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Pharmaceutical R&D – Early signs of a change in fortune

It’s no secret that the pharmaceutical industry is undergoing rapid, and often painful, change. As therapeutics become increasingly difficult and expensive to bring to market, companies are laying off groups, spinning off departments and shuttering doors. Mergers and acquisitions are trending toward an inevitable part of the business plan. And as companies consolidate, so does R&D.

But there may be signs that the most volatile years may be in the past. A recent report from Thomson Reuters (CMR International Pharmaceutical R&D Factbook) indicates that 2014 was a record-setting year, with global pharma sales crossing the $1 trillion threshold for the first time ever. In addition, 2014 saw a 93% FDA approval rate, with 41 of 44 NDA and BLA applications being accepted by the US FDA – the most in more than 10 years. Of these new drugs, approximately 30% were for rare conditions. 11 New Molecular Entities were approved for oncology indications, seven of which received orphan drug status.

A significant trend that has developed over recent years and contributed to such a high approval rate is the “fail fast, fail cheaply” approach. By removing unsuccessful drug candidates early in discovery using more cost-effective and efficient in vitro methods, it has led to a reduced, yet higher quality, early stage drug development pipeline. Phase III termination or abandonment is on the decline while the submission success rate continues to improve.

It’s certainly possible that 2014’s boom could be an isolated event, but there are positive indications that this may be the beginning of a new period of growth. In addition to crossing the $1 trillion mark, sales have grown by close to 6% in 2014, and since the low-point in 2007, FDA NME approvals have shown a seven-year upward trend, peaking in 2014. Furthermore, R&D programs are giving greater focus to rare diseases and conditions with small populations. This buoys results because clinical trials for ailments like these can be done more quickly, with smaller sample populations and are given priority by regulatory bodies.

As for major contributors to hitting the $1 trillion benchmark, a recent report in Genetic Engineering News (The Top 25 Best Selling Drugs of 2014) shows that 25 marketed drugs account for nearly 15% of that revenue, from across 11 therapeutic indications. In total, the top 25 selling drugs of 2014 account for almost $150 billion in sales, with the lion’s share being taken by treatments for cancer patients ($38 billion for six drugs). Arthritis therapeutics claim the runner-up position, with four drugs accounting for $33 billion. Worth noting is the $10.3 billion sales from a single product to treat Hepatitis C (Gilead’s Sovaldi). Sovaldi’s presence on this list in its very first year on the market indicates that in addition to orphan diseases, difficult or as yet untreated diseases, present further opportunity for R&D growth.

Top Drugs by Revenue in 2014