Pharmaceutical giants are continuing to join the biotech goldrush following a year that has seen high-value acquisitions of biologics companies
Pharmaceutical giants are continuing to join the biotech goldrush following a year that has seen high-value acquisitions of biologics companies.
In two of the biggest deals, Schering Plough paid ?7.5 billion for Akzo Nobel’s biotechnology division Organon Biosciences, while AstraZeneca followed suit with their ?7.6 billion purchase of MedImmune. And many smaller acquisitions have bolstered flagging pipelines.
The trend is turning drug development on its head, says Mike Dey, vice president of pharmaceutical development at French pharmaceutical firm Ipsen. ’Biotech takes a market-driven approach, looking at a specific cell and a particular disease, then finding a treatment for that, rather than finding a powerful molecule and looking for a disease it can treat,’ he explains. ’We’ve known how the biology works for a long time, but we are now able to engineer these products on a large scale, which makes them commercially viable.’
Tim Hughes, a consultant to the biotechnology industry who specialises in scaling up product manufacturing, has seen the industry evolve over 30 years. He thinks biologics are gradually going to replace the traditional approach to drug design. ’Pharma’s fortunes are built on small molecules and powerful organic chemistry,’ he says. ’But this is a more intelligent approach to therapeutics, targeting specific cells.’
Nevertheless, Hughes doesn’t think that spells the end for chemistry in drug design and manufacture. ’This change should be seen as an opportunity for synergistic work. Things are changing, and I think manufacturing chemists are right to be concerned, but they shouldn’t lose hope.’
Manufacturing is a particular challenge in biotech. Large biological molecules are often difficult to take from the flask to the plant. This is an area where Dey thinks the pharmaceutical industry’s decades of large-scale manufacturing experience will help the industry to develop. ’I think we will see many more alliances between big pharma and biotech, which will support the industry’s growth,’ he says.
Dey also points to what he calls the ’desperation factor’ driving up the prices of biotech companies - with many products approaching patent expiry, companies need to expand their pipelines quickly. ’Biotech firms are of course playing potential buyers off against each other to get the best price,’ he admits. But he doesn’t think the firms have been overvalued. ’I think biologics will make up the next generation of blockbusters, and paying ?200 million for a drug that will sell ?1 billion in its first year is a good investment,’ he says.
According to industry consultants IMS Health, the number of biologics with annual sales greater than a billion dollars has risen from 44 in 2000 to 105 in 2006, doubling their share of the growing blockbuster pharmaceutical market to 20 per cent.
Attrition rates due to toxicity and safety concerns at the late stage of drug development are also clogging the pharmaceutical pipeline, another reason for the high level of interest in biologics. ’When you are copying a biological process, you know that the resulting product will be safe,’ says Dey. However, generic biologics have also started to arrive. In April 2007, Dr. Reddy’s Laboratories launched a generic version of Roche’s Rituxan, a non-Hodgkin’s lymphoma treatment.
The single biggest area of interest for biological treatments is in oncology. While predictions for pharma grow more and more dismal, IMS Health predicts 17-20 per cent growth in the oncology market up to 2011. They say that in Europe and North America, therapeutic agents introduced in the past 10 years make up approximately 75 per cent of all sales of anti-cancer agents - a trend driven largely by biotechnology innovations.
The latest development in the biologics sector came on 7 December 2007, when AstraZeneca unveiled their new biologics unit formed from the consolidation of Cambridge Antibody Technology into MedImmune.
’Building a major international presence in the research, development and commercialisation of biologics to complement our small molecule capabilities is key to our sustained success,’ says David Brennan, Chief Executive Officer of AstraZeneca. ’The consolidation . immediately creates one of the world’s largest biologics pipelines.’
The new organisation - still called MedImmune - has approximately 100 research projects and more than a dozen clinical product candidates. Motavizumab, their anti-RSV (respiratory syncytial virus) biologic drug, has just garnered positive Phase III trial results, and a US Food and Drug Administration license application is expected in early 2008.
Schering Plough will also be expecting a return on its substantial investment in Organon, whose anti-psychotic asenapine is currently under review by the FDA, with a launch expected next year.
If Dey’s optimism is anything to go by, it’s hardly surprising that biotechnology is garnering so much attention: ’I think we will see a cancer vaccine emerge from this area of research, maybe not in my working life, but definitely in the long term.’
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