Drug Pipelines Show Waning Progress, Analysis Says

This article published with permission from The Burrill Report.

Drugmakers’ pipeline success rates across every phase of development have been slowly worsening or, at best, staying flat, suggests a new analysis by senior Bernstein Research analyst Tim Anderson.

Anderson’s review of drug company data, supplied by the consulting firm KMR Group, found that despite the positive picture of research and development productivity painted by a raft of novel drug approvals in recent years, pipeline analysis shows a more mixed picture.

“The drug industry has suffered from two primary problems over the past decade: lagging R&D and the patent cliff,” writes Anderson. “Of all fundamental attributes, having a productive R&D engine is probably the single most important factor.

That engine appears to be sputtering in recent years. Anderson found late-stage pipeline success rates slipped to just 65% during the years 2007 to 2011, as compared to the 70% rate registered between 2003 and 2007. Meanwhile, mid- and early-stage assets have experienced even deeper declines against a backdrop of slowly lengthening product development periods.

Instead of finding new signs of R&D productivity, Anderson has found that the number of preclinical drugs needed to yield a single approved product has been increasing steadily, hitting a point, during the period 2007 to 2011, at which 30 preclinical products are needed just to secure one approval, as compared to the need for just 12 preclinical products required during 2003 to 2007.

Despite the gloomy picture, Anderson points out that even with the high quality of KMR’s data — it’s sourced directly from drug companies — its limitations leave room for the perception that pipelines may be growing slowly better. First, the multi-year grouping KMR used to group the data may “mask a more recent inflection point,” he suggests. Mega-mergers such as the tie-up between Pfizer and Wyeth in 2009 might also be coloring the data with pipeline disruption. A move toward weeding out weak early-stage candidates and a shift away from “me-too” drugs may also impact the productivity picture in ways not captured by the data set.

Growth opportunities presented by emerging markets and more energy being put into the development of novel drugs — 25 new molecular entities have been approved by the U.S. Food and Drug Administration so far this year — also offer potential areas for improvement, suggests Anderson.

“We are hopeful,” he concludes, “that pipelines will continue to improve as a result of the conscious effort by drug company management teams to ‘fix’ this problem, and that returns on investment will improve.”

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