Pharmaceuticals: Going Large

Global Panorama/FlickrIn pharmaceuticals, the 20th century was the era of the small molecule.

The industry thrived by identifying a steady stream of relatively simple compounds that treated lots of people, patenting them and making a fortune.

In the early 21st century it has become harder for drugmakers to find new cures quickly enough to replace those on which the patents are expiring.

Many drugmakers, both established ones and startups, have sought salvation in biotechnology--the adaptation or exploitation of processes found inside living organisms.

As in other areas of drug research, there have been setbacks as well as successes. But steady progress is being made in creating "biologics", drugs that consist of giant molecules, hundreds of times the size of a conventional drug molecule, which are manufactured inside animal cells or micro-organisms such as bacteria. In the coming year a fresh wave of biologics is expected to be approved for use by general practitioners (see table).

Several of these will treat the millions of people who find that statins, the conventional treatment for high cholesterol, do not work well enough. Amgen's drug, evolocumab, may be first, followed by alirocumab, from Sanofi and Regeneron. Pfizer also has a contender, bococizumab, at an advanced stage of development.

Drugmakers have been encouraged to keep working on new biologics by the success of Humira, a treatment for rheumatoid arthritis and related conditions, which won approval in America in 2002 and is made by an American firm, AbbVie. Humira has become the world's leading prescription drug, with sales of $11 billion in 2013, according to EvaluatePharma, a research outfit.

Damien Conover of Morningstar, an investment-research firm, reckons that biologics provided 22% of the big pharma companies' sales in 2013, and he thinks this will rise to 32% by 2023. They will provide an even bigger share of revenues at those firms which have concentrated on them, such as Bristol-Myers Squibb, Merck, Eli Lilly and Sanofi. In America more than 900 biologics are in development, for more than 100 diseases.

Over the next five years, a further generation of biologic drugs will start to deliver cures by using viruses to deliver "gene therapy"--the replacement of a faulty gene in a patient's body cells with the correct version. China has had one such treatment, for some forms of cancer, since 2003. But in 2015 the West's first gene therapy, Glybera, for a rare genetic disease that clogs the blood with fat, will go on sale in Germany. The treatment, created by uniQure, a Dutch firm, is expected to cost EUR1.1m ($1.3m) for a course.

Pfizer has a new partnership with a biotech company, Spark Therapeutics, to give haemophiliacs the correct gene to produce blood-clotting factor. Scientists have already reported that ten patients with severe haemophilia B have remained cured for a number of years. Milo Biotechnology, another gene-therapy company, is developing treatments for muscle-wasting diseases such as muscular dystrophy.

Len Schleifer, the boss of Regeneron, which has several biologics close to approval, says the big advantage of such drugs is their specificity: they do only what they are supposed to do, rarely causing the sort of side-effects that are frequently discovered in conventional, small-molecule drugs, and lead to them being abandoned.

However, biologics are hard to make and, at present, difficult to take. They must be injected, infused or inhaled, as they are destroyed in the stomach when swallowed. This may discourage doctors from prescribing them in some cases. That said, José-Carlos Gutiérrez-Ramos, a senior scientist at Pfizer, says improvements will keep being made to how the drugs can be delivered. If so, biologics that can be popped as pills may be possible one day.

Biologics, like all other drugs, are not immune to setbacks. Shares in Roche, a Swiss drugs giant, fell sharply on December 19th when it disclosed disappointing results from tests on cancer patients of a combination of two of its biologics, Kadcyla and Perjeta. Four months earlier Britain's National Institute for Health and Clinical Excellence had decided that Kadcyla should not be prescribed routinely on the National Health Service for women with breast cancer, since its list price is around $140,000 a course.

As with all new drugs, it is not just a matter of how well a biologic works compared with existing treatments, but also whether it is affordable. Biologics for rheumatoid arthritis, which patients have to keep taking for the long term, cost more than $12,000 per patient a year. Some, like Humira, cost far more than this. Paying this sort of money is hard enough for rich countries' health systems; for poorer countries, it is out of the question.

As biologics increase their market share, their cost and efficacy will come under greater scrutiny. Already, the governments of Italy and France have noted that Avastin, a biologic developed for cancer, also treats macular degeneration, a cause of blindness. And it is far cheaper than Lucentis, a biologic for that condition sold by the same companies, Roche and Novartis. To its makers' chagrin, the two governments have approved the use of Avastin for macular degeneration, a move which, according to one French legislator, will save his country's health service $273m a year compared with using Lucentis.

When the patents on conventional drugs expire, other firms are free to start selling "generic" copies of the same chemical; and when the makers of biologics lose patent protection, rival companies are allowed to make equivalents of them, known as "biosimilars". This is harder than copying conventional drugs.

Furthermore, says Ben Perkins of EY, a consulting firm, biosimilars will be (as their name suggests) similar rather than identical: they may be significantly worse, or even better, than the original. In America, a lack of clarity in the regulations for the approval of biosimilars has slowed the development of a market for them, in those cases where biologics have come off patent.

However, things are beginning to move: for instance, in December Apotex, a Canadian firm, said America's Food & Drug Administration (FDA) had agreed to consider its biosimilar of Neulasta, a biologic made by Amgen, an American firm, which helps cancer patients fight infection. A study published in November by the RAND Corporation, a research institute, said that on current assumptions about how the FDA's regulations will develop, biosimilars could save America's health system a total of $44 billion over the coming decade.

That would be a useful sum, but the overall savings from biosimilars will not be as dramatic as those from replacing branded conventional drugs with generic versions. First, biosimilars will also be costly to make. Second, since they will not be identical copies, doctors and patients may be slow to accept them as substitutes.

All this will be good news for those drugmakers who create successful biologics, for it will allow them to continue selling at higher prices for longer. They may thus find that the "patent cliff", the slump in revenues they have been suffering as older remedies lose patent protection, is not as steep as feared. But health-service bosses the world over will find that their job gets even harder than it is now: new treatments for once-intractable ailments will keep being invented, but their costs will be cripplingly high.

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