to time, improve the patient compliance potentially and convenience. improve the bioavailability of Alpex Pharma is an independent Swiss drug delivery company specialized in the development and manufacture of proprietary solid Tablets and dosage forms such as Orally Disintegrating Tablets, Buccal