The business of science or the science of business?

During this semester I have taken a subject called Commercialisation of Science which looks at how scientific ideas are taken from discovery to the marketplace as fully fledged products for sale.

If I have taken one thing away from the previous 10 weeks it has been this – science is big business and science is risky business.

Obscure movie references aside, this guy probably could have made it in the Risky Business that is drug development

First, the good part. The money.

Scientific and technological breakthroughs that lead to a sudden shift in consumer behaviour are typically accompanied with an enormous generation of revenue. It seems like a fairly simple set of steps.

  1. Find a gap in the market
  2. Make your product better than anything else on the market
  3. Get paid

In pharmaceuticals, this process can be particularly lucrative if the disease being targeted affects a large group of people and/or is concentrated in developed economies such as the USA, Europe and Australia where governments can afford to subsidise treatment.

Humira, created by Abbott Laboratories spin-off, AbbVie, is a recent example of this enormous pharmaceutical success.

TNFα is a key molecule of the immune system that is mainly produced by activated macrophages to induce inflammation. In chronic inflammatory disease, TNFα can be overproduced and become a pathological molecule that causes patients extreme pain and tissue degeneration.

Humira is a fully human, monoclonal antibody that acts as a TNFα antagonist by preventing over-produced TNFα from binding to the TNFα cell surface receptors, suppressing the biological inflammatory effects of TNFα.

It is indicated for chronic inflammatory conditions such as rheumatoid arthritis, psoriatic arthritis, Crohn’s disease and ulcerative colitis.

The estimated market size of these 4 major diseases is in excess of 10 million people in the US alone. This has translated to global sales exceeding $US 9 billion for the 2012 financial year[1] and it is expected that for the first time since being released on the market, AbbVie will rake in $US 10 billion in sales from Humira when 2013 is said and done[2]. Not too shabby.

Before you go running off to cure the next Western world blockbuster disease (seriously, the person that comes up with a pill that cures obesity could probably end up buying a small country) let’s now look at the bad.

Drug development is an incredibly risky and an even more expensive process to go through.

Drug companies have been stung several times by drugs that have failed to proceed through clinical trials for reasons including from lack of efficacy to unacceptable side effects. The undertaking of human clinical trials themselves is an incredibly time consuming and expensive process. It can involve surveying tens of thousands of subjects (all of whom must be remunerated for being tested on) over several years to assess whether a novel compound is superior to the existing gold standard treatment.

Forbes blogger Matthew Harper, estimates the cost of developing a new drug at $US 5 billion[3]. And a pharmacology professor of mine, formerly of big pharma, estimated the success rate for getting a drug to market at about 1 in 10.

Some basic maths suggests that successful drugs need to make their companies around $50 billion just too breakeven following the 9 other development failures.

Those are pretty high stakes.

References

1)      Abbvie, 2012, Abbvie Annual Report 2012, accessed 10 September 2013, http://www.abbvieinvestor.com/phoenix.zhtml?c=251551&p=irol-reportsannual

2)      “Humira”, Drugs.com, 2nd September 2013, http://www.drugs.com/humira.html (accessed 31 August 2013)

3)      Harper, M, 2013, The Cost Of Creating A New Drug Now $5 Billion, Pushing Big Pharma To Change, accessed 7th October 2013, http://www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-drugs-is-shaping-the-future-of-medicine/


2 Responses to “The business of science or the science of business?”

  1. crtaylor says:

    Its a very sad reality. Those drugs are called orphan drugs (reflecting the sadness) and are often the first ones cut when the PBS is required to tighten its belt. Thanks for the comment Gabe.

  2. Gabriel Bernasochi says:

    High stakes but I wonder how many pharma companies fold after they get a foot hold in the industry. I think the really limiting thing is producing drugs for diseases that only affect a small part of the population. Given the expense to develop a drug it needs to have a market to satisfy. Obesity is a good example of one work targeting as a lot of money stands to be made. However, something like some ultra rare blood diseases don’t affect enough people to warrant the $5 billion dollar layoff, especially given the 1 in 10 likelihood of success. A sad reality.