What changes are in store for pharmaceutical manufacturers?
Michael Lehmann, executive vice president, global sales & marketing, Patheon shares his views on the challenges ahead for the pharma sector and how they could mean greater opportunities ahead for pharmaceutical manufacturers
Interestingly enough, the types of challenges facing biopharmaceutical companies in 2016, while not too different from previous years, are intensifying and point to greater opportunities for pharmaceutical development and manufacturing service providers.
Pricing pressures
In the EU, individual countries have put up hurdles to reimbursement that require therapies to demonstrate more than incremental improvement over standard of care before they are reimbursed. The barriers include, but are not limited to, measurement of disease burden, comparative effectiveness, cross-border reference pricing and even selection of clinical endpoints. Dozens of countries have been successful in lowering drug prices through reference pricing – a system in which drugs are grouped into classes by therapeutic effect. A standard price is set for each class, so if a company sets a higher value, the payer only covers the reference cost. The consequence of reference pricing is that the squeeze on pricing by the European countries places pressure on pharma companies to realise global revenues.
This continuing pressure on biopharma companies to reduce the price of the medicines is also evident in the US during a presidential election year, as the candidates elevate the debate around drug pricing, President Obama’s health care law and access to care.
These global pricing pressures are pushing biopharma companies to seek new ways to increase productivity, improve efficiency and ultimately become more cost effective. The focus on improving efficiency and cost-savings is driving more and more companies to reconsider their infrastructure costs, and evaluate the savings derived by collaborating with a pharmaceutical development and manufacturing service organisation.
Shifting demographics
The combination of an ageing population, together with the prevalence of chronic disease, is creating greater demand among patients for targeted treatments, medicines and therapies. The challenge for biopharma companies will be to drive innovation in R&D, and create novel products while tempering costs. Again, this requires companies to explore alternative business models that involve more strategic partnerships and collaborations to meet the rapidly growing needs of the marketplace.
Complex molecules
It is estimated that a third of all clinical failures in the drug development process can be attributed to solubility and bioavailability challenges. The increase in low solubility drugs is directly related to the challenging diseases for which biopharma companies are researching treatments. The complexity of new molecules has led to the demand for technical expertise in not just solubility and formulation, but also in the approach to scale up and manufacture these complex compounds —expertise that many biopharma companies do not possess. Solubility enhancement capability, combined with optimal technology that can be scaled up through commercialisation, is but one of the hurdles for biopharma companies seeking to move their products to market in an efficient, cost-effective manner.
Personalized medicine
The long-awaited personalised medicine revolution is finally arriving. With the price of personal genome sequencing falling significantly, researchers are increasingly focused on personalised medicine approaches.
In 2014, according to analysis conducted by the Washington DC-based Personalized Medicine Coalition, more than 20% of the 41 new drugs approved by the US Food and Drug Administration (FDA) were personalised medicines. Today up to 50% of new medicines in the pipeline are reportedly personalised medicines across all therapeutic categories.
Forecasting
Drug forecasting done by pharmaceutical companies drives numerous decisions in their development programmes — sales force resources, geographic resource distribution and of course, manufacturing planning. It is well recognised in the industry that predicting forecasts accurately is a challenge, especially for new drug launches. A variety of models are used to develop the forecast, but these models are not perfect and cannot predict uncertainties in the marketplace. Forecasting will continue to be a challenge for biopharma companies. Innovative companies will explore avenues to improve accuracy, but also look for ways to manage in a volatile market. Flexible manufacturing solutions will become an attractive option for companies looking to manage their business more efficiently and maximize market opportunities with affordable solutions to scale.