The document discusses recent issues and challenges facing the pharmaceutical industry regarding global outsourcing. It notes that drug development costs have risen tremendously to over $1 billion on average, while successful new drug approvals have declined. Pharmaceutical companies are focusing more on biomarkers, biologics, and genomic research to develop new drug targets. However, stricter regulations from the FDA and increased development costs and times pose significant challenges, especially for drugs targeting age-related diseases. Outsourcing certain functions and improving efficiency are seen as ways to help address these challenges.

1. GLOBAL OUTSOURCING:
RECENT ISSUES & CHALLENGES IN
THE PHARMACEUTICAL INDUSTRY
WEI GAROFOLO & FABIO GAROFOLO

2. Drug development has become a tremendous
challenge for most pharmaceutical companies
today. Investment of US$1 billion and 10 years
are very common in order to launch any new
drug, not to mention that it is also common for
a promising candidate to fail to become a
manufacturable and marketable therapy after many
years of development [1].

3. The pharmaceutical industry, like others,
goes through various stages of the business life
cycle and, apparently, it is now in a downcycle
compared with 10–20 years ago. Blockbuster
drugs and the enormous earnings from them
are perishing, ‘me-too’ drugs are only making
limited profits and old drug targets are becoming
exhausted [2].

4. We have seen major increases in R&D
investment; however the return has been disappointing,
with decreases in successful new
drugs. Based on the numbers published, in the
USA the R&D spending has increased year by
year from US$15,000 million in 1995 to over
US$40,000 million in 2006, but the number of
new molecular entities (NMEs) and new biologic
license applications (BLAs) approved by the
US FDA has gone down from over 50 in 1996 to
approximately 20 in 2006 [1]. Obviously, despite
substantial R&D spending, pharmaceutical
companies’ development pipelines seem to be
failing to provide promising rewards.

5. To cope with the challenges in the future,
pharmaceutical companies have become more
selective by focusing only on innovations that
could produce significant returns in the future,
such as disease models, biologics (e.g., somatic
cells, gene therapy and recombinant therapeutic
proteins) and biomarkers. However, on a
more positive note, genome studies are producing
new drug targets and it is estimated that in
10–15 years, most new drugs will be produced
from these new targets [2].

6. ‘Aging’ seems to be
another opportunity for big pharma because the
overall aging of the population will provide a big
market for new age-related drugs. Indeed, current
clinical trials are generating new blockbusters for
those chronic diseases, and these future blockbuster
markets are estimated to be in the region
of approximately US$10–50 billion rather than
US$5 billion today [2].

7. However, challenges
remain with the opportunity, because these agerelated
new drugs, such as CNS drugs, have only
a 1% chance of reaching the market place after
entering clinical development, compared with
the industry average of 11% [3]. Obviously, it
takes much more time and resources to develop
them and, therefore, pharmaceutical companies
must work on reducing risks of failure across the
drug-development process by lowering development
costs and shortening development time for
these newly needed drugs.

8. In other words, R&D
must be performed with greater efficiency, major
cost containment and faster speed, drug discovery
must be streamlined and highly focused on
achieving ‘proof of concept’ in humans, and productivity
must be improved with a minimum
increase of the resources [2]. In short, ‘doing
more with less’ has become the present objective
of many pharmaceutical companies.

9. Tougher regulations are another challenge the
pharmaceutical industry is facing. For instance,
the FDA Amendment Act (FDAAA), issued in
September 2007, empowers the FDA with greater
control over drug safety. Under the guideline of
safety first/safe use, the FDA requires more
postmarketing
studies/trials, safety-related labeling
and risk evaluation and mitigation strategies
(REMS) to ensure that benefits outweigh risks
based on pre- and post-safety information [4].

10. In addition, the recently issued FDA guidelines
on metabolites in safety testing (MIST) clearly
state that a more extensive characterization of
the pharmacokinetics of unique and/or major human
metabolites (UMMs; known as ‘disproportionate
metabolites’ in the MIST document)
is needed.

11. This is due to the recent belief
that characterization of UMMs could provide
greater insight into the connection between
metabolites and toxicological observations,
based on plenty of evidence that metabolites
were the cause of certain drug withdrawals and
black-box warnings.

12. “…even if the market for generic drugs is huge,
the competition among generic companies
themselves has become tougher, which is
quickly reducing the prices, hence lowering the
profits for generic drug companies.”

13. Generic drug companies appear to do better
than big pharmaceutical companies. It is
forecasted that they will continue to grow, due
to the patent expiration of a large number of
branded drugs. For example, blockbuster drugs
like atorvastatin (Pfizer, for treatment of high
cholesterol), olanzapine (Eli Lilly, for treatment
of schizophrenia), valsartan (Novartis,
for treatment of hypertension) and pantoprazole
(Wyeth, for treatment of gastrointestinal
disorders) will all expire in the next few years.

14. In addition, there is also the increasing government
promotion of generic drugs to counter growing
healthcare drug expenditure. However, even if
the market for generic drugs is huge, the competition
among generic companies themselves
has become tougher, which is quickly reducing
the prices, hence lowering the profits for generic
drug companies.

15. For the full Bioanalysis publication,
please visit Wei Garofolo's
professional website