Wednesday, September 30, 2009

The $1000 Genome

Our esteemed colleague, Dr. Joel Studebaker writes today about The $1000 Genome

The $1000 genome, referring to the cost of sequencing all 3.2 billion bases in a human’s DNA, has long been the goal of new developments in sequencing technology. The cost per base pair for sequencing has been dropping rapidly, almost following a Moore’s Law for genetics. Many believe that the $1000 price will make it attractive to sequence the genomes of many people and that, with many more genome sequences available, analysts will be able to gain new insights into how sequence variations influence health and disease. A recent announcement from a laboratory at Stanford appears to have brought the cost for a human sequence below $50,000.

Since the human genome effort started, the hope has been that comparison of the genomes of patients with particular medical conditions to those of suitable control groups would provide several benefits to pharmaceutical therapy.

1. Genetic variations that occur in DNA coding for proteins or in DNA that regulates production of proteins will point to new targets for therapy.

2. The variations will identify subgroups of patients who would benefit from a drug that would not show a statistically significant effect in a more general population. As in the case of Herceptin, diagnostic tests would be necessary to find the members of these subgroups.

3. The variations will identify patients whose genetic makeup make them more susceptible to adverse side effects that might lead to discontinuation of development if those patients were part of a clinical trial population. The hypersensitivity reaction of patients with a particular HLA type to abacavir is an example. Again, diagnostic tests would identify these patients.

Points 2 and 3 are clearly aspects of personalized medicine, which is a double edged sword for the pharmaceutical industry in that it may lead to more narrowly defined markets as well as to approval of drugs that might not be approved otherwise.

These three considerations were among the reasons for the effort to identify the genetic variations known as single nucleotide polymorphisms (SNPs) in laboratories sponsored by the SNP consortium and in the more recent HapMap (Haplotype Map) project. Despite the availability of over three million SNPS that provide good coverage of the genome, correlation of SNP genotypes with disease conditions has not yet had a wide impact on pharmaceutical development. After several years of SNP studies, the view has emerged that many rare genetic variations may contribute to susceptibility to disease (or efficacy of therapy or to increased risk of adverse reactions). If that view is correct, complete DNA sequences represent a more efficient way than SNP assays to find multiple rare variations that have predictive value.

Wednesday, September 16, 2009

Why has Outsourcing Gone Mainstream in the Pharmaceutical-BioPharmaceutical Industry

Gil Roth the Editor of Contract Pharma magazine invited several people to comment about the outsourcing trends in the industry in honor of the magazine's 10th anniversary. I sent him my thoughts and wanted to share them here as well (along with a few additional details):

At a macro level, the largest changes in the last 10 years that have occurred in the Pharmaceutical/Bio-pharmaceutical outsourcing-contracting-consulting space is how it has become totally main stream and in many ways regarded as a necessity to being competitive in a world where the classic Pharmaceutical Industry model no longer works. Layer on top of that what Thomas Friedman of New York Times fame labeled as “The Flat World” and it is no wonder that the outsourcing band wagon is so much the order of the day.

The way Wall Street would put is that this trend is a result of a “secular change”. That change is rooted in failed pipelines, lower R&D productivity, the rapid ascent of generic drugs (over 70% of US prescriptions in 2008), increased government regulations, the acknowledgment about the effectiveness of the sales force, extraordinary expense profiles, a public who will not or cannot appreciate the value of the product, a hostile congress and the advent of significant health-care reform from the Obama administration. By the way, Wall Street has acknowledged these secular changes by stripping much of the "P/E premium" from large pharmaceuticals stock prices and turned them into relatively poor performers.

When you combine those challenges with the enormous advances in technology and communication that enable global research and development and supply chains, an outsourcing strategy is not only prudent, it is a requirement. It is indeed a very straightforward way to lower the costs of doing business. When one adds on the acknowledgment of the demand generated by the rising wealth and demand for health-care from very rapidly developing countries including India and China, the requisite of using outsourcing as a way to enter those markets is on the top agendas of many senior executives in the industry.

While the Pharmaceutical/Bio-pharmaceutical Industry has been a notoriously slow adapter of change (yes, there are lots of reasons, not the least of which are regulatory) compounded by risk adverse cultures, the one thing they are not is naive. Gone are the days of “top line revenue” is the only thing that is of concern of management. Today there is a focus on “The Bottom Line” which includes unit costs, effectiveness and efficiency among the tactics. Sure there are other strategies being deployed, for example we have identified two camps in the industry, the consolidation camp and the diversification camp. The “consolidators” would include the big pharma mega-mergers (Pfizer-Wyeth, Merck-ScheringPlough, etc.) and include even some of the consolidation seen by several large biotechs. When you couple a parallel path by the big CRO's, contract manufactures, consultants, etc., the appeal of awarding large pieces of business functions in either long term contracts and/or joint ventures becomes attractive. In a similar fashion, the “diversifiers” (Sanofi, Novartis, etc.) want to focus on their new business endeavors such as animal health, consumer pharmaceuticals or diagnostics and therefore are far more likely to look at an outsourcing strategy as a natural way to allow management focus to be aimed at their new strategies.

The outlook, in my opinion even more to come with innovative joint ventures, terms and conditions and capabilities which will aid the industry to continue its path toward attractive business results.