The next 5 years: High­er R&D pro­duc­tiv­i­ty is here to stay, emerg­ing biotechs and new tech will have a big im­pact. But what about pric­ing?

Hind­sight is 20/20 vi­sion. But the drug mar­ket an­a­lysts at IQVIA be­lieve they can al­so paint a clear pic­ture of what lies ahead for all of bio­phar­ma in the next 5 years.

And it looks quite com­pelling — es­pe­cial­ly for the up-and-com­ing small­er com­pa­nies with a hard fo­cus on drug de­vel­op­ment and a taste for jump­ing in­to mar­ket­ing. Glob­al­ly, the in­dus­try can ex­pect to see over­all drug spend­ing rise from $1.2 tril­lion in 2018 to $1.5 tril­lion in 2023 — with the pres­sure on US pric­ing ris­ing.


IQVIA of­fered us a chance to get a pre­view of their new re­port, out on Tues­day. And with plen­ty of bold pre­dic­tions on of­fer for all as­pects of the in­dus­try, we’re go­ing to fo­cus on drug R&D trends, with a shot at clar­i­fy­ing the un­cer­tain pic­ture around drug pric­ing.

There’s a rel­a­tive­ly high and steady rate of new drug launch­es ex­pect­ed be­tween now and the end of 2023, says IQVIA in their new re­port on this top­sy turvy in­dus­try. Over the last 5 years, the in­dus­try av­er­aged 46 new drug launch­es per year. Over the next 5 years, that av­er­age will rise to 54. Spe­cial­ty drugs will ac­count for two thirds of those launch­es, com­pared to 61% in the last 5 years.


But R&D won’t be dom­i­nat­ed en­tire­ly by Big Phar­ma.

In­stead, the new re­port says up-and-com­ing small­er biotechs — de­fined as those with less than $500 mil­lion in rev­enue or R&D bud­gets un­der $200 mil­lion a year — have seen their per­cent­age of R&D ac­tiv­i­ty jump from 60% to 72% over the past 10 years. That’s led to 68 new drugs over the last 5 years, up from 47 from this group over the 5 years be­fore that.


The next 5 years? Look for these small­er com­pa­nies to pro­duce more than a third of the new drugs ap­proved, with a much greater like­li­hood that they’ll un­der­take the mar­ket­ing with­out a phar­ma part­ner.

As for phar­ma, the big com­pa­nies will pre­fer to do more part­ner­ing rather than shoul­der all of the com­mer­cial risk them­selves. In the near fu­ture, the em­pha­sis at the gi­ants will be on clar­i­ty and sol­id, re­li­able num­bers, and that means less like­li­hood of mak­ing ex­trav­a­gant bets on new drugs.

In this brave new world pic­tured by IQVIA, you can ex­pect play­ers to main­tain mar­gins in an un­cer­tain world or slash R&D spend­ing to com­pen­sate. Any­one who can’t ad­just will be sub­ject to a buy­out.

Here are some more snip­pets of what they’ve seen in the IQVIA crys­tal ball:

— Re­al world ev­i­dence gains trac­tion and devo­tees

The use of re­al world ev­i­dence is here to stay, with grow­ing so­phis­ti­ca­tion in gath­er RWE and us­ing it with reg­u­la­tors at the FDA — which have sig­naled their readi­ness for what lies ahead. Ran­dom­ized tri­als will re­main the gold stan­dard in R&D, but where they’re not vi­able, RWE can fill the gap. And where new tech­nol­o­gy can gen­er­ate da­ta at low­er costs, through site-less stud­ies for ex­am­ple, look for de­vel­op­ers to change as rapid­ly as pos­si­ble.

— AI is hap­pen­ing, and it’s get­ting big­ger

Ma­chine learn­ing and ar­ti­fi­cial in­tel­li­gence are gain­ing ground, and their use will grow sig­nif­i­cant­ly over the com­ing 5 years. AI and ML will have an im­pact on clin­i­cal as well as com­mer­cial set­tings, dri­ving drug man­age­ment and iden­ti­fy­ing pa­tients. And as da­ta sets con­tin­ue to grow in size, the in­for­ma­tion and analy­sis that they will pro­vide will grow in val­ue, fur­ther dri­ving adop­tion.

— Pre­scrip­tion dig­i­tal ther­a­peu­tics have a role to fill

The first pre­scrip­tion dig­i­tal ther­a­peu­tic was ap­proved last year. But look for lots more in the com­ing wave. What’s up first: “AD­HD, ma­jor de­pres­sive dis­or­der, and schiz­o­phre­nia apps are among late-stage pipelines and may be ear­ly en­trants.”

— That next-gen R&D rev­o­lu­tion? It could take awhile

You’ve like­ly read plen­ty about the next-gen cell and gene ther­a­pies that have been hit­ting the mar­ket. CRISPR-Cas9, stem cells and more gene mod­i­fi­ca­tion ap­proach­es are in the works. But the re­al­i­ty is that the first drugs of this new group — think CAR-T here — are ex­tra­or­di­nar­i­ly ex­pen­sive to make, dif­fi­cult to man­u­fac­ture and aren’t that wide­ly used. As a re­sult, IQVIA ex­pects on­ly 5 to 8 true, new next-gen ther­a­pies to make their way to an ap­proval in the next 5 years — few­er than we’ve seen in ear­li­er pre­dic­tions. The an­a­lysts ex­pect “on­ly a few com­pa­nies will end up dom­i­nat­ing here,” for all the above rea­sons.

— So what about pric­ing and mar­ket de­vel­op­ment?

Pub­lic per­cep­tion of the in­dus­try and drug pric­ing has been shaped by high­ly pub­li­cized in­ci­dents of price goug­ing — what I choose to call the Shkre­li Ef­fect. With drug pric­ing a hot po­lit­i­cal is­sue, there will be lots of ef­forts built around cap­ping prices. But the re­al­i­ty of the po­lit­i­cal sit­u­a­tion in DC will like­ly leave re­al change in the hands of the ex­ec­u­tive branch, says IQVIA, which can in­flu­ence pric­ing through new rules and reg­u­la­tions.

The shift in R&D in­no­va­tion over the last few years has tilt­ed the mar­ket to spe­cial­ty, or­phan and on­col­o­gy drugs, with new ther­a­pies of­ten win­ning 6-fig­ure list prices. That trend will con­tin­ue, says IQVIA, push­ing list prices on new drugs past the $200,000 mar­ket. But look for lots of pres­sure to rein in fu­ture price in­creas­es, with few­er re­al break­throughs like check­point in­hibitors, more back­lash from in­de­pen­dent pric­ing re­view or­ga­ni­za­tions like ICER and more com­pe­ti­tion in new class­es of drugs.

All of this will play out as some of the world’s biggest drug fran­chis­es are hit with biosim­i­lar ri­vals, capped by Hu­mi­ra, which los­es patent pro­tec­tion (most like­ly) in 2023, at the end of the 5-year win­dow. Biosim­i­lar de­vel­op­ment, which has lagged in the US, will ex­pand sig­nif­i­cant­ly over the next 5 years, with more com­peti­tors bring­ing more com­pet­i­tive pric­ing.


Fast growth through greater in­sur­ance ac­cess, mean­while, has made Chi­na the world’s sec­ond largest phar­ma mar­ket. Growth will con­tin­ue, but at a slow­er pace, de­clin­ing to 3-6% through 2023. That com­pares to an av­er­age of 11% per year for orig­i­nal brands over the past 5 years. Chi­na will re­main big, but the ex­plo­sive ex­pan­sion ap­pears to be be­hind us.

 

Novotech CRO Ex­pands Chi­na Team as Biotech De­mand for Clin­i­cal Tri­als In­creas­es up to 79%

An increase in demand of up to 79% for clinical trials in China has prompted Novotech the Asia-Pacific CRO to rapidly expand the China team, appointing expert local clinical executives to their Shanghai and Hong Kong offices. The company is planning to expand their team by 30% over the next quarter.

Novotech China has seen considerable demand recently which is borne out by research from GlobalData:
A global migration of clinical research is occurring from high-income countries to low and middle-income countries with emerging economies. Over the period 2017 to 2018, for example, the number of clinical trial sites opened by biotech companies in Asia-Pacific increased by 35% compared to 8% in the rest of the world, with growth as high as 79% in China.
Novotech CEO Dr John Moller said China offers the largest population in the world, rapid economic growth, and an increasing willingness by government to invest in research and development.
Novotech’s 23 years of experience working in the region means we are the ideal CRO partner for USA biotechs wanting to tap the research expertise and opportunities that China offers.
There are over 22,000 active investigators in Greater China, with about 5,000 investigators with experience on at least 3 studies (source GlobalData).

Daniel O'Day [via AP Images]

UP­DAT­ED: Gilead un­leash­es a $5B late-stage cash al­liance with Gala­pa­gos — lay­ing out O'­Day's R&D strat­e­gy

Daniel O’Day is executing his first major development deal since taking over as CEO of Gilead $GILD. And he’s going in deep to ally himself with a longstanding partner.

O’Day announced today that he is spending $5 billion in cash to add new late-stage drugs to Gilead’s pipeline, picking up rights to Galapagos’ $GLPG Phase III IPF drug GLPG1690 alongside adoption of the biotech’s Phase IIb drug GLPG1972 for osteoarthritis. And Gilead is also putting billions more on the table for milestones, gaining options for everything else in Galapagos’ pipeline, with a shot at all rights outside of Europe.

Altogether, Gilead is gaining rights to 6 clinical-stage assets, 20 preclinical programs and everything else being hatched in translation.

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Alk­er­mes adds bipo­lar I dis­or­der to its FDA wish­list; Con­go con­firms first Ebo­la case in large city

→ An ever-ambitious Alkermes $ALKS team plans to add bipolar I disorder to its list of conditions for ALKS-3831, which it plans to pitch to the FDA in Q4. Alkermes says they were persuaded to add bipolar I disorder after a pre-NDA meeting with the agency, which came about 7 months after the biotech reported positive data for schizophrenia. The drug is a combo using olanzapine/samidorphan, which they hope will be shown to be as effective as olanzapine without the substantial increase in the risk of weight gain.

Pe­ter Kolchin­sky and Raj Shah raise a $300M fund de­vot­ed to biotech star­tups

Peter Kolchinsky and Raj Shah have another $300 million-plus to play with on the biotech venture side of their investment business. 

The two announced Monday morning that they’ve put together their first pure-play venture fund at RA Capital Management, which has been known to bet on just about every angle in healthcare investing — from rounds to follow-on investments at public companies. This new fund of theirs arrives well into a go-go era of new startup financing, with a particular focus on building new biotechs.

Hal Barron [File photo]

Hal Bar­ron's team at GSK scores a win with pos­i­tive Ze­ju­la PhI­II front­line study — now comes the hard part

Score one for Hal Barron and the new R&D team steering GlaxoSmithKline’s pipeline.

The pharma giant reported this morning that its recently acquired PARP, Zejula (niraparib), hit the primary endpoint on progression-free survival in a frontline maintenance setting for women suffering ovarian cancer — following chemo and regardless of their BRCA status.

GSK bet $5 billion on the Tesaro buyout primarily to get this drug, drawing the shaking heads of biopharma. Why pay a big premium for a drug like this when AstraZeneca was going from strength to strength with Lynparza, ran the argument, having won a hugely important accelerated approval to jump out ahead — way ahead — of the rest of the PARP players? Lynparza — now co-owned by a powerhouse cancer team at Merck — won the first approval in frontline maintenance in ovarian cancer.

Boehringer buys Swiss biotech in its lat­est M&A deal, go­ing the next-gen can­cer vac­cine route

Boehringer Ingelheim has snapped up a Swiss biotech startup and added their group as a new platform for the oncology pipeline. 

The German biopharma company has bagged Geneva-based AMAL Therapeutics, paying out an unspecified upfront in a $358 million deal — cash, milestones and everything else, all in. Plus there’s 100 million euros on the line for commercial milestones.

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Ab­b­Vie beefs up the on­col­o­gy pipeline, bag­ging an up­start STING play­er with its own unique ap­proach

AbbVie isn’t letting its $63 billion buyout of Allergan stop its M&A/deals team from continuing their work.

Monday morning we learned that the pharma giant is snapping up tiny Mavupharma out of Seattle, a Frazier-backed startup that has its own unique take on STING — which is on the threshold of their first clinical trial.

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Billing it­self as the first AI biotech to launch hu­man tri­als, Re­cur­sion adds $121M C round

Billing itself as the first AI biotech with programs in the clinic, Salt Lake City-based Recursion now has a $121 million bankroll to start gathering human data to see if it’s on the right track. 

“We’re trying to build this discovery engine,” Recursion CEO Chris Gibson tells me ahead of the C round news. “We now have the first two programs in the clinic.” And that, he adds, qualifies as a first for any AI establishment “that actually have something in the clinic.”

FDA bats back As­traZeneca's SGLT di­a­betes drug for Type 1 di­a­betes — block­ing a class on safe­ty fears

The FDA has just fired its latest salvo at the SGLT class of diabetes drugs, blowing up some commercial opportunity at AstraZeneca as part of the collateral damage.

The pharma giant reported early Monday that the FDA has rejected its blockbuster drug Farxiga for Type 1 diabetes that can’t be controlled by insulin. And while the pharma giant maintained its usual grim silence in the face of a setback, this one should be easy to interpret.