Trends in

Pharmaceutical R&D
By
Surbhi Saxena
Shail Soni
Tejaswi Redla
Introduction
Research based Pharma industry:
Unique role to play
Success rests on continuous innovation
Challenging business conditions Risky investments


R&D process
R&D pipeline
Today cost of developing a single drug amounts 1.3
billion USD compared to 138 million in 1975
High failure rates
R&D pipeline
Rising R&D cost and stringent requirements is leading to
decline in drug approvals
No. of NCEs and NBEs launched on world market fell to
149 in 2007-2011 from 196 in 1990-1995. However after
that it is increasing.
In 2012, the FDA approved 39 new molecular entities, the
highest level in a decade
R&D
spending
world wide
R&D
spending
world wide
Global spending on Pharmaceutical R&D over the years ($
Billion)
- Global R&D spending to grow 3.8% in 2014
R&D
spending
world wide
by
companies
Pharma Rank World Rank Company Country $ million
1 6 ROCHE Switzerland 7007.8
2 7 NOVARTIS Switzerland 6922.8
3 8 MERCK US USA 5995.9
4 9 JOHNSON & JOHNSON USA 5809.5
5 10 PFIZER USA 5740.5
6 15 SANOFI-AVENTIS France 4909.0
7 20 GLAXOSMITHKLINE UK 4229.0
8 26 ELI LILLY USA 4000.4
9 33 ASTRAZENECA UK 3375.0
10 35 ABBOTT LABORATORIES USA 3275.9
11 36 BAYER Germany 3182.0
12 40 BRISTOL-MYERS SQUIBB USA 2851.3
13 41 TAKEDA PHARMACEUTICAL Japan 2839.8
14 42 BOEHRINGER INGELHEIM Germany 2795.0
15 47 AMGEN USA 2561.8
16 67 OTSUKA Japan 1684.5
17 68 DAIICHI SANKYO Japan 1602.9
18 69 ASTELLAS PHARMA Japan 1593.4
19 72 MERCK DE Germany 1511.3
20 78 NOVO NORDISK Denmark 1397.4
Drivers of
R&D
Access to market
Access to local market
Better responses to local market requirements
More successful market introduction

Access to technologies
More advanced innovation
Reduction of time to market

Complexity of diseases
Evolving new and more complex diseases
According to statistics from the FDA, from the time of
authorization of the Orphan Drug Act in 1983 until June
2013, Orphan Drug designations has been awarded to 2843
compounds, and of these, there have been 442 approvals
for Orphan indications.

Drivers of
R&D
Patent cliff
The research-based pharmaceutical industry is expected to
face a substantial drop in revenue in the near future, when
many of its patents on blockbuster medicines are due to
expire. These challenges have not diminished the industrys
innovative drive but have rather encouraged it to adopt new
models of innovation.

Cost of R&D
Around the world, much of the rising R&D expenditure
relates to the high cost of human clinical testing, which
accounts for about two thirds of the entire cost of drug
development.
Against this backdrop, drug makers are under more
pressure than ever to introduce new products that will drive
revenues
Drivers of
R&D
Allocation of R&D investments by function and estimated cost of
bringing NCE or NBE to market ($ Million)

R&D trends
India
Expenditures on Research & Development (R&D) by 30 leading
Indian pharmaceutical companies have gone up significantly by
19.7 per cent during the year ended March 2013 over the
previous year.
The focus of R&D by these companies is on new cost effective
generic products in key therapeutic areas and not on new drug
discoveries.
The R&D expenditure, on standalone basis, of Pharmabiz study
of 30 pharmaceutical companies increased to Rs.5,360 crore
during 2012-13 fromRs.4,478 crore in the previous year
Despite rising investments in R&D the Indian companies have
failed to achieve any major success in discovery and
development of new molecules, new chemical entity or novel
drug delivery systems during past several years
The overall limited success in finding new NCEs worldwide and
the high risks involved in their development is forcing the
companies to look out for partnership. Several multinational
pharma companies are entering R&D partnership with Indian
pharma companies.
R&D trends
India
For instance, Biocon has entered partnership with Mylan,
Sun Pharmaceutical with Merck and Panacea with
Osmotica Pharmaceutical.

R&D expenditure of Indian pharma companies on 2012-
2013

Company R&D expenditure (Rs. Crore)
Dr. Reddys Lab 690
Cadila 493
Ranbaxy 449
Cipla 425
Sun Pharma 310
Emerging R&D
strategies in
Pharma sector
1. Contract research and manufacturing service
It includes outsourcing arrangements for manufacturing of
active pharmaceutical ingredients and formulations,
chemistry and biology research for new drug compounds;
pre-clinical trials and clinical trials.
MNCs eye Eastern Europe, India, China, South America or
Africa for clinical trials to achieve cost savings.

Emerging R&D
strategies in
Pharma sector
Outsourcing by MNCs in India
Emerging R&D
strategies in
Pharma sector
Leading CROs in India
Emerging R&D
strategies in
Pharma sector
2. Mergers and acquisitions:
Alliances between drug developers can save each developer
significant R&D resources by providing it access to expertise
that it does not have internally. This can speed the
development of drug candidates while containing costs.
Mainly two types of such alliances takes place

Emerging R&D
strategies in
Pharma sector
Pharma- Pharma alliances
Example - Bristol-Myers Squibb (BMS) and AstraZeneca
entered into a collaboration to develop and commercialize
two BMS compounds for the treatment of diabetes .
In 2008, Merck and Ranbaxy to gather entered into 5 years
agreement to develop new anti-infectives.
Pharma- Biotech alliances
47% of pharma-biotech alliances pertain to initial drug
discovery and pre-clinical research
33% involve drugs and clinical development
14% involve marketable drugs
Example : Wyeth signed product development deal with 3
biotech firms a
A) Trubion Pharmaceuticals
B) Exelixis
C) Progenics Pharmaceuticals
Emerging R&D
strategies in
Pharma sector
3. Collaboration with academic institutions
As pharma pipelines dwindle and internal R&D budgets
diminish, Big Pharma is increasingly turning to academic
labs for innovative new medicines.
Pharma companies issue grants to academy which is used
to foster R&D in institutions.

Emerging R&D
strategies in
Pharma sector
4. Internal refocusing

Internal refocusing to cut research and development costs is
among the most straightforward approaches to cutting
expenses as these initiatives may be implemented wholly
within each drug makers own organization.

They are therefore among the first responses to cost-
cutting mandates and include management changes:
Staff reductions,
Team consolidations,
Offshoring;
Also shifts in product development strategy:
Lifecycle extension,
Repositioning.
Future trends
in R&D
Drug discovery cost ballooned to USD 1-2 billion. But the
productivity decreased by 60%. This indicates the end of
blockbuster model.

Pharma industry is shifting from chemistry to biologics.
40% of the drugs approved last year were biologics.



Future trends
in R&D
Future
directions for
R&D
A stronger market orientation in R&D is one of the primary
task for future R&D activities
Promoting comprehensive technologies to improve R&D
productivity.
Team oriented approach in R&D
Breaking down silos to foster innovation
R&D has to adopt an increasingly internationalized
strategy. It is important to align R&D strategy with
corporate strategy
Strong collaborations with academic institutions, biotech
companies and peers for R&D
Indias pharma market is now estimated to be USD 20
billion which is forecasted to increase to USD 50 billion by
2020. So, to achieve this goal one has to follow
A good pricing policy
Focus on extensive R&D
Strong IPR environment

Thank you