How biotech firm Bioven found fortune

Making headway: Bioven’s contract research partners include the Beatson Cancer Institute in Glasgow, Scotland, Pangea Biotech in Catalan, Spain and International Medical University (IMU) in Malaysia (pictured, research scientist Sylvia Gan at IMU). Photos: AZMAN GHANI/The Star

Big pharma's contingency for expiring patents: How top global pharmaceutical firms are reinventing themselves to cope with major upcoming challenges

For years, big pharma has braced itself for an impending patent cliff – when patents expire, so does market exclusivity and resulting in an abrupt drop in sales. And with few new “blockbusters” – drugs with annual sales of more than US$1bil (RM3.56bil) each – in the pipeline, it is no wonder the industry has been scrambling to reinvent itself.

It has been estimated that over the next decade, 120 brand-name prescription drugs will lose market exclusivity. The first big wave of expirations came in 2012, leaving USD$35.1bil (RM124.86bil) worth of branded products open to competition by the generics drug market. Another huge wave – valued at about USD$33.5bil (RM119.17bil) – is due this year.

In response to this, new trends have emerged. Rapid-fire mergers and acquisitions have left fewer but bigger fish in the market. Big players have also been shedding their internal R&D units to become leaner and more streamlined. Instead of generating leads, big pharma scours the emerging biotech scene, snapping up potential winners.

This new model has spawned hundreds of small biotech innovators with the exit strategy of being bought out. Some of these are spin-off companies from top research institutions; others, startups by scientists turned entrepreneurs.

Once these smaller outfits have done the early research to build confidence in their product, big pharma funds the more costly clinical trial stages, with a full buyout once the drug is approved.

In a way, this new trend improves efficiency. You’ve probably heard the reference: it costs over a billion US dollars to get one drug to market. But that sum takes into account development costs for all the failed leads – and there are usually many. A tremendous amount of attrition occurs at each stage of the process.

Few make it past phase I trials, fewer past phase II, and fewer still past phase III. It has been estimated that out of roughly every 10,000 drug compounds, one will make it through to the final stages of the US Food and Drug Administration (FDA) approval process. So instead of doing all that on its own, big pharma is entering later in the game.

It’s the new playbook, if you like.

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