Innovation in the Pharmaceutical Industry: The Process of Drug Discovery and Development - Innovation and Marketing in the Pharmaceutical Industry - page 71

Meanwhile, the number of experimental drug projects terminated in the fi nal Phase
3 of clinical development has doubled in the period 2007-2009 compared to
2004-2006.
The decline in revenue from new medications seems particularly puzzling given
the extraordinary biomedical and technological advances occurring in recent years:
the decoding of the human genome, the transition to molecular biology and biotech-
nology, the development of advanced R&D techniques (e.g., high throughput screen-
ing, combinatorial chemistry, bioinformatics, rational drug design), all of which were
supposed to galvanize the process of drug discovery and boost its rate of success.
Noting the dissonance between the ever-increasing R&D costs and the declining
innovation outputs, analysts (e.g., Cockburn 2007 ) have raised the question of a
possible productivity crisis in the pharmaceutical industry. The reasons for the pre-
sumed productivity crisis can be sought in the following factors noted by Cockburn
( 2007 ): (a) the vigorous drug research and successful market introductions over the
last couple of decades have already created suffi ciently good solutions to the “easy”
medical problems, leaving the more challenging and complex diseases (e.g., cancer,
HIV/AIDS, obesity, Alzheimer's, Parkinson's, diabetes) to become the focus of
most fi rms' current R&D efforts; (b) the industry appears to have failed to make the
necessary investments in human and institutional capacity to quickly turn important
biological discoveries into drugs and medical devices; (c) the existing regulatory
review process and its standards are not well adapted to the new research technolo-
gies; (d) the drug companies are reluctant to bring forward products with low sales
potential; (e) fi rms seem inclined to search for blockbuster drugs, and thus, prefer to
seek out candidates with novel action mechanisms and large market potential, which
can be more expensive to develop or more likely to fail; (f) the current extent of col-
laboration in innovation between drug companies could be insuffi cient. Changes in
fi rms' organizational objectives and strategies, supported by adequate modifi cations
in the respective regulatory policies, can help overcome many of these roadblocks.
However, a more positive outlook challenges the notion of declining productivity
in drug innovation by questioning the employed metrics. Properly adjusted cumula-
tive measures (e.g., ones accounting for the increasing quality of follow-on drugs)
can be a better yardstick for gauging innovative output than the simple counts of
new branded drugs.
It is conceivable that in the absence of great potential for blockbuster drugs, the
industry's R&D spending is directed more toward enhancing drug effi cacy and
safety, or improving the delivery mechanisms of already existing treatments.
Therefore, the relevant innovation output might be better assessed not solely by
the total number of new drugs qualifi ed as breakthrough innovations, but also by the
cumulative value of incremental quality improvements—e.g., by accounting for the
relatively minor but frequent drug modifi cations that create extra customer value
(Cockburn 2007 ). The ultimate measure of productivity seems to require consider-
ation of both drug quality and total impact. Generating fewer successful treatments
that are highly effi cacious and targeted toward large patient groups might be of
greater social and economic value than launching a large number of undifferentiated
treatments in already crowded therapeutic categories.