PwC launches new thought leadership on Pharma R&D

Singapore, 7 July 2008 – By 2020, the Pharma R&D process may be shortened by two-thirds, which could result in the dramatic increase of success rates and the potential of halving clinical trial costs, according to PricewaterhouseCoopers’ (PwC) latest research entitled, Pharma 2020:Virtual R&D, which path will you take? New technologies that help researchers better understand the biology of disease could be the catalyst for an R&D overhaul in the pharma world, which could see companies using virtual R&D to increase innovation and reduce commercial deficit.

PwC’s research also highlights that the evolution of ‘Virtual man’ will enable researchers to predict the effects of new drug candidates before they enter human beings. This could transform the way in which Pharma designs and manages clinical studies, and accelerate clinical development. Along with changes underway in the regulatory and socio-political environment, this will enable the pharma industry to overcome one of the most fundamental issues it needs to resolve over the next decade.

As outlined in PwC’s previous report Pharma 2020:The Vision, Pharma is at a pivotal point in its evolution, particularly in relation to R&D. The patents on many of the medicines launched in the 1990s will expire over the next few years, leaving the industry very exposed and only four out of the top 10 companies have enough products in their pipelines to fill the impending revenue gap. This innovation deficit has enormous strategic implications for the industry as a whole.

Pharmaceutical/Healthcare Leader at PwC Singapore, Mr Abhijit Ghosh commented, “Plummeting productivity of effective novel treatments in the lab means incremental improvements to R&D are no longer enough. The resulting commercial deficit in Pharma has enormous implications for the industry, society and governments as a whole. To deliver the revenue returns shareholders have come to expect, Pharma needs a faster, more predictive way of testing molecules before they go into humans.”

Pharma companies need to address the challenges they are facing and remain sustainable by embracing new technologies to reduce drug development time and attrition rates. In addition, the payers, patients, providers and regulators that support the industry will have to make significant strategic, organisational and behavioural changes.

Mr Ghosh elaborated, “Before an organisation makes the decision to overhaul its R&D function, they need to consider issues such as whether to produce mass-market medicines or speciality therapies, how to gain access to the best skills or cost base and whether their research and development should be outsourced or kept in-house. All these will have a profound impact on their business strategies, repertoire of skills they require and ultimately their future bottomline."

Accelerating clinical development by virtualising’ research

‘Virtual man’ could ultimately evolve from the deployment of existing technologies that are connected in a new way. Models of the heart, organ, cells systems and musculoskeletal architecture are already being developed by academics around the world. Such technologies can be used to simulate the physiological effects of interacting with specific drugs and identify which drugs have a bearing on the course of a disease. Some companies using virtual technology have reduced clinical trial times by 40 percent and reduced the number of patients required by two thirds.

Of course, virtually-modelled molecules will still have to be tested in real human beings. However as a complete picture is developed of human biology and reliable biomarkers for identifying and monitoring patients become widely available, pharma companies will be able to optimise their trial designs and minimise the number of patients on whom new medicines are tested. They will develop treatments which have value in the eyes of patients, healthcare payers and for the companies themselves.

The necessary in-depth knowledge about the human body and the pathophysiology of disease will be generated through a collaborative research network of pharmaceutical companies, academia, independent research houses, IT providers, industry regulators, payers and providers. For the first time Pharma will have to consider sharing intellectual property (IP) with other research bodies and potentially new entrants such as IT providers.

The pharma industry requires assistance in the form of better incentives to research and develop medicines that prevent or cure disease. Today our IP frameworks do not provide the incentives needed to alter the agenda from one of treatment to that of prevention and cure.


“Keeping in view the government’s strong support for Pharma R&D in Singapore and the existing infrastructure for biomedical sciences, Singapore is well-positioned to take the lead in test bedding and adopting innovative concepts for ‘virtualising’ research,” Mr Ghosh concluded.

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1. Major trends reshaping the pharmaceutical marketplace:

The burden of chronic disease is soaring. The prevalence of chronic diseases like diabetes is growing everywhere. As greater longevity forces many countries to lift the retirement age, more people will still be working at the point at these diseases start. The social and economic value of treatments for chronic diseases will rise accordingly, but Pharma will have to reduce its prices and rely on volume sales of such products because many countries will otherwise be unable to afford them.

Healthcare policy-makers and payers are increasingly mandating what doctors can prescribe. As treatment protocols replace individual prescribing decisions, Pharma’s target audience is also becoming more consolidated and more powerful, with profound implications for its sales and marketing model. The industry will have to work much harder for its dollars, collaborate with healthcare payers and providers and improve patient compliance.

Pay-for-performance is on the rise. A growing number of healthcare payers are measuring the pharmacoeconomic performance of different medicines. Widespread adoption of electronic medical records will give them the outcomes data they need to determine best medical practice, eschew products that are much more expensive or less effective than comparable therapies and pay for treatments based on the outcomes they deliver. So Pharma will have to prove that its medicines really work, provide value for money and are better than alternative forms of intervention.

The boundaries between different forms of healthcare are blurring. The primary-care sector is expanding as clinical advances render previously fatal diseases chronic. The self-medication sector is also increasing as more prescription products are switched to over-the-counter status. The needs of patients are changing accordingly. Where treatment is migrating from doctor to ancillary care or self-care, patients will require more comprehensive information. Where treatment is migrating from the hospital to the primary-care sector, patients will require new services such as home delivery.

The markets of the developing world, where demand for medicines is likely to grow most rapidly over the next 12 years, are highly varied. Developing countries have very different clinical and economic characteristics, healthcare systems and attitudes towards the protection of intellectual property. Any company that wants to serve these markets successfully will therefore have to devise strategies that are tailored to their individual needs.

Many governments are beginning to focus on prevention rather than treatment, although they are not yet investing very much in pre-emptive measures. This change of emphasis will enable Pharma to enter the realm of health management. But if it is to do so, it will have to rebuild its image, since healthcare professionals and patients will not trust the industry to provide such services unless they are sure it has their best interests at heart.

The regulators are becoming more risk-averse. The leading national and multinational agencies have become more cautious about approving truly innovative medicines, in the wake of the problems with Vioxx.

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