Doing Deals With Biotechs Fails To Yield Results?

Doing Deals With Biotechs Fails To Yield Results?

June 27th, 2011 // 12:53 pm @

Here are some sobering numbers, especially for those wandering the halls of the annual BIO gathering that gets under way today in Washington, DC. The pharmaceutical industry spent an estimated $68 million less on drug R&D in 2010, a 3 percent drop from spending during the previous two years, according to data compiled by CMR International.

Meanwhile, there were 55 phase III terminations from 2008 to 2010, which was more than double the number between 2005 and 2007. At the same time, the number of drugs entering phase III clinical trials fell by 55 percent in 2010, and those entering Phase I and Phase II trials fell 47 percent and 53 percent, respectively.

It gets worse. There were 21 new molecular entities (NMEs) launched on the global market in 2010, compared with 26 in the previous year, which was the lowest number of NMEs launched by big pharma over the past decade. Of course, some may argue the number of launches reflects tougher regulatory scrutiny, as opposed to R&D struggles.

Nonetheless, big pharma has increasingly turned to doing deals with smaller players to compensate for failures and patent expirations, as well. But this approach may not be working as envisioned. So-called ’self-originated molecules’ were deemed to have a 20 percent greater chance of reaching the market from Phase III and FDA submission compared with compounds that were licensed or acquired.

One take away message: “The strategy of big pharma to in-license more drugs for development does not appear to be paying off at present,” Phil Miller of Thomson Reuters, which owns CMR, says in a statement. “An earlier focus on clearing out weak drug candidates will be instrumental to successfully progressing drugs to market.”

Interestingly, the data is disclosed shortly after a survey finds that 44 percent of business development executives at big pharma believe their negotiating power has increased with biotechs between 2006 and 2010, while 55 percent at biotechs felt that upfront payments have dropped, compared with 31 percent who saw an increase, according to Nature News Drug Discovery .

Moreover, 51 percent of the big pharma execs reported an uptick in upfront payments and only 32 percent saw a drop, and the mean upfront deal value at the end of this five-year period was about 95 percent of its 2006 starting point.

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