David's New Book

Thursday, April 26, 2012

Antibiotics - Go East!

Asia - Satellite image - PlanetObserverAsia - Satellite image - PlanetObserver (Photo credit: PlanetObserver)

Where will we find new markets for antibiotics and other pharmaceuticals?  Asia and other emerging economies – that’s where!  According to Bayer, China was their third largest market globally last year.  Asia overall accounted for 7.8 billion Euro (over $10B) in sales for Bayer – a whopping 21.5% of their sales globally. The sales in Asia were very similar to that for North America.  Bayer is a great example since, on the antibiotics side, they sold their North American business to Schering-Plough (now Merck) a number of years ago.  This shows where their thinking was then and how this perception has now been vindicated.

In a report published last year and freely available to all, the Economist notes that pharmaceutical sales in Asia have more than doubled since 2001.  Projections going out to 2016 suggest an annual growth rate of 13% is sales with total sales hitting an astounding $386B. A number of factors are driving this growth and include a growing population (shown below and taken from the Economist report), an aging population with longer life expectancy and a growing middle class able to afford to pay for quality health care.


The resulting projections for increases in health care spending, taken directly from the Economist report are shown below.


Of interest, the profitability index has been rising more slowly and in an erratic way.  This can be attributed to sporadic rises in wages and other costs.  Thus, sales volumes and cost savings will have to combine to maximize profits in Asia.

These observations can be used to explain the surge in antibiotic sales in Asia.  Shown below from IMS data kindly provided last year by Astra-Zeneca, are sales of antibiotics in the years 2006-2010 comparing Asia-Pacific with North America.  If you were a pharmaceutical company wanting to maximize opportunities for antibiotics, where would you place your bets?


I believe that these trends will lead to an increase in the number of large pharmaceutical companies pursuing antibiotic R&D.  Evidence that this is already happening comes from the Bayer-Trius deal largely driven by Bayer’s Asia division, the recent re-entry of Sanofi-Aventis into the antibiotic R&D game and statements by large pharma executives like Mark Mallon from Astra-Zeneca as quoted in the Economist report. 

The corollary to this is that if the FDA continues to make the development of antibiotics infeasible in the US, as I have been saying for a long time now, companies now have the option of developing their antibiotics under European aegis, ignoring the US market and looking to the East to sell their wares.  And this is exactly what will transpire.  You read it here first!
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Thursday, April 19, 2012

Limited Population Antibacterial Drug Approval (LPAD)

I am posting this very brief blog today to encourage you to support congressional approval of LPAD. The legislation calls for extended authority for the FDA to approve antibiotics based on a limited data set for use in populations with high medical need.  This has been reviewed briefly in a couple of previous blogs. Although I remain unconvinced that the FDA actually needs this legislation from a purely statutory point of view, I have become convinced that they need it to provide cover from congressional criticism when, after approval of a drug based on limited data the inevitable problem emerges. This means that without such cover, it is not clear that the FDA will have what it takes to do the right thing and go forward anyway.  I am also completely convinced that for some new drugs, like  those active only against Pseudomonas or those active against metallo-beta-lactamase bearing organisms like NDM-1, such a new development pathway is absolutely essential.  Luckily - the back-up plan is to seek approval under the auspices of Europe if we cannot under the FDA. Of course, if this occurs it will mean that Americans will be left without access to these new and needed antibiotics.

So check out the summary of the legislation as proposed by IDSA, then write your senator and congressman - please!

Thursday, April 12, 2012

Shrinking Pfizer is Good for Antibiotics

Logo of Pfizer Incorporated.Logo of Pfizer Incorporated. (Photo credit: Wikipedia)
Pfizer stock price over 10 years.Pfizer stock price over 10 years. (Photo credit: Wikipedia)

There has been more talk in the news lately regarding Pfizer’s plans to spin off various businesses.  I have discussed the general issues I will cover today in two previous blogs. The recent news that Pfizer, in addition to spinning off its nutritionals and animal health franchises, is considering selling off its generics business. Talk of this breakup was spurred by Jami Rubin’s report a couple of weeks ago based on a briefing of Goldman-Sachs by Pfizer.  Some analysts suggest that this plan could increase the value of Pfizer by over 50%. But all will depend on Pfizer’s ability to advance its pipeline to marketed products.  And that remains to be seen.

As I have noted in the past, another approach would be to break things down further.  As it stands, there is no added value of the now almost non-existent anti-infectives effort at Pfizer.  But there are still early compounds and expertise plus Pfizer still sells linezolid, tigecycline and even piperacillin-tazobactam even though the latter is now generically available as well. These sales probably add up to about $2B in annual revenue.  Pfizer generated $67B in revenue in 2011 – so antibiotics remain a drop in the old bucket. On the other hand, a spin-off of the antibiotics business including their preclinical and early clinical assets would probably be worth much more outside of Pfizer than it is within Pfizer. Even with all the generic intrusion that will occur (linezolid loses patent protection in 2015), there will still be plenty of revenue to drive a small company.  Funding resources for such a spin-off could include both private equity as well as venture capital. The same strategy may work for other businesses within Pfizer – who knows? 
I am sure that Pfizer is not the only large pharmaceutical company where such a strategy would make sense.  I can think of several other good candidates off the top of my head – and so can you! The availability of non-dilutive funding through NIAID, BARDA or the Innovative Medicines Initiative or other sources adds to the attractiveness of the antibiotic spin-off.
But for the future of antibiotics, it is clear to me that the sales of current Pfizer antibiotics could drive new R&D in a new and much smaller company to bring new, novel and desperately needed products to patients and their physicians. What could possibly be wrong with this picture? Why can’t Pfizer bring itself to do the right thing? Is it that the problem is too small to deserve their attention?
I leave these questions in your capable hands – I do not have the answers.
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Saturday, April 7, 2012

Advice and Consent

The western front of the United States Capitol...The western front of the United States Capitol. The Neoclassical style building is located in Washington, D.C., on top of Capitol Hill at the east end of the National Mall. The Capitol was designated a National Historic Landmark in 1960. (Photo credit: Wikipedia)
President Barack Obama signs H.R. 2751, the “F...President Barack Obama signs H.R. 2751, the “FDA Food Safety Modernization Act,” in the Oval Office, Jan. 4, 2011. (Official White House Photo by Pete Souza) License on Flickr (2011-01-12): United States Government Work Flickr tags: WASHINGTON, DC, USA (Photo credit: Wikipedia)

An interesting article appeared in the New York Times today discussing new proposed rules from the Obama administration on the relationship between lobbyists and congress.  Apparently, these new proposed rules would limit the ability of congress folks to interact with registered lobbyists under circumstances where anything free might be involved such as film screenings, cocktail parties, etc. So, it seems like it would be OK to meet with lobbyists – they just can’t pay for drinks and meals nor could they provide free entertainment.  It also seems that if the congressperson is an invited speaker at such an event – that would also be OK. I’m confused – but probably so is anyone else who tries to wade through all this.
I was struck by the article in the Times because it notes that lobbyists are complaining that they would no longer be able to educate congress on the issues important to the lobbyists clients.  The fear is that congress will become alienated and distanced from regulated industry to the point where it is no longer able to make rational decisions. It may surprise you to hear that I sympathize (within limits) with this view.  For me, a great example is the anti-infectives division at the FDA. They, through congressional pressure and through unreasonably tight restrictions on interacting with industry coming from regulations around conflict of interest, have become completely isolated from the industry that they regulate.  This has been an important contributor to the greatest debacle of our century in the discovery and development of new and needed antibiotics.  For almost a decade now, guidance documents from the FDA for the development of new antibiotics have required infeasible clinical trial designs.  This has increased the regulatory uncertainty for the pharmaceutical industry and has, in a number of cases, led directly or contributed to their exit from the field of antibiotic R&D.  I believe that if the FDA had been able to get appropriate advice (in the absence of political pressure from congress) from folks who actually are involved in the development of new antibiotics prior to releasing their guidance documents, they would have understood that their proposed designs were infeasible from the outset.  The way the process currently works, the FDA releases a guidance document requiring infeasible clinical trials.  There is then uproar from the industry and the Infectious Diseases Society of America.  The FDA then reacts (we hope – but this has not yet actually happened) with tectonic speed to revise the guidance such that required trials are again feasible.  In the meantime, more companies abandon antibiotics research. Is this a way to conduct business?  Of course it isn’t.
My nightmare is that this system becomes the way of doing business in congress. The result will be the passage of idiotic laws that then have to be modified after years of delay.  On the other hand, I don’t see why lobbyists should have to provide free meals or drinks to be able to speak to congress folks. I guess this boils down to the question of what it takes for a lobbyist to speak to a congressperson. But I agree that the complete isolation of government from regulated industry is unhealthy and may even be risky. 
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