Disrupting drug discovery with alternative business models

While much of the recent discussion around healthcare emphasizes that the pharmaceutical industry is under pressure from the high costs of bringing a drug to market and the regulatory hurdles, we tend to forget that other industries have faced challenges too, changed and survived. There are thousands of diseases with no treatments, representing millions of patients who have no treatment. At the beginning of the 21st century our pharmaceutical business models are urgently in need of disruption to address this unmet need. We are seeing that this may come from an unlikely source, the patients and the disease foundations they support.

The big pharma business model has tried to adapt under pressures over the past decade. A forthcoming article suggests that the pharmaceutical industry is trying to surmount drug discovery bottlenecks through moving more of its R&D outside. However, this alone may not be enough. It was suggested that four disruptive strategies could involve open accessibility of government-funded research, shifting precompetitive research to later stages beyond preclinical, making more clinical data available to improve learning, listening to patients using social media and sharing data with collaborative tools [1]. An earlier editorial had suggested that organizational and individual failures to collaborate may be behind the inefficiencies in drug discovery and had suggested alternative business models. Central to these would be tools to share data as well as create a marketplace facilitated by the cloud [2]. While this may seem far away for those at the front line of research, what are the alternatives?

An article by O’Brien et al. [3] poignantly describes an approach to early process development in the context of the productivity model in legacy Wyeth. To meet the target of two new drug applications per year they had to produce 8–12 investigational new drugs per year. To do this they made ‘dramatic’ changes [3]. While it is clear that this had the short term effect on productivity, Wyeth eventually succumbed to Pfizer, and thousands of jobs were lost. While this pattern of change to promote efficiency is not unique to this company it has been repeated with minor changes throughout big pharma.

Biotechs are not immune to recent pressures and have seen venture capitalists with less tolerance for risk exiting the industry. A feature by March-Chordá and Yagüe-Perales eloquently describes three business models for biotechs in Canada which are applicable globally [4]. These business models are new drug development, developing a technological platform, and incremental innovation through existing products. Hundreds of companies with different appetites for risk can relate to these business models and many also rely on the ability to form strategic alliances to fund their companies and support their molecules into the clinic. Ultimately the majority of such alliances are terminated early. A feature by Havenaar and Hisocks suggests a model for contract valuation that deals with market uncertainty to give a higher probability of survival [5].

A radical approach to funding of biomedical research that takes its cues from the securitization techniques (that brought us the financial crash of 2008) has also been proposed [6]. Fernandez et al. created a simulation in which a megafund of $5–15 billion could return 9–11% for equity holders. While this may seem out of reach it remains to be seen whether their model could translate to reality. Perhaps if enough of the venture philanthropists combined resources they could have more impact by funding smaller companies.

Large disease charities have funded drug discovery at biotechs to move molecules into the clinic (e.g. the Cystic Fibrosis Foundation provided financial support of $75 million for Vertex to develop Kalydeco for the G551D mutation). We should perhaps look to rare disease patients for inspiration. Many rare disease patients or parent advocates form foundations to fund basic research that is needed. Increasingly they are also forming very small virtual companies to handle the IP and commercialize their ideas (e.g. Dart Therapeutics funded by Charley's Fund and the Nash Avery Foundation for Duchenne Muscular Dystrophy). This may provide the innovation (and funding) needed to revitalize the industry.

1              Ekins, S. et al. (2012) Four Disruptive Strategies for Removing Drug Discovery Bottlenecks. Drug Discov. Today In press DOI: 10.1016/j.drudis.2012.10.007
2              Bunin, B.A. and Ekins, S. (2011) Alternative business models for drug discovery. Drug Discov. Today 16, 643–645
3              O'Brien, M.K. et al. (2010) Early chemical development at Legacy Wyeth Research. Drug Discov. Today 16, 81–88
4              March-Chorda, I. and Yague-Perales, R.M. (2011) Biopharma business models in Canada. Drug Discov. Today 16, 654–658
5              Havenaar, M. and Hiscocks, P. (2012) Strategic alliances and market risk. Drug Discov. Today 17, 824–827
6              Fernandez, J.M. et al (2012) Commercializing biomedical research through securitization techniques. Nat. Biotechnol. 30, 964–975
Sean Ekins graduated from the University of Aberdeen; receiving his M.Sc., Ph.D. and D.Sc. He is Senior Consultant for Collaborations in Chemistry, and VP Science at Collaborative Drug Discovery Inc.  In addition he is Adjunct Professor, Division of Chemical Biology and Medicinal Chemistry, UNC Eshelman School of Pharmacy, University of North Carolina at Chapel Hill; Adjunct Associate Professor, School of Pharmacy Department of Pharmaceutical Sciences, University of Maryland; Adjunct Professor in the Department of Pharmacology at University of Medicine and Dentistry of New Jersey - Robert Wood Johnson Medical School, Piscataway, He has been a postdoctoral fellow at Lilly Research Laboratories, senior scientist at Pfizer and Lilly Research Laboratories;  Associate Director of Computational Drug Discovery at Concurrent Pharmaceuticals, Inc and Vice President of Computational Biology at GeneGo.
Sean has authored or co-authored ~190 peer reviewed papers and book chapters on computational ADME and drug discovery as well as edited/ co-edited four books. He is the Reviews Editor for Pharmaceutical Research, Associate Editor of the Journal of Pharmacological and Toxicological Methods, is on the Editorial Board Drug Discovery Today and Mutation Research Reviews. He currently serves on the scientific advisory board for Emiliem Inc., Assay Depot and Bimini Inc. and the board of directors of the Pistoia Alliance. Sean co-developed the mobile apps ODDT (Open Drug Discovery Teams) and TBmobile and has been awarded 6 NIH grants as Principal Investigator. He is currently actively engaged in drug discovery for tuberculosis, malaria and rare diseases.

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