Posted 12 November 2014
By Alexander Gaffney, RAC
The development of a new pharmaceutical or biopharmaceutical product is a notoriously difficult process. According to industry data compiled by the Tufts Center for the Study of Drug Development, only about one in 10 drugs entering into Phase I clinical trials will ever be approved by the US Food and Drug Administration (FDA)—and those are just the companies whose drugs actually made it to the clinical development stage. Getting a drug approved, in other words, can feel like winning the lottery for a pharmaceutical company.
But what are the odds of hitting the jackpot twice—that is, that a company will have a second drug approved by federal regulators?
Not Many Repeat Approvals
That question is the focus of a new paper in the medical journal Drug Discovery Today authored by Michael Kinch, associate vice chancellor at Washington University.
Kinch, who's also written about FDA's history of drug approvals, set out to analyze the number of drug companies that have received more than two approvals for new molecular entities (NMEs)—new, never-before approved drugs—in their entire history.
Out of the 223 companies that received at least one approval from FDA for their NME, less than half (106, or 47%) went on to receive a second NME approval from FDA, Kinch found. After receiving their first approval, these companies generally took between six and eight years (depending on the decade) to obtain their second approval—a seemingly impressively quick development time.
However, Kinch noted this was likely somewhat deceiving. "As the average time for clinical investigation alone routinely exceeds 6 years, this suggests that much of the early-stage research and development was performed in parallel with the approval campaign for the first product," he said.
Kinch's data found other interesting anomalies as well. For example, between the 1930s and 1970s, between 70% and 95% of all companies with one NME drug approval went on to obtain a second. But starting in the mid-1970s, Kinch says, "The likelihood a company would achieve a second NME approval began to shrink." Between 2001 and 2010, just 10% of all companies with one NME approval obtained a second.
At this point, astute readers might bring up various potentially contributing factors: Were the companies acquired? Did they leave drug development altogether? Did they declare bankruptcy?
Some of those factors were more influential on the data than others, Kinch found. "Starting in the mid-1970s, the likelihood a company would achieve a second NME approval began to shrink. This trend largely reflects increasing levels of corporate consolidation. Overall, 58% of companies that achieved at least one NME approval were subsequently acquired and only one third remain independent as of writing," Kinch wrote.
Between 2001 and 2010, just 20% of all companies with one NME approval remained active and independent 10 years after their first approval. Between 1930 and 1970, nearly all companies remained independent.
"Mergers and acquisitions are the primary impetus preventing a second approval," Kinch observes in his paper.
Where Will New Drugs Come From?
What does all this mean? Kinch says the question that sticks out to him is: "Where will new drugs come from?"
Since many drug companies are acquired, that's leading to "the loss of experienced organizations," with potential ramifications for the sustainability of the drug development ecosystem, Kinch said.
"From an optimistic standpoint, such turbidity recycles experienced personnel and allows them to join other organizations and begin afresh," he observed. "Realistically, the dismantling of successful teams does not seem an efficient use of time or resources when viewed from a business or global public health perspective."
Interestingly, orphan drug products appear to be immune—at least for now—from this trend. Kinch said few orphan drug makers are acquired, perhaps due to the inability of the purchasing company to expand the drug's indication to other disease subsets. Oncology drugs, meanwhile, are highly sought after by companies.
Post-Approval Fate of Pharmaceutical Companies