Originally posted on 11/21/2013
After ASAP chairman of the board Russ Buchanan introduced new ASAP CEO Mike Leonetti and following opening remarks by Program Committee chair Jan Twombly, the 2013 ASAP BioPharma Conference jumped out of the starting gate with a keynote address by Kenneth A. Getz, founder and chairman of CISCRP and professor and director of sponsored research programs at Tufts University School of Medicine, entitled “Changing Dynamics in Drug Development Collaborations.”
Noting that “this is the 50th anniversary of modern drug development,” with the creation of the randomized controlled clinical trial, supported by the FDA, which led to the development of the period of “blockbuster R&D,” Getz argued that it’s now time to take stock of where we are in terms of drug development alliances. The movement from more transactional relationships to integrated, open innovation alliances, outsourcing of research, and a greater global footprint for drug development was accompanied by high hopes: for lower costs, faster cycle times, and greater efficiency. As Getz said, “We are at the dawn of new alliances and open innovation.”
But the reality has been something different. While the rate of drug and biologics approvals is at a peak, and pipeline activity has grown as well, “where we struggle,” according to Getz, is with legacy business models that largely have remained unchanged for half a century. The costs of supporting drug development rise by about 9 percent per year, and costs have risen 30 percent overall from five years ago. There are smaller market opportunities now as a drug enters the market, which leads to a “terribly high probability of failure in our industry,” Getz said. Only one out of five compounds tested gets to market, and of those that do make it, only one in six will recoup the costs of development.
So why has performance been so elusive? Getz put the blame on entrenched legacy processes, risk aversion, fragmented and poorly coordinated functions, insular culture and operating policies, poor communication and coordination, implementation of changes too rapid to integrate and absorb (such as after M&A activity), and rising scientific, operating, and regulatory complexity.
With a high risk profile, high costs, and long durations before drugs can recoup investment, the upshot is, according to Getz, that “the vast majority of our investment is in failed compounds.” He also acknowledged this as “the low point in my presentation!”
With the rise of alliances between pharma companies and CROs, Getz cited what he called “aspirational metrics”: many in the industry hoped for greater cost efficiencies and shorter cycle times that largely haven’t materialized. What is needed, he said, is to stop seeing alliance partners merely as commodity providers and servers, to break down cross-functional challenges to support the alliance better, and to move beyond “insular opportunities.” Under open innovation, all parties need to be aware of the challenges—and a public that surveys show is largely unaware of scientific research and distrustful of pharma companies needs to be engaged as well.
Getz acknowledged that this won’t be easy, but that it’s very necessary to bring all parties together to work on the problem and to think differently given the complexity of today’s biopharma alliances and the exigencies and risks inherent in the market. “This is a very difficult thing to do. It requires looking over the landscape collaboratively.”
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