The following was posted on January 15, 2014 on www.pharmaEvolution.com now defunct.
Based on what has transpired in the last two years, I am writing an update that will be published in few days. I thought an old post would be a good preamble for the future.
Wednesday, January 15, 2014
The human race has one significant weakness. We all want to know
what the future holds for us, and we want to know now -- hence the
popularity of fortune-telling and such "fields" as astrology. In our
desire to predict tomorrow, however, we often forget simple cause and effect.
What we do today helps determine what happens tomorrow. For instance, every new
developed and approved drug, in efficacy and in price, directly impacts company
and industry profits.
Despite ongoing product-quality issues, drug companies have been
profitable. However, this picture is about to change. Some say that it has
already begun to change. Clearly, what we do today will shape pharma's future.
Here are my predictions for the industry over the next five to
fifteen years. How do they compare with yours? As you'll note, I see the status
quo prevailing in some cases, forcing change to come from unexpected
places, such as regulatory agencies or outside forces. But what do you think?
1. Pharma companies will have to figure out how to reach the
world's masses, rather than small patient populations, if they are to succeed
in the long term.
2. On average, the industry's success rate of development and
commercialization, for both small molecule and biotech drugs, will not change
much from its current level. “Eroom’s Law”
still limits pharma's destiny.
3. High drug pricing soon will be frowned upon and discouraged by PBMs (pharmacy benefit managers) and hospitals.
3. High drug pricing soon will be frowned upon and discouraged by PBMs (pharmacy benefit managers) and hospitals.
4. Instead of becoming “process-centric,” pharma will stay
“regulation-centric.” Process-centricity, if adopted, would allow companies to
exceed regulatory requirements, which could also avoid many issues that have
created public relations and financial headaches. Current regulatory guidelines
and requirements discourage change. Since changing an existing process requires
approval, it is still perceived to be a long and expensive step, and something
to be avoided.
5. Industry will hedge in adopting many of the internal changes
(manufacturing methods, technology, and supply-chain improvements) that could
improve profitability and move from the current quality by
analysis/aggravation to a quality by design approach. Again, this is
due to regulatory constraints. Short patent lives for the ethical (brand) drugs
will impede innovation in manufacturing technologies. At the same time, most
generics manufacturers have been in business too short a time for their
managers to grasp the value of better technologies and methods.
6. Since current or higher level of profits can be achieved with
the current inefficient practices, industry leadership does not see any value
in improving its product development, business, and technology practices.
External forces will drive change.
7. With not much forthcoming from the industry to improve its
manufacturing and business practices, regulatory bodies will enact regulations
that will force the industry to adopt better practices. This tug of war will
continue, unless the industry takes the lead.
8. Continuous formulation processes could be a reality in the
next five years for new drugs.
9. Continuous API manufacturing is possible, but it will require
a different economic and manufacturing model.
A shift is taking place in the global pharmaceutical businesses,
whether we like it or not, and is being brought on by generics manufacturers
based in developing countries. Pharmaceutical companies will have to take
radical measures to retain or increase their revenue streams and profits.
A shift to a new model from the current model in new drug
discovery, development, manufacturing technologies, supply chain, conservation,
and sustainability requires an “unreasonable man” as described by George
Bernard Shaw. ("The reasonable man adapts himself to the world; the
unreasonable one persists in trying to adapt the world to himself. Therefore
all progress depends on the unreasonable man.")
Significant innovation is feasible in manufacturing and its
support functions. For it to happen, though, the pharmaceutical industry will
have to move its focus from “regulation-centricity” to “process-centricity.”
The industry still appears unwilling to take the steps required for change.
The world and its inhabitants would clearly benefit from better
and higher availability of lower cost drugs, while companies would be able to
improve their profits from the current levels. I view this as a win-win
situation. What do you think?
Girish Malhotra, PE
EPCOT International
