Value Creation in the Pharmaceutical Industry

Prof. Dr. Alexander Schuhmacher is a professor for R&D management, Vice Dean of the Faculty of Applied Chemistry and Senator at Reutlingen University. And he is Director for R&D performance metrics and business model innovation at Bioscience Valuation. Before joining the academic world, he worked 14 years in the pharmaceutical industry in various functions in R&D, such as in R&D portfolio management and strategic planning. He studied biology at the University of Constance (Germany), Pharmaceutical Medicine at Witten-Herdecke University (Germany) and he is also a graduate of the Executive MBA program at the University of St. Gallen (Switzerland). Prof. Dr. Markus Hinder studied medicine at the Universities of Heidelberg, Paris and Zrich and obtained a doctoral degree in pharmacology from Heidelberg University. After graduation he trained in clinical pharmacology, cardiology and emergency medicine. Before joining Novartis he held leadership positions in clinical pharmacology, translational medicine, clinical development, medical affairs and project management. Markus is a professor at Cardiff University/ Hochschule Fresenius, reviewer for several journals and associate editor for the Journal of Translational Medicine. Prof. Dr. Oliver Gassmann is a Professor for technology and innovation management at St. Gallen University, where he chairs the Institute of Technology Management. His teaching activities include several executive MBA programs. He has written or edited 18 books and published more than 300 journal articles on technology and innovation management. Until 2002 he headed the R&D department of Schindler. The main focus of his research lies in open innovation and global innovation processes. He is the 1998 recipient of the RADMA Prize and in 2009 was elected among the top 50 researchers by IAMOT, the International Association for Management of Technology.

List of Contributors XVII Foreword XXI 1 Introduction to the Book 1 Alexander Schuhmacher, Oliver Gassmann, and Markus Hinder Reference 8 2 Global Epidemiological Developments 11 Stephan Luther and Peter Schmitz 2.1 Introduction 11 2.2 Model of Epidemiological Transition 12 2.3 Global Burden of Diseases 15 2.3.1 Trends in the Distribution of Disease Burden 16 2.4 Infectious Diseases 20 2.4.1 (Re-)emerging Infectious Diseases 23 2.4.2 Neglected Tropical Diseases 26 2.5 Noncommunicable Diseases 29 2.6 Antimicrobial Resistance 32 2.7 Dynamics 35 References 38 3 The Value of Pharmaceutical Innovation: Concepts and Assessment 45 Sam Salek and Paul Kamudoni 3.1 Introduction 45 3.2 Concepts and Definitions of Value 46 3.3 Stakeholders Perspectives on Value 47 3.3.1 Drug Regulatory Agencies 47 3.3.2 Health Technology Assessment 47 3.3.3 Patients 49 3.3.4 Prescribers/Clinicians 49 3.4 Recent Developments Influencing the Definition and Assessment of Value 50 3.5 Recommendations: Implications for R&D 51 3.6 Discussion 52 3.7 Conclusion 56 References 57 4 A Review of the Pharmaceutical R&D Efficiency: Costs, Timelines, and Probabilities 61 Alexander Schuhmacher, Oliver Gassmann, and Markus Hinder 4.1 Introduction 61 4.2 The Historical Perspective 62 4.3 The R&D Phase Model 63 4.4 The Low R&D Success Rates 63 4.5 The Long R&D Time Intervals 67 4.6 The High Cost of Pharmaceutical R&D 71 4.7 The Reduced R&D Efficiency 73 4.8 Can an Increase in R&D Value Compensate the Reduced R&D Efficiency? 76 References 78 5 Financing Pharmaceutical Innovation 81 Sviataslau Sivagrakau 5.1 Introduction 81 5.2 Measuring Innovation: Categories of New Drugs 84 5.3 Productivity of Pharmaceutical Industry throughout Time 86 5.4 Measuring the Cost of Developing New Medicines 87 5.5 Funding Drug Development: a Global Endeavor 91 5.6 Public and Private Funds: Complementary Finance for Drug Development 95 5.7 How Commercial Drug Development Projects Are Financed Today: Big Firms, Small Firms, andTheir Cooperation 97 5.8 Public Health Economics and Financing Pharmaceutical Innovation 99 5.9 Conclusion 101 Acknowledgment 102 References 102 6 Challenges and Options for Drug Discovery 107 Werner Kramer 6.1 Introduction 107 6.2 Paradigm Shifts of R&D Organizations 108 6.3 Productivity of Drug Discovery 109 6.4 IsThere an Innovation Gap in Biomedical Research? 111 6.4.1 To Go for First in Class or Best in Class 112 6.4.2 HowWe Define Medical Innovation? 112 6.5 Why Did Drug Candidates Fail? 113 6.5.1 Why Is the Dropout Rate So High in Early Clinical Development? 115 6.5.1.1 Drug Behavior In Vivo: Role of Transport Proteins 115 6.5.1.2 Hypes and Lack of Scientific Thoroughness 116 6.6 Implications from the "Lessons Learnt" for Future Drug Discovery Research 123 6.6.1 Organization of Drug Discovery and Development 123 6.6.2 Elucidation of the Physiological Validity of a Target for the Human Disease 125 6.6.2.1 Extensive Inquiry of (All) Published Data of a Target or Pathway 125 6.6.2.2 Integrative Knowledge Management 127 6.6.2.3 Demonstration of the Involvement of a Target in Human Disease 128 6.6.2.4 A Stringent and Comprehensive Test Sequence 132 6.6.2.5 Translational Clinical Trials 135 Acknowledgment 136 References 136 7 Translational Medicine: Enabling the Proof of Concepts 141 Gezim Lahu and John Darbyshire 7.1 Introduction 141 7.2 Translational Medicine and Its Role/Value in Early Development 143 7.3 Knowledge Generation 144 7.4 Types of Data, Experiments, and Tools Needed to Move from Basic Research to Early Clinical Development 144 7.4.1 Dose Selection 145 7.4.2 Animal Models 146 7.4.3 Fraction of NOAEL and Efficacious Dose 149 7.4.4 Allometric Scaling and PBPK 150 7.4.5 Physiologically Based Pharmacokinetic Models PBPK 151 7.4.6 Pharmacokinetic and P