Amgen exec bemoans big pharma's shrinking pipeline

Dr Glen Begley, the Australian who now heads the haematology and oncology R&D department at US biotech giant Amgen, has told a conference that the decline in new drug approvals was "alarming", and predicted major shakeouts in big pharma.

Begley also warned that the majority of new therapies being developed in Australia would never make it to the market, and recommended that companies brace themselves to learn from biotech failures, both their own and others.

Formerly a senior researcher at Melbourne's Walter and Eliza Hall Medical Research Institute, Begley told the Lorne Cancer Conference at Phillip Island that if the trend continued, "in 50 years we may still be relying on many of the same drugs we're using today."

In 1996, 53 novel drugs were approved by the US Food and Drug Administration (FDA). In 2002, despite a huge increase in its R&D spend, the number had slipped to just 17, Begley said.

He described how the therapeutics industry was trapped in a spiral of steeply rising costs and shrinking revenues. By 2010, the drugs that currently generate 50 per cent of Merck's revenues would be out of patent, he said. For Pfizer, a US$280 billion company with 14,000 employees globally, the figure was 60 per cent.

"For Pfizer, each new molecular entity that reached the clinic in 2002 cost $800 million," Begley said. "To put that in perspective, it's three times the total budget for Australia's National Health and Medical Research Council.

"The big companies are suffering from decelerating revenue growth, and increasing patent exposure, increasing cost-containment pressures, and high-profile drug failures.

He said Merck had already announced that an estimated 70,000 people may have suffered heart attack or stroke as a result of chronic, high-dose administration of its arthritis drug Vioxx, which inhibits the COX-2 inflammatory pathway.

Begley said that on the day that Merck made its announcement that it was withdrawing Vioxx from the market, investors cut 20 per cent of its value. Amgen has now overtaken Merck in the big pharma league.

Pfizer's own COX-2 inhibitor, Celebrex, has also been taken off the market. Analysts have warned that the company could lose 10 to 15 per cent of its staff, and be forced to reduce its $5 billion annual R&D spent to meet its potential liabilities.

"These are very big and significant changes if you're interested in improving patient care," Begley said.

He said the situation was even worse for new cancer drugs, which are aimed at a much larger, unmet medical need. New anti-cancer therapies account for 50 per cent of all drugs currently in clinical trials. "It puts the spotlight on oncology, when the success rate is actually a 75 per cent failure rate," he said.

In the US, blame for the failure to identify the risks posed by chronic, high-dose use of COX-2 inhibitors was not being directed at Merck or Pfizer, but at the FDA itself, for failing to require the companies to undertake research into potentially adverse effects.

In consequence, the FDA was likely to come under intense political pressure to increase the stringency of its regulatory processes -- which in turn was likely ramp up the cost of developing new drugs even further, past the US$1 billion mark.

Begley told Australian Biotechnology News that governments that funded research into new drugs were likely to become increasingly reluctant to invest, if large amounts of taxpayers' money was spent on R&D, but promising new drugs failed to make it through clinical trials.

Big pharma companies were crucial to the process of taking new drugs to the market, given the strong trend for them to cherry-pick the most promising new molecules from smaller biotech companies around the world, including Australia.

Given the plethora of small biotech companies in Australia, many of them with only one or two lead molecules in early clinical trials, the great majority of new therapies being developed in Australia would never make it to the market.

Begley said Australian biotech company executives needed to become much more hard-nosed to protect their investors -- executives should be praised, not pilloried, if they decided to terminate unpromising research projects, merge with companies with similar research interests, or even wind up their companies. Such measures were preferable to throwing good money after bad.

He said that every molecule that failed, and every biotech company that went to the wall, further eroded the confidence of investors in the biotech sector, and community confidence in medical research.

Australian biotech companies should carefully consider the possibility of hiring executives from failed biotech companies in the US, he said, on the basis that they had probably gained valuable experience from failure.

Such experience could be invaluable in forcing Australian biotech sector the hard commercial realities of drug development, and in creating a more robust industry.