Last week I spoke to the NIH biotechnology business leadership in Bethesda, Maryland. To the standing room only crowd, I laid out the challenges that we face over the next decade - the rising cost of new drug development, the increasingly poor odds of success using traditional development methods, and the insidious risks associated with a push for more and more revenue while being slow to adopt more modern, proven (at least outside the biopharmaceutical industry) means of new product development.
Here are some the statistics I provided based on years of research and information gathering:
- From lab to market, the chance of success is 1 in 205
- And only 1 in a 1,000 to turn a profit
- And only 1 in 5 will break even
- 75% of all prescriptions in the US are for low-cost generics
- Only 33% of all biopharmaceutical firms are based in the US
- 47% of all R&D in US biotechnology companies is completely outsourced - those firms have zero labs
- Over the next 18 months, the 8 big pharma/biotech companies will lose - from loss of patent protection - more money than the entire GDP of the continent of Africa and 90% of the continent of Latin America
As you can see, looking to "emerging markets" (such as Africa and Latin America) is not going to make up for the lost revenue. In addition, countries from China to Germany to Italy are mandating cuts in pricing to all drugs - new and old.
I then discussed potential ramifications:
- Big bio/pharma firms stuck with organizational structures and departmental fiefdoms may be too slow to adapt, leading to constant rounds of cost-cutting (i.e., layoffs and outsourcing) and mergers
- Small, nimble and largely virtual companies - biotechs, combination device firms, small pharmas - will fill the void left by struggling big pharma
These are not new predictions - others have made them before - but then I went on to discuss some impacts to the job market for biotechnology. Here, on the blog, I'll simply mention that over the next decade, we should plan for:
- Project-based employment (such as a contractor/consultant/outsourced vendor)
- LIttle company loyalty for those not vested in the small pharma, virtual biotech startup
- Need to keep our job skills honed - technology/scientific skills are easily atrophied and in a global economy, it is more likely a small business employer will hire a different contractor/outsourced vendor rather than spend money on training anyone not part of the small company
- The increasing adoption of new product development methodologies such as quality by design
- A serious need for data integrity expertise for all the various clinical trials and studies
- The need for cost-effective, streamlined quality systems - you can't comply inefficiently in a small company
A number of the attendees asked superb questions and offered some really great insights. One discussion we had revolved around how to lower the cost of healthcare overall, which in turn would then help lower the cost of medicines in a more controlled manner (rather than the precipitous patent cliff). One scientist visiting from Mexico noted that when a patient goes to the hospital, in order to keep overhead low, patients are given the opportunity to buy any drugs needed themselves rather than going through the hospital.
I look forward to talking with the group again next year. It's always quite energizing to layout the challenges and see folks willing to roll up their sleeves, get creative and get problem solving. For all the worries around the landscape ahead, I think we're growing a cadre of entrepreneurial scientists and engineers who will surmount the hurdles ahead.
