Spare a thought for Big Pharma
Big Pharma, even if it is driven by avarice rather than public good, is our best punter to make the kind of bets needed to fight diseases like Alzheimer’s
Sometimes, just sometimes, it is possible to feel sorry for Big Pharma. One such moment came late last month when Eli Lilly and Co. announced that an Alzheimer’s drug, solanezumab, which had been under development for years, had failed in a late-stage clinical trial. Eli Lilly has invested nearly $3 billion over the last 30 years in efforts to develop a drug for Alzheimer’s, which causes progressive loss of memory and cognitive function. It has seven Alzheimer’s medicines in various stages of development but sadly none so close to commercialization. Solanezumab failed in Phase 3 trials, which normally have an 80% chance of success.
The failure is a major setback in the fight against Alzheimer’s not just in the US where it affects 5.4 million people, but also in the rest of the world, including India, which has over 3.7 million patients. With no known medicine capable of preventing or ameliorating the devastation caused by it, solanezumab was a great big hope all round. The pharma industry has already seen 15 straight failures on late-stage Alzheimer’s trials.
The battle against Alzheimer’s may not yet be lost though this is a huge blow. Nor will Eli Lilly fold away though its stock dropped 14% immediately after the announcement. The company does have more Alzheimer’s drugs in its pipeline and companies like Novartis AG, Merck & Co. Inc. and Biogen Inc., will continue their pursuit of treatments for it.
But it is an expensive loss. Analysts had already slotted solanezumab as a blockbuster, likely to bring in billions of dollars in sales over the next few years. Those are much-needed revenues, profits from which would drive future moonshots in the battle against diseases.
Sadly, in the clamour to criticize pharma companies for their often usurious pricing, we tend to forget how dicey the process of developing a new drug formulation is. This year itself, Clovis Oncology stopped all development work on rociletinib, a drug which was expected to treat lung cancer, following its failure to get US Food and Drug Authority (FDA) approval. Similarly, Celldex Therapeutics, the Texas-based biotech firm, abandoned further development work on its brain cancer drug rintega after it failed Phase 3 trials. Data from the FDA shows that only about 7% of the drugs that enter Phase 1 clinical trials go all the way to the market.
Also read: High prices today, effective drugs tomorrow
Companies like Turing Pharmaceuticals, under its much-reviled CEO Martin Shkreli who earned the rightful ire of patients and industry watchers when he hiked prices of its essential drugs manifold, as well as Valeant Pharmaceuticals International, Inc., have turned the spotlight on Big Pharma’s egregious practices. Sadly, pharma companies are also best positioned to develop new drugs. Research & development in pharma is unlike that in any other industry.
A Samsung can afford to release a Galaxy Note 7, sell it to 2.5 million customers, before having to withdraw it after 35 of them caught fire. Its withdrawal hurt the company but did not stop either Samsung or Apple or any other phone maker from trying to launch another smartphone with similar features.
Most new drugs formulations come out of the US where almost 75% of clinical trials in medicine are paid for by private companies. The best that governments across the world do is to provide grants and loans for research and facilities at various institutions and universities. But between basic discovery research and late-stage development comes the crucial task of proving the value of the said drug. This costs big money which is often hard to come by and the exercise is fraught with so much risk that the industry dubs it “valley of death”. Of course, for those who choose to traverse this valley, the rewards are huge. Thus, by 1993 the US government had spent nearly half a billion dollars developing the ovarian and breast cancer drug taxol which was then picked up for marketing by Bristol-Myers Squibb. The company’s subsequent sales of the drug worldwide brought in nearly $9 billion.
Even as we grapple with this dilemma of late stage capitalism at its best and worst, Big Pharma, even if it is driven by avarice rather than public good, is our best punter to make the kind of bets needed to fight diseases like Alzheimer’s. If Eli Lilly’s failure with solanezumab, weighs the odds against further R&D in the area, it would be a calamity.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
Click here to read more from The Corporate Outsider.