World’s top pharmaceutical companies are heading for a major crisis as
they are continuously failing to bring out new molecules with potential
to turn them into blockbusters. At the same time the R&D
expenditures of most of these companies are steadily on the rise. A
situation like this if persisted can endanger the very existence of
these companies as their profitability is getting eroded. The trend of
failing R&D in pharmaceutical industry is illustrated by a recent
study of R&D expenditures of 15 top global pharma companies
conducted by Pharmabiz. The study shows that during the first half of
2011, these companies spent 8.2 per cent more on R&D at 41.06
billion US dollars as compared to the same period of the previous year
with no major breakthrough products. In 2010, the R&D expenditure of
these 15 global pharma companies went up by 15.5 per cent at 88.60
billion dollars. However, R&D expenditure as percentage of
pharmaceutical sales of 15 companies remained unchanged at 17.8 per cent
during first half of 2011. Novartis, AstraZeneca, Eli Lilly and a few
others have stepped up their R&D expenditures during the first half
with Novartis spending 16.7 per cent more, Eli Lilly spending 7.1 per
cent more and AstraZeneca 2.1 per cent more. Pfizer, Merck & Co and
GSK spent slightly less on R&D during the first half of 2011.
Pfizer's R&D spending declined by 1.7 per cent to $ 4.33 billion
during the first half while that of GSK’s R&D expenditure declined
by 12.9 per cent to $3.09 billion during the same period.
This is
happening at a time when more and more products of top companies are
losing their blockbuster status. Over a dozen products of top companies
have lost their blockbuster position during the first half of the
current year on account of a steady drop in sales. It is likely that
several other blockbuster products may also face declining sales in the
second half of 2011. Pfizer is going to witness the biggest setback of
its life time in the current year when Lipitor loses its patent in
November hitting a revenue stream of $10 billion. The problem with the
global pharmaceutical industry is not that they are not getting enough
drug candidates from their research labs but these candidates are not
reaching the market place. Take the case of two largest pharma
companies, Pfizer and GSK. Pfizer has 25 products in the Phase III as on
August 11, 2011, 31 projects in Phase II and 37 in Phase 1. GSK is
expected to have 15 products in Phase III by the end of 2011 and by the
end of 2012 it expects to have more than 30 in Phase III. Now the
question is how many of these candidates would be able to pass the
regulatory hurdles. The number of new drugs approved for marketing has
been steadily falling despite rising public and private spending for
research and development. Approval of new drugs by the US FDA has
dropped from an average of more than 35 a year in the mid-1990s to just
20 in 2009. For the regulatory authorities, clearances have to be tight
as increasing number of drugs are failing in the market after the
marketing approvals are given. R&D in pharmaceutical industry is
thus becoming a less productive activity and therefore a burden on the
company managements. It is time for global pharma to invent new
strategies in drug research instead of just spending more every year.
Source:Pharmabiz
