Business Development & Licensing Journal

Transcription

1 Business Development & Licensing Journal For the Pharmaceutical Licensing Groups Strategic options for getting the most out of late-stage licensing deals Trends in the therapeutic area focus of leading pharmaceutical companies Royalty recovery and audits Managing and motivating negotiators Prepare to meet your partner Book review and author interview

2 Trends in the therapeutic area focus of leading pharmaceutical companies: a new survey Insight into how the therapeutic area focus of a pharma company s late-stage R & D is changing can be valuable for licensing and other pharma industry professionals. How can we expect the therapeutic direction of leading pharmaceutical companies to change over the next few years as their new products emerge onto the market? And how does this compare with the situation five years ago? As well as examining changes within the Top 20 companies, this article draws some overall conclusions. by John Ansell, John Ansell Consultancy Introduction In September 2008 it was revealed that Pfizer intended to focus down to fewer therapeutic areas, cutting out eight disease areas as defined by the company. But by January 2009 it had announced its acquisition of Wyeth, temporarily at least broadening Pfizer s therapeutic area coverage and restoring some of those indications it had only just planned to exit. It also added one area new to Pfizer: vaccines. How are other leading pharma companies changing their therapeutic focus in R & D? And what are the general trends? This article contrasts current findings with those from a uniform survey carried out five year ago 1, and also refers to similar, earlier surveys conducted 10 2,3, and 12 years ago 4. How we classify projects by therapy area The aim of the therapeutic classification system we have devised is as far as possible to reflect in a pragmatic manner terminology used by the pharmaceutical industry. Naturally, the way in which pharmaceutical companies employ therapeutic area terminology in describing their R & D pipelines varies. Therefore, wherever necessary, we re-interpret the terminology which companies themselves employ according to our uniform classification system. This system used is shown in Figure 1. A combination of two types of terminology are used to describe the therapeutic areas: anatomical (e.g. gastroenterological, ophthalmology) therapeutic (e.g. anaesthesia, cancer). We exclude any therapeutic areas pursued by companies in the past which no longer feature in by any of the Top 20 companies currently. Qualifications for representation in a therapeutic area Only projects in development for therapeutic indications are included. Thus diagnostics, e.g. contrast media, are excluded. Also potential prescription products only are considered, thus excluding the OTC area. In terms of phases of development included, only projects that are at least advanced as Phase II clinical trials qualify for inclusion. Projects continue to qualify as far as the granting of registration, and thereafter if Phase IV work is continuing on a product. The Phase II cut-off means that a company s desire to be involved in a therapeutic area is insufficient in itself for that area to be included; it must also have made progress with at least one project beyond Phase I. But in-licensing of a project which is sufficiently advanced in development can qualify the licensee in a therapeutic area. The Phase II cut-off thus reflects tangible progress in a therapeutic area and not just a professed aim. Where an originating company is still active in clinical or other development for an already launched product, this can continue to qualify its therapeutic area for inclusion. This Phase IV activity is increasingly nowadays in any case being designated by companies as new Phase II or Phase III work. As far as our system is concerned, however, once there are no further indications in development, a product no longer qualifies its therapeutic area for inclusion. The Top 20 company cohort and representation by therapeutic area The selected cohort of Top 20 companies is shown in Figure 2. The rankings, which are based on global sales levels, are taken from the current Scrip 100, but with one modification. The 19th-ranked company, Procter & Gamble, has been excluded because it recently announced that it had stopped investing in pharmaceutical R & D. The 20th and 21st company, Astellas and Novo Nordisk, have therefore each been promoted by one ranking position. 7

3 Business Development & Licensing Journal The top 20 include one generics company, Teva. However, this company does have a small R & D portfolio of novel, non-generic projects. The composition of the Top 20 companies in our surveys has changed considerably over the past decade. For example, in 1999, when we analysed the Top 50 companies, Amgen, which is now ranked No. 14, just made the rankings at No companies that ranked at that time between No. 21 and Amgen at No. 50 are now included in the current Top 20 usually as part of an another company that acquired it. Hence today s Top 20 incorporates some 30 companies in 1999 Top 50 terms, quite apart from other, smaller companies that were then outside those rankings. Figure 2 indicates the therapeutic areas in which top 20 companies in 2009 are currently active namely those with at least one project currently in development that has reached Phase II clinical trials or beyond. They appear in order of frequency of occurrence. The sources of the data used to determine this are shown in the right-hand column. The majority of companies now provide a sufficiently detailed R & D pipeline on their web sites, or in the form of R & D presentation slides, to give the data needed. This data has often sufficed. However, failing this, for a minority of companies providing insufficient details for our purposes, other web site pages including for example press releases, have been referred to as necessary. In a very few cases where this has still not sufficed other, non-company sources have been used. We found that on average the top 20 companies are represented in 7.65 therapeutic areas. This is very similar to the situation in both 2004 and in 1999, when the average number was Any focussing down to a smaller number of therapeutic areas has therefore so far been minimal. The largest company, Pfizer, is currently represented in ten therapeutic areas. Three other companies Novartis, AstraZeneca and Astellas also qualify in ten areas. Only one company qualifies in more areas than this, Roche, with 11. As Figure 2 shows, there is no particular correlation between size of company and number of therapeutic areas represented. For example the third biggest company, Sanofi Aventis, is represented in eight therapeutic areas, whereas Astellas, ranked No. 17, is represented in ten. This accords with our previous findings. We can conclude therefore that there continues to be no general consensus amongst leading pharmaceutical companies on breadth of R & D portfolio. Neither is there any general rule of thumb linking size of company to breadth of therapeutic portfolio. This again repeats the findings of each earlier survey. Figure 1: Therapeutic area classification system Therapeutic area Respiratory/allergy Comments on classification includes pain whether of central or peripheral origin, but not when associated with rheumatological disorders includes stroke, renal disorders associated with the cardiovascular system; blood and clotting disorders includes diabetes, obesity, urological disorders and hormones; male erectile dysfunction, baldness and disorders of the prostate; gynaecological disorders including osteoporosis and contraception but excluding infections and cancer (or oncology); excludes anti-emesis associated with cancer chemotherapy includes antibacterials, antivirals, antifungals and other anti-infectives; excludes vaccines and ophthalmological infections includes allergies associated with respiratory disorders; excludes allergy associated with dermatological disorders includes all anti-emesis compounds, including those specifically in use with cancer chemotherapy includes ophthalmological infections all vaccines (although a vaccine could fall into another therapeutic area [e.g. a smallpox vaccine could also be considered as an anti-infective], to avoid double counting, we count it only as a vaccine) Source: John Ansell Consultancy 8

4 Trends in therapeutic area representation Leading therapeutic areas As Figure 2 shows, there are three therapeutic areas where 19 out of 20 companies are represented. These are the cardiovascular, metabolic and cancer areas. Not far behind is, in which 18 companies are represented. In October 2008 Scott Gottlieb of the American Enterprise Institute singled out the cardiovascular area as one that research-based pharmaceutical companies were already exiting, linking this in part to the tougher regulatory environment. Our findings certainly do not reflect this. Trends over the past ten years for these most heavily represented areas are shown in Figure 3. This shows that cardiovascular, and metabolic have consistently been amongst the most broadly represented therapeutic areas over the past decade. is the only one of these areas whose representation has ever dipped. The number of companies represented for cancer s inclusion dropped from 18 in 1999 to 16 in This is likely to have been because the intense level of activity in R & D had for some companies not yet been translated into progression of compounds to Phase II. Now, however, 19 companies qualify, indicating that efforts are paying off and anti-cancer compounds are coming through in abundance. Middle-ranking therapeutic areas The next most popular area is anti-infectives, where we today find 16 companies represented (Figures 2 & 4). Although there are still fewer companies qualifying than the 18 in 1999, this represents a slight increase since 2004, when only 15 companies qualified. It does suggest that the long-term decline in interest in anti-infectives may have been stemmed. follows just behind, a therapeutic area in which 15 companies are represented. This area s representation has been on the rise. In 1999 only 10 companies qualified, but this had increased to 14 by has been the area benefitting most from the development of monoclonal antibodies, a major factor accounting for this trend. There is then quite a gap down to respiratory/allergy, which shows long-term decline. Back in Top 20 companies were represented. This declined to 14 by 2004, and now it has fallen further to 13 (Figure 4). This probably reflects the relatively modest room for improvement in this therapeutic area and the consequent declining interest in developing new Figure 2: Therapeutic areas where the Top 20 pharmaceutical companies are active with projects at Phase II or beyond 1 Pfizer GlaxoSmithKline Sanofi Aventis Novartis Roche AstraZeneca Johnson & Johnson Merck & Co Wyeth Lilly Bristol-Myers Squibb Abbott Boehringer Ingelheim Amgen Bayer Takeda Schering-Plough Teva Astellas Novo Nordisk Total Respiratory/allergy Total Note: Company rankings are for 2007; Source, Scrip 100, January 2009, excepting exclusion of the now inactive Procter & Gamble (ranked 19th), with promotion of Astellas & Novo Nordisk by one ranking position. Source: John Ansell Consultancy 9

5 Business Development & Licensing Journal Figure 3: Trends in Top 20 company R&D presence in leading therapeutic areas Number of companies active Figure 4: Trends in Top 20 company R&D presence middle-ranking therapeutic areas Number of companies active Figure 5: Trends in Top 20 company R&D presence other therapeutic areas Number of companies active Respiratory/ allergy approaches to treating respiratory diseases. It probably also indicates the difficulty in making breakthroughs in those respiratory indications where major commercial potential for new products does exist such as in chronic obstructive pulmonary disease (COPD). This has been something of a graveyard for novel approaches in recent years. Finally in this middle-ranking group shown in Figure 4, representation has fluctuated in the next area, gastroenterology. Ten companies currently qualify. A decade ago there were just eight, but by five years ago this had risen to 14. Industry interest in gastroenterology R & D declined during the early 1990s, with companies withdrawing from R & D because of the widespread perception that room for appreciable improvement of therapy post-tagamet, Zantac and Losec no longer existed. A few years ago monoclonal antibodies began to bring advances in ulcerative colitis and Crohn s disease but this has apparently failed to sustain interest in the field. Rather like COPD in the respiratory area, irritable bowel disease (IBS), another indication of enormous commercial potential has been just as much of a graveyard in gastroenterology for novel approaches. Promising 5-HT3-antagonists Lotronex (alosetron, GlaxoSmithKline), Zelnorm (tegaserod, Novartis) and cilansetron (Solvay) have all failed in recent years. Other therapeutic areas Way below the middle-ranking indications, five further therapeutic areas remain (Figures 2 & 5). Six companies are represented in vaccines, two more than five (and 10) years ago. Shortly, six of the top eight pharmaceutical companies will be active in vaccines: GlaxoSmithKline, Sanofi Aventis, Roche, AstraZeneca, Merck & Co and newcomer Pfizer once its acquisition of Wyeth has been completed. However, no companies ranked below Wyeth in ninth place are active in the vaccine field. Perhaps these companies have been reluctant to get to grips with all that vaccines can entail specialised manufacturing expertise, non-standard decision makers to persuade and marketing targets to reach, as well as unusual distribution systems. Five companies are represented in ophthalmology, down at the same level as ten years ago, after an increase to seven companies five years ago, when monoclonal antibody products in particular boosted numbers. Five years ago dermatology appeared to be on the up, rising slightly from eight qualifying companies in 1999 to nine in However, subsequently there has been a sharp decline, so that now only five companies are represented. Monoclonal antibodies undoubtedly helped to boost interest in dermatology R & D, but this therapeutic area has usually been much more poorly represented than bigger areas of commercial potential such as rheumatology in this respect. Now, the boost from monoclonal antibodies to dermatology appears to be very much on the wane, despite the evident scope for improved therapies. Price is often an issue for new products in dermatological markets which tend to be dominated by cheap, traditional therapies. also suffers because it tends to be considered a relatively trivial disease, most disorders being far from life-threatening. 10

6 Also, five companies are represented in transplantation. This has advanced slightly, from four companies five and 10 years ago, to five today. Bringing up the rear, just one company, Schering-Plough, is now represented in anaesthesia. This has come about through this company s acquisition of Organon in has been an area of weak representation since this survey started: four companies 10 years ago, and none at all five years ago. Companies newly represented in therapeutic areas since 2004 In Figure 6 we indicate areas where companies are newly represented since The therapeutic areas are shown in order of occurrence in that year. There are in aggregate 20 instances of areas being newly represented just one per company on average. 13 out of 20 companies have qualified in new areas. Takeda is the company with the highest tally: three, with five qualifying in two: Pfizer, AstraZeneca, Merck & Co, Bayer and Schering-Plough. The areas most often newly represented are cancer and ophthalmology, each by four companies. As Figure 6 shows, the new representations are widely distributed across all therapeutic areas from the least represented therapeutic areas to the relatively well represented ones. However, no companies have entered the cardiovascular area, and dermatology. But then there was little scope for increase in the first two of these, where practically all companies are already represented. Companies exiting therapeutic areas since 2004 Figure 7 shows areas exited by the current Top 20 companies since 2004, 19 in all. This is just one less than the number of new representations of therapeutic areas further evidence that there is little net change in overall representation of therapeutic areas by companies. This is confirmed if we look at this across companies: the number of companies exiting areas is 12 one less than have qualified for additional areas. The skewed distribution of exits to the right-hand side of Figure 7 is striking. This means that companies have recently been pulling out of (or losing representation in) the less researched therapeutic areas to a much greater extent than is the case with the most intensively researched ones. and gastroenterology has both been particularly badly hit, with no less than five of the current top 20 companies exiting each area over the past five years. (Note also that for dermatology we Figure 6: Therapeutic areas where companies are newly represented 2009 c.f (in 2004 frequency sequence) 1 Pfizer GlaxoSmithKline Sanofi Aventis Novartis Roche AstraZeneca Johnson & Johnson Merck & Co Wyeth Lilly Bristol-Myers Squibb Abbott Boehringer Ingelheim Amgen Bayer Takeda Schering-Plough Teva Astellas Novo Nordisk Total Total Source: John Ansell Consultancy 1 : Area where company newly represented Total Respiratory/allergy 11

7 Business Development & Licensing Journal found no companies newly represented in the area.) A further area suffering a marked loss of representation by companies is ophthalmology, with four less than in The impact of this pattern of exiting is that the emphasis of representation has swung more towards the more heavily researched therapeutic areas. The companies exiting the most therapeutic areas since 2004 are Wyeth and Boehringer Ingelheim, each with three. Most altered corporate therapeutic strategy We can at this point also deduce that Merck & Co is the most active company in terms of changes to the therapeutic areas in which it is active. It has entered two new therapeutic areas (cancer & ophthalmology) whilst exiting another two (rheumatology & gastroenterology). At the other extreme, there is neither representation in any new area nor exiting of a previously represented one in two companies, Abbott and Novo Nordisk, indicating a stability of therapeutic area strategy in both companies. Fringe areas of commitment Having developed the best-selling product globally in the late 1980s/early 1990s, the anti-ulcerant Zantac (ranitidine), Glaxo subsequently took the decision to exit gastroenterology. However, limited gastroenterology research continued within the company. Then as, GlaxoSmithKline, it took the decision to re-enter the market towards a decade ago by our count, it has been represented ever since. Merck & Co was also very much involved in gastroenterology, notably with its highly successful anti-ulcer product Pepcid/Pepdul (famotidine), licensed from Yamanouchi, and subsequently, until rights returned to its originator Astra, to Figure 7: Therapeutic areas where companies no longer qualify 2009 c.f (in 2004 frequency sequence) 1 Pfizer GlaxoSmithKline Sanofi Aventis Novartis Roche AstraZeneca Johnson & Johnson Merck & Co Wyeth Lilly Bristol-Myers Squibb Abbott Boehringer Ingelheim Amgen Bayer Takeda Schering-Plough Teva Astellas Novo Nordisk Total Total Source: John Ansell Consultancy : Area where company no longer represented Total Respiratory/allergy 12

8 Losec/Prilosec (omeprazole). However, by 1999 it did not have a sufficient presence in gastroenterology R & D to qualify in this therapeutic area. But by 2004 Merck & Co was represented again, with anti-emetic compounds at Phase II. Its novel anti-emetic, Emend (apretinant), was then being launched in its first markets, for chemotherapy-induced nausea and vomiting. Originally this product was to be developed for indications, with emesis only as a subsidiary indication. But the product did not succeed in, leaving gastroenterology as the lead area for the product. However, by 2009 Merck & Co was once again absent from gastroenterology. Boehringer Ingelheim has had a heritage in gastroenterology with products such as the anti-spasmodic Buscopan, but by the late 1990s had exited the area. However, by 2004 it was active again, in a completely different area of gastroenterology, liver fibrosis, through its involvement with Genentech s interferon gamma 1b, which by 2004 was at Phase II. But this project did not materialise, and by 2009 Boehringer Ingelheim was once again absent from gastroenterology. is therefore an example of a fringe area of commitment by leading pharmaceutical companies. This can make it particularly difficult to choose a partner for a gastroenterology project from which a long-term commitment can be guaranteed. Conclusions By our assessment, leading pharmaceutical companies continue to be represented in practically as many therapeutic areas on average as they have been during the past decade. Also the number of areas companies no longer qualify for since 2004 is very close to the number they newly qualify for in Therefore there is no evidence so far for the focussing down by companies that has been expected in some quarters. Perhaps the fact that the pharmaceutical industry is somewhat more concentrated than five years ago has helped to bolster the figures. Another contributory factor could be the general increase in Phase IV trial activity, with products being kept in development for longer post-launch. companies is that if they succeed in their R & D endeavours, they stand to face heavier competition than they do currently with the portfolio of products they will then be promoting. Other factors being equal, they will therefore need to compete more strongly than they do currently. This does not square with the trend over the past few years of cutting back salesforces. The absence of any general consensus amongst leading pharmaceutical companies on the ideal therapeutic breadth of an R & D portfolio remains. Game theory would suggest that if a minority of companies were now to opt to increase their emphasis on the more rarefied therapeutic areas even if on paper markets in those areas appear commercially less attractive they could well stand to gain because they would tend to face less intensive competition. This trend for major pharmaceutical companies to abandon these more rarefied areas does also provide opportunities for smaller pharmaceutical companies. It should prompt licensing professionals in such companies to examine opportunities in such areas, where competition in the market is likely to prove less challenging than in the past. References 1. Ansell, J, Therapeutic Area Trends in R & D of the Top 20 Pharmaceutical Companies Spectrum Pharmaceutical Industry Dynamics, Decision Resources, September Ansell, J & Sparkes, K, R & D Portfolio Analysis: Therapeutic Area Focus Strategies of the Top 50 Pharmaceutical Companies. DR Reports, June Ansell, J, Where is the Pharmaceutical Industry Heading Therapeutically? John Ansell Consultancy, April Ansell, J, Converging Targets: R & D Strategies of the Top 20 Pharmaceutical Companies Spectrum Pharmaceutical Industry Dynamics, Decision Resources Inc, Oct The absence of any general consensus amongst leading pharmaceutical companies on the ideal therapeutic breadth of an R & D portfolio remains, as found in our previous surveys. Likewise, there is still no evidence of any general rule of thumb linking size of company to breadth of portfolio. Amongst the Top 20 companies the net effect of trends over the past five years is a reduced emphasis on the already less-researched therapeutic areas. This is much more the result of companies exiting areas rather than failing to qualify for new ones. This finding contrasts with five years ago, when it seemed that the biggest companies in particular were more prepared to conduct R & D in the less researched areas. This may be strategically short-sighted but is perhaps understandable, given that competition in R & D is much less transparent than competition in the market. There is thus a recurrence of the phenomenon of Converging Targets we detected 12 years in our initial, 1997 survey 4. The risk for John Ansell set up John Ansell Consultancy in He has advised some 120 pharmaceutical companies, start-ups, and companies that provide a wide variety of services to the pharmaceutical industry. He concentrates on projects in international marketing, business development and licensing, reflecting his earlier industry experience with Organon, Schering AG, Fisons, Solvay and Glaxo Holdings. John holds a B.Sc. in biochemistry from Liverpool University and an M.A. in business studies from Sheffield University. He may be contacted at jansell@ndirect.co.uk. 13