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| Veeda Clinical Research Corporate Blog on internal news, views, happenings in the group and discussion about the industry subjects. |
3/3/2010
The Market for global CRO's has taken dynamic change after the recession. Many CRO's in the western world have faced problems relating to projects getting cancelled / late payments followed by takeovers by private equities. the shift of Global pharma cutting down on the clinical development pipeline and shifting towards "generic drugs " and off patent bio similar drugs has made the local pharma industries particularly like India face a phenomenal pressure.
Most of the Pharma companies' earnings in the west today are placed with medium earnings, 'low profits, and pressure from patent litigations from generic makers which has forced many to proceed on layoffs particularly in the month of January 2010. With the intention of changing focus towards the emerging markets and generics, it is likely that the scene of outsourcing to CRO's in the world is likely to change. Outsourcing budgets are likely to be defined mainly on pricing and inflation trends in the geography of interest for Big Pharma.
The "structured" outsourcing market will definitely "migrate" to a new form altogether.
Patent Infringement followed by Para IV filings have been on the rise in the decade and have increased in the USA from 50 to more than 65 litigations. Consequently, the rate of settlements between branded and generic drug companies has also spiked. This indicates an increase of 27% in the year 2009 over the previous year and trends have shown that there has been a rising trend over the years particularly from 2006 (28-30) , 2007 (40-41) , 2008 (50) and finally more than 65 in 2009.
The rate of settlements in patent litigations has also been increasing at a 100% rate particularly from the year 2007 (20) to 45 in 2008 and more than 50% of the litigations in 2009 got settled outside the courts. This could be attributed particularly as a pay for delay phenomenon as well as recession in the period of 2008.
Generic drugs are produced and distributed, usually at much lower prices, after patent protection on the drug's active ingredient  expires.
Companies a few years ago used to spend their investment energies in mega clinical development projects with active hype particularly the Indian Pharma companies. Many Indian Pharma majors with a mega research plan like Dr. Reddys', have suffered setbacks on account of "negative" end points received in some of their project pipelines especially in the last few years. With the"shrinking "response to clinical development in India, Companies have decided to work quietly and sensibly only. The companies have shifted their focus to generic drug promotion in rural markets, focusing on generic filings in emerging markets and in terms of core research and development move on the lines of drug discovery and biotech for surviving in the long term.
Yes, the outsourcing market is likely to take turn towards a different bend. The fragmented market of CRO's is currently operating in a vicious circle. All players are trying to grab their share of outsourcing in their own way as the market is extremely competitive on account of pricing pressures and the related inflationary factors. The regulators add to the stiff competition and move the market to a further "slow growth" with both anticipated and unanticipated delays.
Therefore Pharma companies look alternatively towards outsourcing providers in other geographic regions like India which are conductive to their requirements which could be outsourcing of bio equivalence studies (completely) or in parts (DM, lab services, Project management, clinical trials etc.)
This could be one of the only ways which could "boost" the outsourcing market in India. However the market for CRO's In India has also acquired a very fragmented look and the competition is equally high particularly in the period post 2008.
One of the hubs for oncology biotechnology today is San Francisco. The reasons for this are the availability of ideal infrastructure, qualified experts and the nearness of academic institutions coupled with good logistic connections.
Sunesis, Poniard, Bipar Sciences and Exelixis are some of the companies which are developing drugs in licensing agreements with Big Pharma like BMS, GSK, Sanofi- Aventis and Genentech. These are some of the potential companies in the San Francisco bay area (3 of them being listed) are active cancer compounds in Phase II and Phase III phases of drug development.
The need to be creative is increasingly becoming the need of the hour. This holds true for all sectors, be it the Pharmaceutical industry or the CRO industry. Being creative does not necessarily mean developing and maintaining infrastructural or intellectual expertise in house, the same can apply to many other company activities as well. This applies to tie –ups, licensing, tie ups, joint ventures to name few. The most common types of alliances are generally related to the Pharma- Pharma, Pharma-CRO, Pharma- Biotech, Biotech-CRO, etc to name few.
Sometimes sectors which are related to the industry indirectly can also be important to the value added growth of the Pharma or the CRO industry.
Pharmaceutical companies will need to rethink their strategies as the world in which they operate undergoes dramatic changes. Patients, armed with unprecedented access to information, are being transformed from passive participants to super consumers of healthcare services. Drug makers will need to rethink not only how they approach them, but how to forge partnerships with nontraditional healthcare players that are helping to usher in this new era from telecommunications carriers to information technology device makers.
The need to curb the rising costs of healthcare has led policy makers in many countries to consider generic substitution of various brand name drugs as na effective means to cut costs.
For example, NHS in England began a 3-month consultation to seek views on plans to automatically substitute branded drugs with generic versions in primary care. However, doctors, patients, and advocacy groups—in England and elsewhere—are concerned that generic antiepileptic drugs (AEDs) might not be therapeutically equivalent to branded drugs, which could put patients at risk of breakthrough seizures or other adverse events. Thus, any proposal to implement widespread generic substitution needs careful consideration.
Anecdotal evidence, case reports, and database reviews have suggested an association between generic switching and poor outcomes. According to a retrospective review of medical and pharmacy claims in Canada, the rates of switchback (switching back to a branded drug after generic substitution) were greater for AEDs than for non- AEDs, and health-care costs were greater in patients who received generic topiramate compared with the branded version. Furthermore, the risk of head injury or fracture was almost three times greater in patients who switched from one generic version of topiramate to another, compared with patients who continued on the branded version. However, good-quality prospective data on outcomes after switching are lacking, and the view of the US Food and Drug Administration (FDA) is that approved branded and generic drugs can be used interchangeably.
The FDA and the European Medicines Agency have strict standards for approval of generic drugs: a generic drug is deemed to be equivalent to a branded drug if
the 90% confi dence intervals for the mean of several key pharmacokinetic parameters for a generic drug are within 80–125% of those of the brand-name drug.
However, such bioequivalence studies are done in small numbers of healthy volunteers and may not be generalisable to patients with epilepsy. Furthermore,
the narrow therapeutic range of AEDs means that drug concentrations must be maintained within a narrow window to be eff ective. Variations from this therapeutic range, even by a small margin, can increase the risk of detrimental out comes. Switching between diff erent generic versions is particularly problematic: two different generic drugs could, in theory, have bioequivalence values at the two extremes of the 80–125% range, causing large fl uctuations in serum concentrations if patients switch from one generic version to another. Although generic switching is unlikely to be problematic for many patients, experts believe that there may be a subset of patients who might be more susceptible to variations in AED concentrations.
The Pharma world space of 3 major global players has united to form the world's FIRST cancer group to focus towards the emerging markets of Asia to target Stomach and Lung cancer. The news release has got flashed at 6-7 major web sites. An individual news clip was flashed by Elli Lilly in the late evening hours yesterday as well which spoke of its initiatives to start the research work form Singapore. There were mentions of mainly the people from Elli Lilly in Singapore and China in the News release.
The world of the Pharmaceutical Industry has changed. The drug majors are uniting themselves with the changing times, have decided to "mutually share" database s for cancer drug development and move in unison towards the emerging markets.
If this is so, then what should be the subsequent strategic initiatives at the CRO's (the outsourcing providers) in the emerging markets?
Should the CRO's "act" in a similar manner as the Pharma companies or prepare to understand the market on their own with individual capabilities?
This is question which can be answered only when the outsourcing market takes a DECISIVE turn in a direction which today many forecasting experts are trying to understand.
Latin America has proved to be an emerging market for clinical trials since the year 1999. According to latest statistics from the clinical trial gov. website, the trends in the rise of clinical trials particularly Brazil, Mexico and Argentina are extremely potential especially for the Phase II-Phase III trials. The trials which are outsourced in the LA region have crossed the 2500 mark in number and at least 61% of these are being conducted for the Phase III stage.
At least 1600 trials have been registered in the phase III in the year 2008 in the major markets of Latin America. The remaining is concentrated to the extent of 23 % in the Phase II migrating to Phase III and mainly dominated by 13% in the approved drug section. As the drug approvals in the last 5-7 years have fallen and major block buster drugs have experienced failures in Phase II (while crossing to Phase III) would "reduce/retrench" Phase III further for the year 2009.
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