Tag Archives: innovation

Should high prices of new drugs, causing low access to majority of patients, be attributed to high R&D cost?

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Many thought leaders have been arguing since long that pharmaceutical R&D expenses are being over stated and the real cost is much less. An article titled “Demythologizing the high costs of pharmaceutical research”, published by the London School of Economics and Political Science in 2011 indicates that the total cost from discovery and development stages of a new drug to its market launch was around US$ 802 million in year 2000. This was worked out in 2003 by the ‘Tuft Center for the Study of Drug Development’ in Boston, USA.

However, in 2006 the same figure increased by 64 per cent to US$ 1.32 billion, as reported by a pharmaceutical industry association. Maintaining similar trend, if one assumes that the R&D cost will increase by another 64 per cent by 2012, the cost to bring a new drug to the market through its discovery and development stages will be around US $2.16 billion. This will mean a 2.7 times increase from its year 2000 estimate, the article says.

The authors mentioned that the following factors were not considered while working out the 2006 figure of US$ 1.32 billion:

  • The tax exemptions that the companies avail for investing in R&D.
  • Tax write-offs amount to taxpayers’ contributing almost 40% of the R&D cost.
  • The cost of basic research (should not have been included), as these are mostly done in public funded universities or laboratories.

The article comments that ‘half the R&D costs are inflated estimates of profits that companies could have made if they had invested in the stock market instead of R&D and include exaggerated expenses on clinical trials’.

The authors alleged that “Pharmaceutical companies have a strong vested interest in maximizing figures for R&D as high research and development costs have been the industry’s excuse for charging high prices. It has also helped generating political capital worth billions in tax concessions and price protection in the form of increasing patent terms and extending data exclusivity.”

The study concludes by highlighting that “the real R&D cost for a drug borne by a pharmaceutical company is probably about US$ 60 million.”

Declining Pharmaceutical R&D productivity:

That pharmaceutical R&D productivity is fast declining has been vindicated by ‘2011 Pharmaceutical R&D Factbook’ complied by Thomson Reuters, the key highlights of which are as follows:

  • 21 new molecular entities (NMEs) were launched in the global market in 2010, which is a decrease from 26 NMEs of the previous year.
  • 2010 saw the lowest number of NMEs launched by major Pharma players in the last 10 years
  • The number of drugs entering Phase I and Phase II clinical trials fell 47% and 53% respectively during the year.

Does pharmaceutical R&D always create novel drugs?

According to a recent report, US-FDA approved 667 new drugs from 2000 to 2007. Out of which only 75 (11%) were innovative molecules having much superior therapeutic profile than the existing ones. However, more than 80% of 667 approved molecules were not found to be better than those, which are already available in the market.  Thus, the question very often being raised by many is, why so much money is spent on discovery and development of ‘me-too’ drugs and thereafter for their prescription generation through aggressive marketing, when the patients pay for the entire cost of such drugs including the profit after being prescribed by the doctors?

A global CEO challenged the status quo:

By challenging the status quo, Andrew Witty, the global CEO of GlaxoSmithKline (GSK) in his speech  in Mumbai on September 27, 2011 to the members of the Indian pharmaceutical industry commented that the cost of over a billion dollar to bring a new molecule to the market through its discovery and development stages is “unacceptable.” He attributed such high R&D expenses to the ‘cost of failure’ by the industry.

Witty said, “High in-house failure rates are slowing progress on pricing affordability… We need to fail less and deliver more”.

He commented during his deliberation that success in reducing the R&D cost to make innovative drugs more affordable to the patients of all income levels, across the globe, will be the way forward in the years ahead.

Ways to reduce the R&D cost:

Some other experts articulated that sharp focus in the following areas may help containing the R&D expenditure to a great extent and the savings thus made, in turn, can fund a larger number of R&D projects:

  • Early stage identification of unviable new molecules and jettisoning them quickly
  • Newer cost efficient R&D models, like one implemented by GSK
  • Significant reduction in drug development time.

An opposite view:

The book  titled “Pharmaceutical R&D: Costs, Risks, and Rewards”, published by the government of USA states that the three most important components of R&D investment are:

  • Money
  • Time
  • Risk

Money is just one component of investment together with a long duration of time to reap the benefits of success intertwined with a very high risk of failure. The investors in the pharmaceutical R&D projects not only take into account of how much investment is required for the project against expected financial returns, but also the timing of inflow and outflow of fund with associated risks.  It is thus quite understandable that longer is the wait for the investors to get their return, greater will be their expectations for the same.

The publication also highlights that the cost of bringing a new drug from the ‘mind to market’ depends on quality and sophistication of science and technology involved in a particular R&D process together with associated investment requirements for the same. In addition, regulatory requirements to get marketing approval of a complex molecule for various serious disease types are also getting more and more stringent, increasing their cost of clinical development simultaneously. All these factors when taken together make the cost of R&D very high and unpredictable.

Thus to summarize, high pharmaceutical R&D costs involve:

  • Sophisticated science and technology dependent high up-front financial investments
  • A long and indefinite period of negative cash flow
  • High tangible and intangible costs for acquiring technology with rapid trend of obsolescence
  • High risk of failure at any stage of product development

Conclusion:

While getting engaged in to this debate, one should possibly keep in mind that effective patent exclusivity period in the pharmaceutical industry is much limited as compared to any other industry across the globe. This is mainly because a long period of 8-10 years goes between drug discovery/grant of patent, drug development and market launch of the new molecule, when it starts recovering the cost and making a profit. Thus the period of effective commercial exclusivity that a new drug enjoys through patent protection usually lasts not more than 10 to 12 year period.

For all these reasons and despite such a huge controversy, I wonder, even if the R&D expenditures are brought down to the year 2000 level of US$ 802 million through various productivity improvement measures, whether it will really be possible to develop a commercial R&D model by any pharmaceutical company to deliver low price innovative drugs ensuring high access to majority of the patients. For that one should possibly look at other R&D models like, ‘Patent Pool’ and ‘Open Source Drug Discovery (OSDD)’ systems along with various funding options.

Thus in my view, high prices of new drugs, causing low access to majority of patients, should by and large be attributed to high R&D cost. However, there is not even an iota of doubt about commercial unsustainability of such ballooning research and development expenditures even in the medium term.

That said, the arithmetic of pricing for a new marketable molecule could change dramatically, if “the real R&D cost for a drug borne by a pharmaceutical company be just about US$ 60 million”, as argued by the authors of a publication quoted above, though the figure, I reckon, is quite unrealistic.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Pharmaceutical innovation and Public Health Interest: Ways to achieving the dual objectives

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Healthcare industry in general and the pharmaceutical sector in particular have been experiencing  a plethora of innovations not only to cure and effectively manage ailments to improve the quality of life, but also to help increasing overall disease-free life expectancy of the population with various types of treatment and disease management options. Unfortunately despite all these, over half the global population is still denied of basic healthcare needs and support.

A 2011 official estimate of the current world population reads as 6.93 billion. Out of which over three billion live with a subsistence of less than US$ 2 per day. Another billion population is surviving on even less than US$ 1 per day. According to published reports around 18 million people die from poverty-related causes across the world, every year.

The World Health Organization (WHO) has estimated that over a billion population of the world still suffer from neglected tropical diseases.

On February 3, 2012, quoting a ‘World Bank and PwC report’, ‘The Economic Times’ reported that “70% of Indians spend all their income on healthcare and buying drugs.”

In a situation like this, challenges that the governments and the civil society are facing in many developing and to some extent even in some developed countries (although for different reasons), are multi-factoral. It has been well established that the humongous global healthcare challenges are mostly of economic origin.

In such a scenario, ongoing heated debate on innovation, Intellectual Property Rights (IPR) and public health interest keeps gaining momentum all over the globe and has still remained unabated.

Argumentative Indians have also got caught in this raging debate. I reckon rightly so, as India is not only the largest democracy of the world contributing 16.7% of the global population, it is also afflicted with 21% of the global burden of disease. Thus, the reason for similar heated debate in our country is indeed no brainer to any one.

Thorny issues:

One of the thorny issues in this debate is the belief that huge R&D budgets of the global pharmaceutical companies are worked out without any consideration of relative value of such investments to the vast majority of population in our society, across the world. These thought leaders argue, as the poor cannot pay for the expensive innovative drugs, they are mostly denied of the fruits of pharmaceutical innovation in their battle against diseases.

These experts also say that safeguards built into the patent system in form of compulsory licenses are not usually broad enough to improve access to innovative medicines to a larger section of the society, whenever required.

In addition, they point out that wide scope of patent grants in areas of early fundamental research, quite often is strategically leveraged by the patentee to block further R&D in related areas without significant commercial considerations to them. Such a situation comes in the way of affordable innovative drug development for public health interest, when need arises.

Inadequate access to medicines in India:

The key issue in the country is even more complicated. Inadequate or lack of access to modern medicines reportedly impacts around 50% of our population. It is intriguing to fathom, why has the nation not been able to effectively address the challenge of access to relatively affordable high quality generic medicines to the deprived population of the society over a period of so many decades?

Thus IPR in no way be considered as the reason for poor access, at least, to generic medicines, especially in India. Neither, it is the reason for inadequate availability of affordable essential medicines for the diseases of the poor.

The key reason, as is widely believed, is inadequate focus on the deprived population to address their public health concerns by the government.

Pharmaceutical innovation and the burden of disease:

A study  titled, ‘Pharmaceutical innovation and the burden of disease in developing and developed countries’ of Columbia University and National Bureau of Economic Research, to ascertain the relationship across diseases between pharmaceutical innovation and the burden of disease both in the developed and developing countries, reported that pharmaceutical innovation is positively related to the burden of disease in the developed countries but not so in the developing countries.

The most plausible explanation for the lack of a relationship between the burden of disease in the developing countries and pharmaceutical innovation, as pointed out by the study, is weak incentives for firms to develop medicines for the diseases of the poor.

A healthy debate:

Many experts argue that greater focus on the development of new drugs for the diseases of the poor, should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

However, another school of experts think very differently. In their opinion, health infrastructure projects are certainly very essential elements of achieving longer-term health objectives of these countries, but in the near term, millions of unnecessary deaths in the developing countries can be effectively prevented by offering more innovative drugs at affordable prices to this section of the society.

Creation of IGWG by WHO:

Responding to the need of encouraging pharmaceutical innovation without losing focus on public health interest, in 2006 the ‘World Health Organization (WHO)‘ created the ‘Inter-governmental Working Group on Public Health, Innovation and Intellectual Property (IGWG)‘. The primary focus of IGWG is on promoting sustainable, needs-driven pharmaceutical R&D for the diseases that disproportionately affect developing countries.

‘Reward Fund’ for innovation and access – an idea:

A paper  titled, “Optional reward for new drug for developing countries” published by the Department of Economics, University of Calgary, Institute of Health Economics, proposed an optional reward fund for pharmaceutical innovation aimed at the developing world to the pharmaceutical companies, which would develop new drugs while ensuring their adequate access to the poor. The paper suggests that innovations with very high market value will use the existing patent system, as usual. However, the medicines with high therapeutic value but low market potential would be encouraged to opt for the optional reward system.

It was proposed that the optional reward fund should be created by the governments of the developed countries and charitable institutions to ensure a novel way for access to innovative medicines by the poor.

The positive effects of the debate:

One positive effect of this global debate is that some global pharmaceutical companies like Novartis, GSK and AstraZeneca have initiated their R&D activities for the neglected tropical diseases of the world like, Malaria and Tuberculosis.

Many charitable organizations like Bill & Melinda Gates Foundation and Clinton Foundation are allocating huge amount of funds for this purpose.

On January 30, 2012, on behalf of the research-based pharmaceutical industry, Geneva based International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) by a Press Release  announced donations of 14 billion treatments in this decade to support elimination or control of nine key Neglected Tropical Diseases (NTDs).

Without creating much adverse impact on pharmaceutical innovation ecosystem of the country, the Government of India is also gradually increasing its resource allocation to address the issue of public health, which is still less than adequate as of now.

All these newer developments and initiatives are definitely ushering in an era of positive change for a grand co-existence of pharmaceutical innovation and public health interest of the country, slow and gradual though, but surely a change for the better.

Innovation helps to improve public health:

In India, various stakeholders of the pharmaceutical industry feel that there is a need to communicate more on how innovation and IPR help rather than hinder public health. Some initiatives have already been taken in this direction with the pioneering ‘patent pool’ initiative of GlaxoSmithKline (GSK) in Europe and ‘Open Source Drug Discovery (OSDD)’ by the Council of Scientific and Industrial Research (CSIR) of the Government of India.

The pace needs to be accelerated:

The pace of achieving the dual objectives of fostering pharmaceutical innovation without losing focus on public health has to be accelerated, though progress is being slowly made in these areas through various initiatives. Additional efforts are warranted for sustainability of these initiatives, which have not yet gained the status of robust and sustainable work models.

However in India, the government in power should shoulder the key responsibility garnering all resources to develop and implement ‘Universal Health Coverage’ through appropriate innovative healthcare reform measures. Such steps will help achieving the country its national goal of providing affordable healthcare to all.

At the same time, creation of a variant of ‘reward fund’ to encourage smaller pharmaceutical players of India to pursue pharmaceutical innovation needs to be considered expeditiously. This will help encouraging pharmaceutical innovation in a big way within the country.

Address the basic issue of poverty:

It is a well-accepted fact that the price is one of the key determinants to improve access to modern medicines to a vast majority of the population. However, the moot question remains how does one make medicines more affordable by not addressing effectively the basic issue of general poverty in the country? Without appropriately resolving this issue, affordability of medicines will continue remain a vexing problem and a critical issue to address public health in India.

Conclusion:

Innovation, as is widely acknowledged, is the wheel of progress of any nation. This wheel should move on… on and on with the fuel of IPR, which is an economic necessity of the innovator to make the innovation sustainable.

In the book titled, ‘Pharmaceutical Innovation: Revolutionizing Human Health‘ the authors have illustrated how science has provided an astonishing array of medicines to effectively cope with human ailments over the last 150 years.

Moreover, pharmaceutical innovation is a very expensive process and grant of patents to the innovators is an incentive of the government to them for making necessary investments towards R&D projects to meet unmet needs of the patients. The system of patent grants also contributes to society significantly by making freely available patented information to other scientists to improve upon the existing innovation through non-infringing means.

Altruism, especially in the arena of public health, may be demanded by many for various considerations. Unfortunately, that is not how the economic model of pharmaceutical innovation and IPR works globally. Accepting this global reality, the civil society should deliberate on how innovation and IPR can best be used, in a sustainable manner for public health interest, especially for the marginalized section of the society.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Seeing ghosts where there aren’t any

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Seeing ghosts almost everywhere in the Indian pharmaceutical industry, especially where there aren’t any, has indeed become quite common nowadays, across the spectrum of stakeholders. The ‘ghosts’ could well reside in ‘100% Foreign Direct Investments (FDI) through automatic route in the pharmaceutical sector’ or ‘threat to the generic industry of the country by the MNCs’ or ‘abysmal Intellectual Property environment vitiating investment climate of the global players’ or even presence of ‘invisible foreign hands’ in shaping important policies of the country, just to name a few.

“Seeing ghosts”: Both from inside and outside the country:

The incidence of encountering with ‘ghosts’, from both inside and outside the country, would possibly increase further as the economic attractiveness of India in general and pharmaceutical consumption in the country in particular, will keep growing fast in the years ahead.

India attracting:

Currently McKinsey & Company in its report titled, “India Pharma 2020: Propelling access and acceptance, realizing true potential”, estimates that the Indian Pharmaceuticals Market (IPM) will record a turnover of US$ 55 billion in 2020 from around US$ 12.1 billion in 2011. The report further highlights that with aggressive growth boosters it is quite possible to make the IPM attain a turnover of US $70 billion during the same period. Rapid urbanization, increasing accessibility to drugs due to expansion of healthcare infrastructure, fast growing rural markets, increasing resource allocation to public health, patented products, consumer healthcare, biologics and vaccines will be the key growth drivers for the industry.

The burning issue of affordability for healthcare is expected to be addressed by 650 million people coming under health insurance and additional 73 million people getting added to middle and upper class segments by 2020.

All ‘ghost’ seeing are not unjustifiable:

In this evolving scenario, ‘encounter with ghosts’ in some areas may perhaps be justifiable, especially, within the country. Commensurate justifiable measures will require to be put in place to allay those justifiable fears.

Recent India visit of two global iconoclasts:

However, last week, when India witnessed visits of two global CEOs of two global pharmaceutical majors, Andrew Witty of GlaxoSmithKline (GSK) and Chris Viehbacher of Sanofi, from the media reports it appeared to me  that we are made to see ‘ghosts’ in some of the key areas of the Indian Pharmaceutical Industry, where there aren’t infact any. As per media reports, both Witty and Viehbacher, who are also Chairpersons of the European Federation of Pharmaceutical Industries and Associations (EFPIA) and the Pharmaceutical Research and Manufacturers of America (PhRMA), respectively, articulated great commitments of their respective companies to India by aligning their business goals with the national healthcare policy and objectives of the country.

Long term commitment to India:

 

Last year Andrew Witty dedicated the new Albendazole manufacturing facility of GSK at Nashik in India to the ‘Global Program Filariasis’ to the ‘World Health Organization (WHO)’ being the largest drug donation program in the history of global pharmaceutical industry.

Early October this year during his visit to Mumbai, Witty reiterated in unequivocal terms that the cost of around US$ 2 billion to innovate and develop a successful drug is unacceptable to him as it includes to a large extent the cost of failure in that endeavor.  “We need to fail less often and succeed more often”, he said while emphasizing that the global pharmaceutical industry needs to metamorphose and must learn to strike a right balance between the cost of R&D projects and delivering innovative medicines to the patients at affordable prices.

Witty also mentioned that GSK globally follows a tiered pricing strategy, linked to the economic conditions of the individual countries. He feels that pharmaceutical product price should be commensurate to per capita income of a nation.

Without any hesitation Andrew Witty said that India will be one of the most prominent markets among the emerging economies that the global drug makers are concentrating now.

Closely followed by Andrew Witty’s visit to India, another iconoclast Christopher A Viehbacher, global CEO of Sanofi stepped into our soil and announced that Sanofi will invest US$ 300 million in a “state-of-the-art” manufacturing plant and R&D initiatives of Shantha Biotechnics in Hyderabad to make it the biggest vaccine plant of Asia not only to cater to the needs of India, but also to reach affordable vaccines across the globe.

Viehbacher emphasized that Sanofi wants to continue to build its long term business in India because of its market attractiveness. Like Witty, he emphasized that Sanofi strategy is also to have affordable medicines in emerging markets like India so that people can afford to pay for.

He reportedly reiterated, “I do not want us to be a colonial company with a colonial approach where we say we decide on the strategy and pricing. If you have to compete locally then the pricing strategy cannot be decided in Paris but will have to be in the marketplace. People here will decide on the pricing strategy and we have to develop a range of products for it”.

Viehbacher feels that emerging markets including India are expected to account for 40% sales of Sanofi by 2015.

Conclusion:

October 2011 India visit of these two visionaries of the global pharmaceutical industry, reinforced the fact that in many areas of the Indian Pharma sector we fancy to see “Ghosts where there aren’t any”, just as it happens outside the shores of India with equal intensity, gusto and zest.

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

‘Utility Models’: A process of winning in the world of innovation

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On May 13, 2011 the Department of Industrial Policy and Promotion (DIPP) uploaded in their website a Discussion Paper on “Utility Models (UM)”. It was reported that as a policy initiative on Intellectual Property Rights (IPR) and to encourage innovation in the country, without diluting the present strict criteria for patentability, this discussion paper intends to trigger a healthy national debate on a very relevant subject.

Benefits of UM:

A publication titled, Utility Models and Innovation in Developing Countries by International Centre for Trade and Sustainable Development (ICTSD), Geneva, Switzerland highlights the following benefits of the UM:

• Fosters local innovation for local industries to produce more goods and generate more employment.

• Protects valuable inventions which otherwise would not be protected under the patent law of the country.

• Prevents free-riding of inventions by copiers who do not make any investment in R&D.

• Generates additional revenue for the government in terms of fees towards registration, search, publication, etc.

• Acts as a source of valuable information via published specifications.

• Reduces incentives for industry to lobby for the inclusion of minor inventions in the patent regime, which in turn would limit the public domain much more than the less expansive utility model system.

Does India need UM Laws?

Though India is fast emerging as a global economic power to reckon with, the Micro, Small and Medium Enterprises (MSME) of the country still do not have adequate resources and wherewithal to invest in various R&D projects in the right scale. Thus many of them are unable to come out with the types of inventions, which would have global potential and also conform to the prevailing Patents Act of India (2005).

Moreover, even today the benefits of acquiring ‘Intellectual property (IP)’ in the business process is still not widely understood and made use of, across various Indian industries. The requisite culture, appropriate ecosystem and thereby a groundswell for innovation are yet to take shape in our country.

Imitating or copying something new developed within or outside India is the order of the day in most of the industries in India. As the UM would require neither a high-tech infrastructural support nor high level of investments, coming out with a commercially relevant innovation with limited exclusivity period may not be as difficult, especially, by the MSME sector of India. UM could thus effectively help creating both an appropriate ecosystem and groundswell for innovation in the country.

As indicated in the DIPP Discussion Paper, many countries of the world like, Australia, China, Japan, Germany, France, Korea, Netherlands and others still find the UM as an extensively used tool to foster innovation within the local industries.

Utility models in some countries:

As indicated in the above DIPP Discussion Paper, I am quoting below examples of UM being practiced in some important countries:

COUNTRY DATE OF FIRST LAW DURATION OF PROTECTION NAME SUBSTANTIVE EXAMINATION
AUSTRALIA 1979/2001 8 years Innovation Patent no
AUSTRIA 1994 10 years Utility Model no
BELGIUM 1987 6 years Short Term Patent no
BRAZIL 1945 10 years Utility Model yes
CHINA 1985 10 years Utility Model no
FRANCE 1968 6 years Utility Certificate no
GERMANY 1891 10 years Gebrauchsmuster no
INDONESIA 1991 5 years Simple Patent yes
ITALY 1934 10 years Utility Model no
JAPAN 1905 not > 15 years Utility Model no
KOREA 1961 not > 15 years Utility Model yes – but deferred
MALAYSIA 1986 15 years Utility Innovation yes
MEXICO 1991 10 years Utility Model yes
NETHERLANDS 1995 6 years Short Term Patent no

(Source: Petty Patents by John Richards – updated version of Proceedings of the Fordham University School of Law International Intellectual Property Law and Policy Conference 1995,Juris Publishing and Sweet & Maxwell, 1998).

Therefore, keeping in mind of the needs of, especially, the MSME sector, I reckon, the UM should be seriously considered by the Government for expeditious implementation. As stated earlier, the UM would enable a large section of smaller entrepreneurs to get a limited commercial exclusivity for their inventions, which otherwise would not have been possible by them within the current patent regime of India.

Moreover, such inventions being incremental in nature, subsequent inventions would be triggered much faster with a cascading effect on continuous innovation in the country.

In this scenario, it will be very important to keep the registration cost for the UM within affordable limits by the Indian Patent Offices (IPO).

Scope of protection:

I reckon, all types of inventions, including mechanical and chemical ones, should be covered under the UM. If this does not happen the UM law will only be useful to a small section of the entrepreneurs.

Further, a large number of useful developments and improvements that may fall short of requirements of getting patents, could be well accommodated under the UM to encourage more and more innovations for rapid economic growth of the country.

In case of chemical or pharmaceutical innovations there will also be a chance for the smaller players to apply for the UM for incremental innovation, when such inventions would not pass the stringent qualifying criteria of Section 3(d) of the Indian Patents Act. I hasten to add that some contentious issues could possibly crop-up in this area, which needs to be resolved with well informed debates.

I would recommend that in India UM may be considered for innovations in areas of chemicals, pharmaceuticals, devices, tools, working instruments or apparatus with appropriate qualifying standards.

Parameters for consideration:  

The inventive threshold for the UM would obviously be less than what is required by the patent laws of India. These should be very clearly enunciated by the policy makers without ambiguity whatsoever. However, the product novelty criteria in no case should be compromised, which should be similar to patents.

The period of exclusivity for UM varies internationally, for example, from 5 years in Indonesia to 10 years in China and 15 years in Korea. In India, the protection period should not ideally exceed 5 to 7 years from the date of grant of the UM with a much simpler registration process than the patent.

Section 8(1) of Patents Act may be suitably amended to include provision of UM. At the same time, providing details of corresponding UMs, along with related patent applications, if any, should be made mandatory.

An innovator should be allowed to apply for both patent and UM together. However, when only an application for patent will be filed and after scrutiny, if the same does not qualify for grant of patent, the concerned applicant may be allowed to convert the same application into UM, without any adverse impact on priority.

It is important to ensure that filing of a new UM nearer end of the term of patent is not allowed. The patent may, in such cases, be regarded as prior art by the IPO. Moreover, any provision for temporary protection of an invention as an UM pending grant of a patent should not be included in the legislation. Patent grant is usually a slow process in India, which quite often gets caught in the quagmire of delays and backlogs. In such a scenario, if any temporary exclusivity is granted by way of UM to the applicant, the entire patent processing system may get further slowed down.

Promoting domestic filings by MSMEs:

There does not seem to be any need to provide any specific provision to promote domestic filing by the MSMEs other than by way of providing for express provisions of disposal of infringement actions or other related contentious issues.  Specific non-extendable time frames should be provided for all.

Currently the Courts in India have very little exposure to IP laws. Keeping this in mind UM laws should have simple wordings, free of ambiguity enunciating specific measures in case of infringement. Any invalidity should be clearly spelt out to avoid unnecessary appeals and unproductive, protracted and expensive litigation process.

To make Indian industries feel and understand the need for the protection/exclusivity for the UM, suitable awareness campaigns should be designed and championed by the government and the industry bodies with a focused approach to achieve this goal within a given timeframe.

UM and Traditional knowledge:

Traditional knowledge is something, which is already available or known to public at large and any protection to such knowledge would deny the civil society its legitimate rights in India. Thus, I shall strongly recommend that no exclusivity is granted to any person or industry on traditional knowledge.

However, rights to traditional knowledge may be provided through a different fail-proof mechanism to safeguard the interest of specific communities in India, who have inherited such knowledge through practice for generations.

The enforcement mechanism:

The enforcement mechanism for the UM should be similar to the Patent System or else a special ‘Utility Model Appellate Board (UMAB)’ may be considered for speedy redressal of infringement disputes.

Obviating monopolistic dominance:

Compensation / royalty rather than other methods of restrain could be a better option as most applicants would be MSMEs.

The UM law makers should, however, bear in mind that individual innovators although will have remedy within the law in case of a breach, due to sheer practical considerations, could at times feel helpless when a rich licensee will fail to compensate or pay royalty as per the order of a Court of law.

I would, therefore, suggest that there should be specific clauses in the UM law, which will be strong deterrent to such behaviour by unscrupulous elements, for example, payment of the compensation in an amount exceeding about 15 to 20 times of the original award in the event of default for no good reason. However in such a case the appropriate value may be properly decided to effectively avoid any attempt of ‘extortionary measures’ by anyone.

Conclusion:

It is believed by many that the UM framework with a lower threshold of invention will be able to encourage domestic incremental innovation in many areas of business. Thus, by providing protection to UM for about 5 years vis-a-vis 20 years, as provided by the patents, India can further stimulate the process of innovation, while discouraging monopolies in the country.

I reckon, a suitably designed UM framework will immensely encourage the domestic players to seek protection and obtain exclusivity for continuous incremental innovation in various facets of their respective businesses.

This process, in turn, will promote innovation based commercial business models within the country by offering low cost and affordable innovative products to the common man, adding simultaneously speed to the wheel of economic progress of the nation with inclusive growth.

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Open Innovation: Quo Vadis, Pharmaceutical R&D?

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Is the Pharmaceutical R&D moving from the traditional models to much less uncharted frontiers?

Perhaps towards this direction, in November, 2010 in a report titled, “Open Source Innovation Increasingly Being Used to Promote Innovation in the Drug Discovery Process and Boost Bottomline”, Frost & Sullivan underscored the urgent need of the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective Research and Development initiatives, in general.

‘Open Innovation’ model, they proposed, will be most appropriate in the current scenario to improve not only profit, but also to promote more innovative approaches in the drug discovery process.  Currently, on an average it takes about 8 to 10 years to bring an NCE/NME to market with a cost of around U.S$ 1.7 billion.

The concept of ‘Open Innovation’ is being quite successfully used by the Information Technology (IT) industry since nearly three decades all over the world, including in India.  Web Technology, the Linux Operating System (OS) and even the modern day ‘Android’ – the open source mobile OS, are excellent examples of ‘Open source innovation’ in IT.

In the sphere of Biotechnology Human Genome Sequencing is another remarkable outcome in this area.

On May 12, 2011, in an International Seminar held in New Delhi, the former President of India Dr. A.P.J. Abdul Kalam commented, “Open Source Drug Discovery (OSDD) explores new models of drug discovery”. He highlighted the need for the scientists, researchers and academics to get effectively engaged in ‘open source philosophy’ by pooling talent, patents, knowledge and resources for specific R&D initiatives from across the world. In today’s world ‘Open Innovation’ in the pharmaceutical R&D has a global relevance, especially, for the developing world of ‘have-nots’.

The ‘Open Innovation’ model: 

As the name suggest, ‘Open Innovation’ or the ‘Open Source Drug Discovery (OSDD)’ is an open source code model of discovering a New Chemical Entity (NCE) or a New Molecular Entity (NME). In this model all data generated related to the discovery research will be available in the open for collaborative inputs. The licensing arrangement of OSDD where both invention and copyrights will be involved, are quite different from any ‘Open Source’ license for a software development.

In ‘Open Innovation’, the key component is the supportive pathway of its information network, which is driven by three key parameters of open development, open access and open source.

As stated earlier, ‘Open Innovation’ concept was successfully used in the ‘Human Genome Project’ where a large number of scientists, and microbiologists participated from across the world to sequence and understand the human genes. However, this innovation process was first used to understand the mechanics of proteins by the experts of the Biotech and pharmaceutical industries.

The Objectives of ‘Open Innovation’: 

The key objective of ‘Open Innovation’ in pharmaceuticals is to encourage drug discovery initiatives, especially for the dreaded disease like cancer and also the neglected diseases of the developing countries to make these drugs affordable to the marginalized people of the world.

Key benefits of ‘Open Innovation’:

According to the above report of Frost & Sullivan on the subject, the key benefits of ‘Open Innovation’ in pharmaceuticals will include:

• Bringing together the best available minds to tackle “extremely challenging”   diseases

• Speed of innovation

• Risk-sharing

• Affordability

Some issues:

Many experts feel that the key issues for ‘Open Innovation’ model are as follows:

  • Who will fund the project and how much?
  • Who will lead the project?
  • Who will coordinate the project and find talents?
  • Who will take it through clinical development and regulatory approval process?

However, all these do not seem to be an insurmountable problem at all, as the  saying goes, ‘where there is a will, there is a way’.

Current Global initiatives for ‘Open Innovation’:

  1. In June 2008, GlaxoSmithKline announced in Philadelphia that it was donating an important slice of its research on cancer cells to the cancer research community to boost the collaborative battle against this disease. With this announcement, genomic profiling data for over 300 sets of cancer cell lines was released by GSK to the National Cancer Institute’s bioinformatics grid. It has been reported that over 900 researchers actively contribute to this grid from across the industry, research institutes, academia and NGOs. Many believe that this initiative will further gain momentum to encourage many more academic institutions, researchers and even smaller companies to add speed to the drug discovery pathways and at the same time make the NCEs/NMEs coming through such process much less expensive and affordable to a large section of the society, across the globe.
  2. The Alzheimer’s  Disease Neuroimaging Initiative (ADNI) is another example of a Private Public Partnership (PPP) project with an objective ‘to define the rate of progress of mild cognitive impairment and Alzheimer’s disease, develop improved methods for clinical trials in this area and provide a large database which will improve design of treatment trials’. 
  3. Recently announced ‘Open invitation’ strategy of GlaxoSmithKline (GSK) to discover innovative drugs for malaria is yet another example where GSK has collaborated with European Bioinformatics Institute and U.S. National Library of Medicine to make the details of the molecule available to the researchers free of cost with an initial investment of US $ 8 million to set up the research facility in Spain involving around 60 scientists from across the world to work in this facility.

‘Open Innovation’ in India: 

In India, Dr. Samir Brahmachari, the Director General of the Council of Scientific and Industrial Research (CSIR) is the champion of the OSDD movement. CSIR believes that for a developing country like India OSDD will help the common man to meet his unmet medical needs in the areas of neglected tropical diseases.

‘Open Innovation’ project of CSIR is a now a global platform to address the neglected tropical diseases like, tuberculosis, malaria, leishmaniasis by the best research brains of the world working together for a common cause.

To fund this initiative of the CSIR the Government of India has allocated around U.S $40 million and an equivalent amount of funding would be raised from international agencies and philanthropists.

Success of ‘Open Innovation’ initiative of CSIR: 

Sometime in late November 2009, I received a communication from the CSIR informing that their OSDD project, since its launch in September 2009, has crossed 2000 registered users in a very short span of time. The pace of increasing number of registered users indeed reflects the confidence that this initiative has garnered among the interested researchers across the world.

CSIR has indicated that the next big leap planned by them in the area of ‘Open Innovation’ is to completely re-annotate the MTb genome for which they have already launched a project titled ‘Connect to Decode’ 2010.

Conclusion: 

Currently pharmaceutical R&D is an in-house initiative of innovator global companies. Mainly for commercial security reasons only limited number of scientists working for the respective innovator companies will have access to these projects.

‘Open Innovation’ on the other hand, has the potential to create a win-win situation, bringing in substantial benefits to both the pharmaceutical innovators and the patients.

The key advantage of the ‘Open Innovation’ model will be substantial reduction in the costs and time of R&D projects, which could be achieved through voluntary participation of a large number of researchers/Scientists/Institutions in key R&D initiatives. This in turn will significantly reduce the ‘mind-to-market’ time of more affordable New Chemical/Molecular Entities in various disease areas.

Thus, to answer to ‘Quo Vadis, Pharmaceutical R&D’, I reckon, ‘Open Innovation’ model  could well be an important direction for tomorrow’s global R&D initiatives to improve access to innovative affordable Medicines to a larger number of ailing patients of the world, meeting their unmet medical needs, more effectively and with greater care.

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

‘Frugal Innovation’ in Healthcare: Ahoy!

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Patented new products have been the prime growth driver of the research based pharmaceutical companies, the world over. Probably because of this reason the world has seen over a period of time about four different molecules of H2 Blockers and six different molecules of proton pump inhibitors to treat peptic ulcers, nine varieties of statins to treat lipid disorders, ten variants of calcium channel blockers to treat hypertension, three new compounds of similar drugs to address erectile dysfunction and the list could go on. Most of these molecules attained the blockbuster status, backed by cutting edge innovative marketing strategies.

Whether all these patented molecules met significant unmet needs of the patients could well be a contentious point. However, the key point is that all these drugs did help fueling growth of the global pharmaceutical industry very significantly, including our own Indian Pharmaceutical companies, though through immaculate copying during pre-product patent regime of before January, 2005.

Since last few years, because of various reasons, the number of market launch of such patented products has greatly reduced. To add fuel to the fire, 2011-12 will witness patent expiries of many blockbuster drugs, including the top revenue grosser of the world, depleting the growth potential of many large research-based global pharmaceutical companies.

Blockbuster drug ‘Business Model’ is no longer sustainable:

The blockbuster model of growth engine of the innovator companies effectively relies on a limited number of ‘winning horses’ to achieve the business goal and meeting the Wall Street expectations. In 2007, depleting pipeline of the blockbuster drugs hit a new low in the developed markets of the world. It is estimated that around U.S. $ 140 billion of annual turnover from blockbuster drugs will get almost shaved-off due to patent expiry by the year 2016.  IMS reported that in 2010 more than U.S. $ 30 billion was adversely impacted because of patent expiry.  Another set of blockbuster drugs with similar value turnover will go off patent in 2011.  It will not be out of context to mention, that the year before last around U.S. $ 27 billion worth of patented drugs had reportedly gone off-patent.

Decline in R&D productivity with a thin silver lining though:

The decline in R&D productivity has not been due to lack of investments.  It has been reported that between 1993 and 2004, R&D expenditure by the pharmaceutical industry rose from U.S. $ 16 billion to around U.S. $ 40 billion.  However, during the same period the number of applications for New Chemical Entities (NCEs) filed annually to the U.S. FDA grew by just 7%.

It was reported that total global expenditure for pharmaceutical R&D reached U.S. $ 70 billion in 2007 and is estimated to be around U.S $ 90 billion by the end of the year just gone by.  75% of this expenditure was incurred by the U.S alone. It is interesting to note that only 22 NMEs received marketing approval by the US FDA during this period against 53 in 1996, when expenditure was almost less than half of what was incurred in 2007 towards R&D.

The silver linings:

There seem to be following two silver linings in the present scenario, as reported by IMS:

  1. Number of Phase I and Phase II drugs in the pipeline is increasing.
  2. R&D applications for clinical trials in the U.S. rose by 11.6% to a record high of 662 last year.

Funding high cost R&D will be a challenge:

Patent expiry of so many blockbusters during this period will obviously fuel the growth of generic pharmaceutical business, especially in the large developed markets of the world. The market exclusivity for 180 days being given to the first applicant with a paragraph 4 certification in the U.S. is, indeed, a very strong incentive, especially for the generic pharmaceutical companies of India.

In a scenario like this, funding of high cost R&D projects is becoming a real challenge.

Cut in R&D Expenditure has already begun:

Following its acquisition of Wyeth in 2008, Pfizer announced plans to reduce their R&D budget from the US $11 billion to between $8 and $8.5 billion by 2012. Similarly, GSK also announced a reduction of £500 million from its costs by 2012 and half of these costs are from their R&D budget.

As reported by Chemistry World in January 2010, “AstraZeneca announced its plans to reduce around 1800 R&D positions as part of a restructuring process that will see 8000 jobs go as it looks to reduce its costs by $1 billion a year by 2014”.

The time for ‘Frugal Innovation’:

In a new and fast evolving scenario when the erstwhile ‘Blockbuster Drugs Business Model’ with commensurate huge R&D spends does no longer seem to be a practical proposition. Unmet needs in the healthcare space should now be met with cost efficient ‘Frugal Innovation’, which has already dawned in the healthcare space of India.

April 15, 2010 issue of ‘The Economist’ in an article titled, “First break all the rules – The charms of frugal innovation” has described some of health related ‘Frugal Innovations’ as follows:

  • Bangalore Center of General Electric (GE) has come out with a low cost hand-held electrocardiogram (ECG) called ‘Mac 400’, which has reduced the cost of an ECG test to just US $1 per patient.
  • Tata Consultancy Services (TCS) has come out with lower-tech, yet robust, portable and relatively cheap water filter, which uses rice husks to purify water. This water filter could provide even to a large family an abundant supply of bacteria-free water for an initial investment of about US $24 and a recurring expense of about US $4 for a new filter every few months. Tata Chemicals, which is making the devices, is planning to produce 1m over the next year and hopes for an eventual market of 100m.

11th Five Year Plan of India and ‘Frugal Innovation’:

The panel set up for the appraisal of the 11th Five Year Plan of India observed that innovation needs to be “inclusive” and “frugal”.

To accelerate growth of the nation and to meet the unmet needs particularly in healthcare and education, besides others, India needs more ‘frugal innovation’ that produces more ‘frugal cost’ and high quality products and services, quite affordable to the common man of the country.

It also highlighted that a paradigm which bases its assessment of innovativeness on the quantum of expensive inputs deployed, like the numbers of scientists, expenditures on R&D etc. will always tend to produce expensive innovations because the cost of innovation must be recovered in the prices of the products it produces.

The above appraisal report goes on saying:

“This is indeed the dilemma of the ‘innovative’ companies in the pharmaceutical industry. They find it economically difficult to justify development of low cost solutions for ailments that affect poor people.”

‘National Innovation Council’ moots ‘inclusive growth’ through innovation:

To encourage the culture and process of ‘inclusive growth’ through innovation in India, Mr. Sam Pitroda , the Chairman of the ‘National Innovation Council’ had mooted a proposal for creation of a Rs 1,000 Crore corpus in the country, where the Government of India should initially take 10% to 20% share of the corpus and then its equities will be bought by the public. 

Conclusion:

The R&D model of companies like GE and TCS, as mentioned above, are taking the affordability of the common man as a starting point and then working backwards to satisfy unmet needs of the people, just as what Tata Motors did for the ‘Nano Car’ in India.

In an environment of continuous diminishing return from the big ticket R&D expenditure of the global pharmaceutical companies, across the world, I sincerely hope and pray that the world witnesses increasing number of cost effective ‘Frugal Innovation’ in healthcare, including medicines, sooner than later…just for the sake of humanity.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Fostering ‘Innovation’ and protecting of ‘Public Health Interest’: A formidable task for the new TF (taskforce)

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‘The Lancet’, March 19, 2011 in its article titled “India: access to affordable drugs and the right to health”, where the authors reiterated:

‘The right to health is a fundamental right in India, judicially recognized under article 21 of the Constitution…Access to affordable drugs has been interpreted to be a part of right to health’.

Keeping in view of this ‘fundamental right’ of the citizens, public health related issues will continue to be treated as a subject of ‘Public Interest’ in the country.

At the same time, no one can wish away the fact that unmet medicinal needs of the ailing patients can only be met through discovery of innovative drugs. Hence, an innovation friendly ecosystem must necessarily be created in the country, simultaneously. This throws open the dual challenge to the government in the healthcare space of the nation – charting an appropriate pathway to foster a climate for innovation and at the same time protecting ‘Public Health Interest’ of its citizens.

The recent admirable response of the Ministry of Health:

Considering this dual healthcare related needs of the country, on March 15, 2011, Mr Ghulam Nabi Azad, the Minister of Health and Family Welfare, announced the formation of a 12-member task force that will evolve the following strategies under the chairmanship of V.M. Katoch, Secretary, Department of Health Research and Director-General, ICMR and will submit its report within three months.

  1. Evolving a short, medium and long-term policy and strategy to make India a hub for drug discovery, research and development.
  2. Evolving strategies to further the interests of Indian pharma industry in the light of issues related to intellectual property rights and recommend strategies to capitalise the opportunity of $60 to $80 billion drugs going off-patent over the next five years.
  3. Evolve policy measures to assure national drugs security by promoting indigenous production of bulk drugs, preventing takeover of Indian pharma industry by multi-national corporations, drug pricing, promotion of generic drugs
  4. Recommend measures to assure adequate availability of quality generic drugs at affordable prices.

Indian Pharmaceutical Industry is on a growth spree:

The pharmaceutical industry of India is currently playing a key role in promoting and sustaining development in the healthcare space of India. Due to significant cost arbitrage, educated and skilled manpower and cheap labor force among others, the industry is set to establish itself as a global force to reckon with, especially in the areas of generic formulations business, Contract Research and Manufacturing Services (CRAMS).

Estimates and Perspectives:

  • The pharma industry is growing at around 1.5-1.6 times the Gross Domestic Product growth of India
  • Currently, India ranks third in the world in terms of volume of manufacturing pharmaceutical products
  • The Indian pharmaceutical industry is expected to grow at a rate of around 15 % till 2015
  • The retail pharmaceutical market in India is expected to cross US$ 20 billion by 2015
  • According to a study by FICCI-Ernst & Young India will open a probable US$ 8 billion market for MNCs selling patented drugs in India by 2015
  • The number of pharmaceutical retailers is estimated to grow from 5.5 lakh to 7.5 lakhs by 2015
  • At least 2 lakh more pharma graduates would be required by the Indian pharmaceutical industry by 2015
  • The Indian drug and pharmaceuticals sector attracted foreign direct investment to the tune of US$ 1.43 billion from April 2000 to December 2008 (Ministry of Commerce and Industry), which is expected to increase significantly along with the policy reform measures and increased Government investment (3%-4%) as a percentage of GDP towards healthcare, by 2015
  • The Minister of Commerce estimates that US$ 6.31 billion will be invested in the domestic pharmaceutical sector
  • Due to low cost of R&D, the Indian pharmaceutical off-shoring industry is expected to be a US$ 2.5 billion opportunity by 2012

Key growth drivers: Local and Global:

Local:

• Rapidly growing middle class population of the country with increasing disposable income.
• High quality and cost effective domestic generic drug manufacturers are achieving increasing penetration in local, developed and emerging markets.
• Rising per capita income of the population and inefficiency of the public healthcare system will encourage private healthcare systems of various types and scales to flourish.
• High probability of emergence of a robust healthcare financing/insurance model for all strata of society.
• Fast growing in Medical Tourism.
• Evolving combo-business model of global pharmaceutical companies with both patented and generic drugs is boosting local outsourcing and collaboration opportunities.
Global:
Global pharmaceutical industry is going through a rapid process of transformation. The moot question to answer now is how the drug discovery process can meet the unmet needs of the patients and yet remain cost effective.

Cost containment pressure due to various factors is further accelerating this process. CRAMS business, an important outcome of this transformation process, will be the key growth driver for many Indian domestic pharmaceutical players in times to come. 

Key Challenges:

Like all other industries, Pharmaceutical Industry in India has its own sets of Challenges and opportunities under which it operates. Some of the challenges the industry faces are:

  • Unfortunate “Trust Deficit” between the Government and the Industry, especially in pharmaceutical pricing area
  • Regulatory red tape and lack of initiative towards international harmonization
  • Inadequate infrastructure and abysmal public delivery system
  • Lack of adequate number of qualified healthcare professionals
  • Inadequate innovation friendly ecosystem to encourage R&D
  • Myopic Drug Policies have failed to deliver. The needs of over 350 million BPL families who cannot afford to buy any healthcare products and services, have not been effectively addressed, as yet
  • Inability of the government to address the critical issue of ‘80% out of pocket expenditure’ of the common man towards healthcare
  • Inadequate Public Private Partnership (PPP) initiatives in most of the critical areas of healthcare

Job Creation:

Pharmaceutical sector in India has created employment for approximately 3 million people from 23,000 plus units. Accelerated growth in job creation, will not only open up more opportunities to pharmaceutical professionals, but will also fuel growth opportunities in allied business segments like Laboratory, Scientific instruments, Medical Devices and Pharma machinery manufacturing sectors.

Despite all these, it is worth noting that the Indian pharmaceutical industry is confronting with a major challenge in getting employable workforce with the required skill sets. This issue will grow by manifold, as we move on, if adequate vocational training institutes are not put in place on time to generate employable workforce for the industry.

Government Initiatives are inadequate:

The government of India has started working out some policy and fiscal initiatives, though grossly inadequate, for the growth of the pharmaceutical business in India. Some of the measures adopted by the Government are follows:

  • Pharmaceutical units are eligible for weighted tax reduction at 175% for the research and development expenditure obtained.
  • Two new schemes namely, New Millennium Indian Technology Leadership Initiative and the Drugs and Pharmaceuticals Research Program have been launched by the Government.
  • The Government is contemplating the creation of SRV or special purpose vehicles with an insurance cover to be used for funding new drug research
  • The Department of Pharmaceuticals is mulling the creation of drug research facilities which can be used by private companies for research work on rent

Encouraging Pharmaceutical Export:

In the recent years, despite economic slowdown being witnessed in the global economy, pharmaceutical exports in India have registered an appreciable growth. Export has emerged as an important growth driver for the domestic pharmaceutical industry with more than 50 % of their total revenue coming from the overseas markets. For the financial year 2008-09 the export of drugs is estimated to be around US $8.25 billion as per the Pharmaceutical Export Council of India (Pharmexil). A survey undertaken by FICCI reported 16% growth in India’s pharmaceutical export during 2009-2010.

Five ‘Strategic Changes’ envisaged:
Five new key strategic changes, in my view, will be as follows:
1. As the country will move towards an integrated and robust healthcare financing system:
• Doctors will no longer remain the sole decision makers for the drugs that they will prescribe to the patients and also the way they will treat the common diseases. Healthcare providers/ medical insurance companies would play a key role in these areas by providing to the doctors well thought out treatment guidelines. • Tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable for a significant proportion of the products that the pharmaceutical companies will sell related to these areas.

• Health Technology Assessment (HTA) or outcome based pricing will play an important role in pricing a healthcare product.
2. An integrated approach towards disease prevention will emerge as equally important as treatment of diseases.
3. A shift from just product marketing to marketing of a bundle of value added comprehensive disease management processes along with the product will be the order of the day
4. More affordable innovative medicines will be available with increasing access to a larger population, as appropriate healthcare financing model is expected to be in place.

5. Over the counter medicines, especially originated from rich herbal resources of India, will curve out a larger share of market, as appropriate regulations will be put in place.

Conclusion:

With the all these evolving trends in the healthcare sector of India, the ball game of the successful domestic Indian pharmaceutical industry is expected to undergo a rapid metamorphosis, as they will require to  compete with the global players on equal footing. Those Indian Pharmaceutical companies, who are already global players in their own rights, are already well versed with the nuances of this new game and are expected to offer a tough competition to the global players, especially, in the branded generic space, initially.

However, for some domestic players, the new environment could throw a major challenge and make them vulnerable to the consolidation process, already set in motion within Indian pharmaceutical industry.

The newly formed taskforce will hopefully be able to address all these issues in an integrated way to guide this life-line industry to a much higher growth trajectory to compete effectively not only in the global generic space, but also with the global innovator companies, sooner than later.

So the name of the game is to ‘Foster Innovation’ and protect ‘Public Health Interest’ simultaneously and not one at the cost of the other.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

A Disruptive Innovation in Healthcare – Personalized Medicines

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Tufts Center for the Study of Drug Development (Tufts University) in its publication named ‘Impact Report’, November/December 2010 articulated, “Biopharmaceutical companies are committed to researching and developing personalized medicines and within their development pipelines, 12%-50% of compounds are personalized medicines.”

Thus the disruptive innovation process towards ‘Personalized Medicines’ have already begun. Over a period of time ‘Personalized Medicines’ will be targeted to the biological/genomic profile of an individual to significantly improve the quality of healthcare to the patients.

This paradigm shift in the healthcare space would prompt similar changes in various disease diagnostic technologies, which will not only be able to detect a disease well before the appearance of symptoms, but would also  indicate which patients will best respond to or be adversely affected by which medications.

‘Personalized Medicines’ will in that process ensure a critical shift from the disease oriented treatment to a patient oriented treatment, which can be initiated much before the clinical manifestations of a disease are detected.

The technological march towards this direction is indeed risky and arduous one. However, the benefits that the humanity will accrue out of this disruptive innovation will far outweigh the risks in all forms.

Personalized Medicines:

Rapid strides in pharmacogenomics bring in a promise of radically different ways of treating diseases, as major pharmaceutical companies of the world make progress in developing much more effective medicines designed to target smaller populations.

The above ‘Impact Report’ defines Personalized Medicines as:

“Tailoring of medical treatment and delivery of health care to the individual characteristics of each patient—including their genetic, molecular, imaging and other personal determinants. Using this approach has the potential to speed accurate diagnosis, decrease side effects, and increase the likelihood that a medicine will work for an individual patient.”

‘Personalized Medicines’ are expected to be an effective alternative to quite unwieldy current ‘blockbuster drugs’ business model.

What is then the aim of ‘Personalized Medicines’?
The aim of ‘personalized medicines’ is, therefore, to make a perfect fit between the drug and the patient. It is worth noting that genotyping is currently not a part of clinically accepted routine. However, it is expected to acquire this status in the western world, very shortly.

Some interesting recent developments:

  1. The Economist, March 12-18, 2011 in its article titled “Toward the 15-minute genome” reported that ‘nanopore sequencing’ of human genome is now gaining momentum. This could make sequencing of entire genomes of cancerous and healthy cells possible to accurately point out what has exactly changed in individual patients, enabling the oncologists to determine patient specific drugs for best possible results in each case, separately.
  2. New cancer marker has been reported to aid earlier detection of the disease, where repetitive stretches of RNA are found in high concentrations in cancer cells.
  3. A new blood test will accurately detect early cancer of all types with an accuracy of greater than 95%, when repeated the accuracy will even be even greater than 99%.
  4. ‘Breast On A Chip’ will test nano-medical detection and treatment options for breast cancer
  5. A brain scan will detect the telltale “amyloid plaques,” the protein fragments that accumulate between nerves in Alzheimer’s disease

In what way ‘Personalized Medicines’ will be different?

With ‘Personalized Medicines’ the health of a patient will be managed based on personal characteristics of the individual, including height, weight, diet, age, sex etc. instead of defined “standards of care”, based on averaging response across a patient group. Pharmacogenomics tests like, sequencing of human genome will determine a patient’s likely response to such drugs.
These are expected to offer more targeted and effective treatment with safer drugs, and presumably at a lesser cost. Such medicines will also help identify individuals prone to serious ailments like, diabetes, cardiovascular diseases and cancer and help physicians to take appropriate preventive measures, simultaneously. ‘Personalized medicines’ in that process will focus on what makes each patient so unique, instead of going by the generalities of a disease.
To give a quick example, genetic differences within individuals determine how their bodies react to drugs such as Warfarin, a blood thinner taken to prevent clotting. It is of utmost importance to get the dosing right, as more of the drug will cause bleeding and less of it will not have any therapeutic effect.
‘Personalized medicines’, therefore, have the potential to bring in a revolutionary change the way patients are offered treatment by the medical profession. Genomic research will enable physicians to use a patient’s genetic code to arrive at how each patient will respond to different types of treatments.
In the field of cancer, genetic tests are currently being done by many oncologists to determine which patients will be benefitted most, say by Herceptin, in the treatment of breast cancer.
Expected benefits from ‘Personalized Medicines’:

The expected benefits from the ‘Personalized Medicines’, besides very early diagnosis as stated above, are the following:
1. More Accurate dosing: Instead of dose being decided based on age and body weight of the patients, the physicians may decide and adjust the dose of the medicines based on the genetic profiling of the patients.
2. More Targeted Drugs: It will be possible for the pharmaceutical companies to develop and market drugs for patients with specific genetic profiles. In that process, a drug needs to be tested only on those who are likely to derive benefits from it. This in turn will be able to effectively tailor clinical trials, expediting the process of market launch of these drugs.
3. Improved Health care: ‘Personalized Medicines’ will enable the physicians to prescribe ‘the right dose of the right medicine the first time for everyone’. This would give rise to much better overall healthcare.
Role of Pharmaceutical and Biotech companies:
Many research based pharmaceutical and biotechnology companies have taken a leading role towards development of ‘personalized medicines’ in line with their key role as healthcare enterprises. India is also taking keen interest in this science.
Some important issues:
However, there are some ethical and social issues in the development of ‘personalized medicines’ primarily in the area of genetic testing and consideration of race in the development of such medicines, which need to be effectively addressed, sooner.
Can it replace the ‘Blockbuster Drugs’ business model?
Realization of deficiencies in the economics of ‘block buster drugs’ R&D business model has made ‘personalized medicines’ a reality today.
Better efficacy and safety profile of ‘personalized medicines’ will prove to be cost-effective in the overall healthcare systems. Smaller and exclusive markets for ‘personalized medicines’ are also expected to be quite profitable for the pharmaceutical companies. However, such smaller segmentation of the market may not leave enough space for the conventional ‘blockbuster model’, which is the prime mover of the global pharmaceutical industry, even today.
Reports indicate that some renowned global pharmaceutical companies like, Roche, AstraZeneca, GlaxoSmithKline are making good progress towards this direction through collaborative initiatives.
Approximate cost of ‘Genome Sequencing’:
When human genome was first sequenced, the reported cost was staggering U.S$ 3 billion. However, with the advancement of technology, it came down to U.S$ 1 million, last year. Currently, the cost has further come down to U.S$ 60,000. With the rapid stride made in the field of biotechnology, combined with the economies of scale, cost of such genetic tests is expected to be around U.S$ 1,000 in near future, making it possible for people to obtain the blue print of their genetic code.
Savings on cost of Clinical trials with ‘Personalized Medicines’:
Genome sequencing will help identifying a patient population, which will be far more likely to respond positively to the new treatment. In that process, if it reduces costs of clinical trial by even 5%, expected net savings for the industry towards clinical trial have been reported to be around U.S$ 5 billion.
With ‘personalized medicines’ the innovator companies will be able to significantly reduce both time, costs and the risks involved in obtaining regulatory approvals and penetrating new markets with simultaneous development of necessary diagnostic tests. Such tests will be able to identify patients group who will not only be most likely to be benefitted from such medicines, but also will be least likely to suffer from adverse drug reactions.
Therefore, considerable cost advantages coupled with much lesser risks of failure and significant reduction in the lead time for clinical trials are expected to make ‘personalized medicines’ much more cost effective, compared to conventional ‘blockbuster drugs’.
Innovative and cost effective way to market ‘Personalized Medicines’:
With ‘personalized medicines’ the ball game of marketing pharmaceuticals is expected to undergo a paradigm shift. Roche’s model of combining necessary diagnostic tests with new drugs will play a very important role in the new paradigm.
Roche is ensuring that with accompanying required diagnostic tests, the new oncology products developed at Genentech can be precisely matched to patients.
Can ‘Personalized Medicines’ be used in ‘Primary Care’ also?
To use ‘personalized medicines’ in a ‘primary care’ situation, currently there is no successful model. However, it has been reported that in states like, Wisconsin in the U.S, initiative to integrate genomic medicines with ‘primary care’ has already been undertaken. Scaling-up operations of such pilot projects will give a big boost to revolutionize the use of ‘personalized medicines’ for precision and targeted treatment of the ailing population.

Conclusion:

In my view, there does not seem to be any possibility of looking back now. The robust business model of ‘personalized medicines’, will now be the way forward, as much to the industry as to the patients. It is a win-win game.

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.