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The Pharma Pulse: Product Innovation & Emerging Pharma
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New product development is the lifeblood of any industry. Smaller bio/pharmaceutical companies are accounting for an increasingly larger portion of new products as measured by recent new molecular entity approvals. Which companies are making the mark? DCAT Value Chain Insights takes an inside look.

R&D productivity declines among large bio/pharma companies

The rise in product innovation from smaller companies comes as R&D productivity from larger bio/pharmaceutical companies declines. An analysis by Deloitte and Global Data, which tracked the late-stage pipelines (Phase III or Phase II with breakthrough therapy designation) of 12 large bio/pharmaceutical companies over a 10-year period beginning in 2010 and an additional cohort of four specialty bio/pharmaceutical companies over five years, showed a decline in returns on R&D investments (1). While individual companies may have had short-term successes, rising R&D costs and lower returns on investments present a challenge. In looking at the study’s original cohort of 12 large bio/pharmaceutical companies, R&D returns have declined each year since 2010, from 10.1% in 2010 to only 1.9% in 2018 and 1.8% in 2019, the most recent available data. Although the extension cohort of four specialty bio/pharmaceutical companies showed better R&D returns, they still show recent declines from 9.3% in 2018 to 6.2% in 2019. At the same time, forecast peak sales per asset for the large bio/pharmaceutical companies have almost halved since 2010, when they were $816 million to $376 million in 2019.

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At the same time, externally sourced product innovation has become increasingly important for large bio/pharmaceutical companies. In 2010, close to half of the study’s original 12 large bio/pharmaceutical companies’ pipelines were sourced through external innovation, which historically launches at a rate higher than the industry’s benchmark. In 2018 and 2019, more than 50% of the late-stage pipelines of both cohorts of the study—the 12 large bio/pharmaceutical companies and the additional four specialty bio/pharmaceutical companies—were sourced externally.

Figure 1 NME 42821

New molecular entity approvals and smaller bio/pharma companies

The importance of smaller bio/pharmaceutical companies in new product development is evident by recent trends in new drug approvals. Taking last year (2020) as an example, of the 53 new molecular entities (NMEs) approved in 2020 by the US Food and Drug Administration’s Center for Drug Evaluation and Research, 36, or 68%, were from small to mid-sized bio/pharmaceutical companies. For purposes of this analysis, the large bio/pharmaceutical companies were defined as those companies among the top 26 companies based on 2019 pharmaceutical revenues (2) and not included in this evaluation. Figure 1 outlines those drug approvals and Table I at the end of the article outlines all 53 NMEs approved in 2020.

The increased role of smaller bio/pharmaceutical companies was also underscored in a June 2020 webinar hosted by the Drug, Chemical & Associated Technologies Association (DCAT) and featuring Graham Lewis, Vice President, Global Pharma Strategy, IQVIA. He pointed out that emerging bio/pharmaceutical companies are increasingly intent at commercializing their own products rather than just being a source of external innovation for larger companies (3) (see Figure 2). 

PIO Figure2

Financing into the bio/pharma industry

Recent financing trends are a promising sign that smaller companies will continue to be the source of product innovation. The bio/pharmaceutical industry as a whole (both large and small companies) had a favorable year in 2020 on a financing basis, due in part to the COVID-19 pandemic as investors saw uptick in the sector. The top 600 bio/pharmaceutical companies added $487 billion in market capitalization in 2020, according to the Evaluate Vantage Pharma, Biotech & Medtech 2020 in Review report, and the industry saw an unprecedented amount of cash flow into the sector. Drug developers raised a record-breaking $12.7 billion via initial public offerings in 2020, which was more than twice the total raised in 2019. The average amount raised ($167 million) nearly doubled, and 55 companies raised more than $100 million and 35 of these bringing in more than $200 million. Private companies also broke records, with $20 billion invested by venture financers, which eclipsed the boom year of 2018 although the total number of financing rounds was lower than in prior years, according to the analysis. The average financing per round in 2020 was nearly $45 million, almost $10 million higher than the average in 2019.

References

1. Ten Years from Measuring the Return from Pharma Innovation, Deloitte Center for Health Solutions and GlobalData (2019).

2. M. Christel, “Pharm Exec’s Top 50 Companies in 2020,” Pharmaceutical Executive, June 1, 2020, Volume 40, Issue 6.

3. J. Miller, “Pandemic Complicates an Already Challenging Outlook for the Global Pharma Industry,” DCAT Value Chain Insights, July 15, 2020. 

Table 1: New Molecular Entities Approved in 2020 by the US Food and Drug Administration’s Center for Drug Evaluation and Research
Company Proprietary Name (active ingredient); NDA or BLA Indication
Acacia Pharma Byfavo (remimazolam); NDA Sedation
Acacia Pharma Barhemsys (amisulpride); NDA To prevent nausea and vomiting after surgery
Almirall Klisyri (tirbanibulin); NDA Actinic keratosis of the face or scalp
Alnylam Pharmaceuticals Oxlumo (lumasiran); NDA Hyperoxaluria type 1, a rare genetic disease leading to kidney disorders.
Amivas artesunate; NDA Severe malaria
AstraZeneca Koselugo (selumetinib); NDA Neurofibromatosis Type 1, a genetic disorder of the nervous system causing tumors to grow on nerves
Bayer Healthcare Lampit (nifurtimox); NDA Chagas disease in certain pediatric patients younger than age 18
BioCryst Pharmaceuticals Orladeyo (berotralstat); NDA Hereditary angioedema
Biohaven Pharmaceuticals Nurtec ODT (rimegepant); NDA Migraines
Blueprint Medicines Gavreto (pralsetinib); NDA Non-small lung cancer
Blueprint Medicines Ayvakit (avapritinib); NDA Unresectable or metastatic gastrointestinal stromal tumor (GIST)
Bristol-Myers Squibb/Celgene Zeposia (ozanimod); NDA Relapsing forms of multiple sclerosis
Cassiopea Winlevi (clascoterone); NDA Acne
Deciphera Pharmaceuticals Qinlock (ripretinib); NDA Advanced gastrointestinal-stromal tumors
Dr. Reddy’s Laboratories Xeglyze (abametapir); NDA Head lice
Eiger Biopharmaceuticals Zokinvy (lonafarnib); NDA Rare conditions related to premature aging
Eli Lilly and Company/Avid Radiopharmaceuticals Tauvid (flortaucipir F-18); NDA Diagnostic agent for patients with Alzheimer’s disease
Eli Lilly and Company/Loxo Oncology Retevmo (selpercatinib); NDA Certain lung and thyroid cancers
Epizyme Tazverik (tazemetostat); NDA Epithelioid sarcoma
Esperion Therapeutics Nexletol (bempedoic acid); NDA Adults with heterozygous familial hypercholesterolemia or established atherosclerotic cardiovascular disease who require additional lowering of LDL-C
Gilead Sciences Veklury (remdesivir); NDA Adult and pediatric patients 12 years of age and older and weighing at least 40 kg for treating COVID-19 requiring hospitalization.
Gilead Sciences/Immunomedics Trodelvy (sacituzumab govitecan-hziy); BLA Adult patients with metastatic triple-negative breast cancer who received at least two prior therapies for metastatic disease
GlaxoSmithKline Blenrep (belantamab mafodotin-blmf); BLA Certain type of multiple myeloma
Horizon Therapeutics Tepezza (teprotumumab-trbw); BLA Thyroid eye disease
Incyte Pemazyre (pemigatinib); NDA Cholangiocarcinoma, a rare form of cancer that forms in bile ducts
Jazz Pharmaceuticals Zepzelca (lurbinectedin); NDA Metastatic small cell lung cancer
Lundbeck Vyepti (eptinezumab-jjmr); BLA Preventive treatment of migraine in adults
Macrogenics Margenza (margetuximab-cmkb); BLA HER2+ breast cancer
MorphoSys Monjuvi (tafasitamab-cxix); BLA Relapsed or refractory diffuse large B-cell lymphoma
Neurocrine Biosciences Ongentys (opicapone); NDA Parkinson’s disease “off” episodes
Nippon Shinyaku Viltepso (viltolarsen); NDA Duchenne muscular dystrophy
Novartis Tabrecta (capmatinib); NDA Certain form of non-small cell lung cancer
Novo Nordisk Sogroya (somapacitan-beco); BLA Human growth hormone
Otsuka Inqovi (cedazuridine; decitabine); NDA Adult patients with myelodysplastic syndromes and chronic myelomonocytic leukemia
RadioMedix Detectnet (copper dotatate CU-64); NDA Detection of certain types of neuroendocrine tumors
Recordati Isturisa (osilodrostat); NDA Adults with Cushing’s disease who either cannot undergo pituitary gland surgery or have undergone the surgery but still have the disease
Regeneron Pharmaceuticals Inmazeb (atoltivimab; odesivimab; maftivimab); BLA Ebola virus
Rhythm Pharmaceuticals Imcivree (setmelanotide); NDA Obesity and the control of hunger associated with pro-opiomelanocortin deficiency, a rare disorder that causes severe obesity that begins at an early age
Ridgeback Biotherapeutics Ebanga (ansuvimab-zykl); BLA Ebola virus
Roche’s Genentech Enspryng (satralizumab); BLA Neuromyelitis optica spectrum disorder
Roche’s Genentech Evrysdi (risdiplam); NDA Spinal muscular atrophy
Sanofi Sarclisa (isatuximab-irfc); BLA Multiple myeloma under certain conditions
Seagen (formerly Seattle Genetics) Tukysa (tucatinib); NDA Advanced unresectable or metastatic HER2-positive breast cancer
Sebela Pharmaceuticals Pizensy (lactitol); NDA Chronic idiopathic constipation in adults
Sumitomo BioPharma/Myovant Sciences Orgovyx (relugolix); NDA Advanced prostate cancer
Sumitomo BioPharma/Urovant Sciences Gemtesa (vibegron); NDA Overactive bladder
Trevena Olinvyk (oliceridine); NDA Management of acute pain
Ultragenyx Pharmaceutical Dojolvi (triheptanoin); NDA Molecularly long-chain fatty acid oxidation disorders
University of California Los Angeles and the University of California, San Francisco Gallium 68 PSMA-11 (Gallium 68 PSMA-11); NDA Detection and localization of prostate cancer
Viela Bio Uplizna (inebilizumab-cdon); BLA Neuromyelitis optica spectrum disorder
ViiV Healthcare Rukobia (fostemsavir tromethamine); NDA HIV
Y-mAbs Therapeutics Danyelza (naxitamab-gqgk); BLA High-risk refractory or relapsed neuroblastoma
Zionexa Cerianna (fluoroestradiol F-18); NDA Diagnostic imaging agent for certain patients with breast cancer

NDA is new drug application. BLA is biologics license application.

Avid Radiopharmaeutials is a subsidiary of Eli Lilly and Company.

Bristol-Myers Squibb acquired Celgene in 2019.

Eli Lilly and Company acquired Loxo Oncology in February 2020.

Gilead Sciences acquired Immunomedics in October 2020.

Sebela Pharmaceuticals acquired Braintree Laboratories in 2018.

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Sumitomo Dainippon Pharma and Roivant Sciences completed strategic alliance and formation of new company, Sumitovant Biopharma, a wholly owned subsidiary of Sumitomo Dainippon Pharma in December 2019. Sumitovant Biopharma became the parent company of the five biopharma companies for which Roivant transferred its ownership interest: Myovant Sciences, Urovant Sciences, Enzyvant Therapeutics, Altavant Sciences, and Spirovant Sciences.

ViiV Healthcare is a joint venture of GlaxoSmithKline and Pfizer with Shionogi as an additional shareholder.

Source: US Food and Drug Administration’s Center for Drug Evaluation and Research

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