Healthcare

GLOBAL INVESTOR 2.12 — 17
Pharmaceuticals
A prescription for growth
Over the past century, the pharmaceutical industry has experienced
several periods of rapid growth. Following what one might call a lost decade
for big pharma, the industry is now set for another growth spurt.
Thomas C. Kaufmann, Research Analyst, Credit Suisse
The origins of the pharmaceutical industry as we know it today trace
back to the second half of the 19th century, when a number of apothecaries
and chemical companies – mostly dye manufacturers – started
to focus their activities on the production and application of chemicals
for pharmaceutical purposes. Many of those firms have survived
in one form or another.
Researchers discovered that many diseases were caused by microbes,
and, building on the advances in chemistry and improving
microscopy techniques, the “microbe hunters” of the day searched
for the causes of many widespread illnesses. Around the turn of the
20th century, the search for cures was increasingly being conducted
in an organized manner, and compounds were chemically synthesized
instead of purified from natural sources.
Paul Ehrlich (1854–1915), a pioneer of modern pharmaceutical
research and Nobel Prize winner, was intrigued by the fact that
specific dyes tended to stain specific structures of the cell and postulated
that there is a relationship between the chemical structure of
a compound and its activity. He coined the term “magic bullet.” Ehrlich
was purportedly the first to systematically screen substances for
their therapeutic effect by introducing slight variations to a known
starting compound. His meticulous effort culminated in the discovery
of Salvarsan, a treatment for syphilis, which was endemic at the time.
In 1910, it quickly became the most widely prescribed medicine in the
world – a “blockbuster” drug in today’s terms.
The following decades gave rise to many important breakthroughs:
Insulin was isolated for the first time in 1921 from animal sources and
provided a treatment for a hitherto fatal disease. In 1928, Sir Alexander
Fleming discovered the antibiotic effect of penicillin, without, however,
further pursuing its clinical application. It was only during World War II
that concerted efforts were undertaken to produce the life-saving
drug on a large scale to treat wounded soldiers on the battlefield.
The dawn of molecular biology
This marked the definitive marriage between pharmaceutical sciences
and the chemical industry, and provided unprecedented scale. The
ensuing decades became years of rapid expansion for the industry,
as many major drugs were discovered and patented. In parallel with
this commercial activity, the structure of DNA was elu ci dated by Watson
and Crick in 1953. Some 17 years later, in another Nobel Prize winning
discovery, Werner Arber reported on the use of restriction
enzymes to manipulate gene sequences, heralding a new era. In 1978,
at Genentech, the first biotech company to go public, researchers were
the first to produce insulin by biotechnological means, i.e. using a host
cell to produce a human version of insulin, which until that time had
been isolated from cattle and pigs. The FDA eventually approved the
drug for commercial use in 1982.
Although many observers expected biotechnology to provide a
pharmaceutical industry around the millennium years were rather sobering.
Research & Development (R & D) productivity declined significantly,
as measured by the number of new approvals per R & D dollar
spent. The regulatory authorities asked for longer and larger clinical
trials to assess product safety, following the negative experience with
Vioxx, an arthritis drug that was discovered to be responsible for
numerous deaths only after being on the market for several years.
At the same time, most pharmaceutical companies were facing
patent expirations on their best-selling drugs and had several painful
setbacks in their development pipelines. A big wave of consolidation
swept through the industry, and large firms were increasingly looking
to acquire external pipeline assets from smaller biotech and pharmaceutical
companies to replenish their product pipelines. At the same
time, R & D expenditures were significantly cut at several companies
in response to declining success rates and considerable shareholder
pressure. >
01_Medicines in development
Due to advances in medical science, some 932 cancer drugs are being
developed – almost a third of all new medicines on the way. Source: PhRMA, USA 2011
HIV/AIDS and
related conditions
88
Alzheimer’s and
other dementias
98
Arthritis and
related conditions
198
Diabetes mellitus
200
Cardiovascular
disorders
245
Mental and
behavioral disorders
250
Respiratory disorders
Parkinson’s and
related conditions
36
Cancer
932
Rare diseases
383 460