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来自 : www.renrendoc.com/p-4294...htm 发布时间：2021-03-25

Pharma 2020: The vision #Pharma 2020: The visionWhich path will you take?* Pharmaceuticals*connectedthinkingpwc# `PricewaterhouseCoopersTable of contentsIntroduction 1A growth market 2Emerging opportunities 3Compound crisis 5External barriers to innovation 8Mixed signals 9The bill for every ill 10Washington blues 12Blurring healthcare boundaries 14Pay-for-performance 16Medicines for different markets 18Healthy habits and fab jabs 19Sticking to the rules 21What’s in a name? 24The need for a dynamic new approach 27Access to basic research 28Pharmaceutical research 29Pharmaceutical development 31Regulation 33The supply chain 36Sales and marketing 38Conclusion 40Acknowledgements 42References 43IntroductionDemand for effective medicines is rising, as the population ages, new medical needs emerge and the disease burden of the developing world increasingly resembles that of the developed world. The E7 countries – Brazil, China, India, Indonesia, Mexico, Russia and Turkey – are also becoming much more prosperous, with real gross domestic product (GDP) projected to triple over the next 13 years. By 2020, the E7 could account for as much as one-fifth of global sales.Yet the biopharmaceutical sector (Pharma) will find it hard to capitalise on these opportunities unless it can change the way in which it functions. Its core problem is lack of productivity in the lab. Several external factors have arguably exacerbated the industry’s difficulties, but the inescapable truth is that it now spends far more on research and development (R&D) and produces far fewer new molecules than it did 20 years ago. The shortage of good medicines in the pipeline underlies many of the other challenges Pharma faces, including its increasing expenditure on sales and marketing, deteriorating financial performance and damaged reputation.At the start of the decade, many people thought that science would come to the industry’s rescue and that molecular genetics would reveal numerous new biological targets, but the human genome has proved even more complex than anyone first envisaged. It is no longer the speed at which scientific knowledge is advancing so much as it is the healthcare agenda that is dictating how Pharma evolves. The first part of our report highlights a number of issues that will have a major bearing on the industry over the next 13 years. The second part covers the changes we believe will best help pharmaceutical companies:operate in this new milieu realise the potential the future holds； and enhance the value they provide shareholders and society alike.•••Pharma 2020: The vision 1A growth marketDemographic, epidemiological and economic shifts are transforming the pharmaceuticals market. The population is growing and aging； new areas of medical need are emerging； and the diseases from which people in developing countries suffer are increasingly like those that trouble people living in the developed world. These changes will generate some huge opportunities for Pharma.The global population is projected to rise from 6.5 billion in 2005 to 7.6 billion in 2020. It is also aging rapidly； by 2020, about 719.4m people – 9.4% of the world’s inhabitants – will be 65 or more, compared with 477.4m (7.3%) two years ago.1Older people typically consume more medicines than younger people； four in five of those aged over 75 take at least one prescription product, while 36% take four or more.2So the grey factor will boost the need for medicines dramatically.Clinical advances will reinforce this trend. The improvements of the past few decades have already converted some previously terminal illnesses into chronic conditions, thus increasing long-term demand for therapies to manage such diseases. The number of deaths from heart attacks has declined by over 50% in most industrialised countries since the 1960s,3for example, while five-year survival rates for US patients with cancer (expressed as an average for all sites) have risen from 53% in the mid-1980s to 66% today.4Demand for new anti-infectives is also mounting, with the development of drug-resistant strains of some existing illnesses. The US Centers for Disease Control and Prevention (CDC) estimates that more than 70% of US hospital infections are resistant to at least one of the antibiotics most commonly used to treat them.5And medical research has exposed problems that were previously unidentified – including risk factors like metabolic syndrome and conditions like chronic fatigue syndrome, which recent evidence suggests is linked to changes in gene expression in the white blood cells.6Meanwhile, new diseases, including mutated forms of old diseases, are surfacing. Urbanisation and greater mobility have contributed to the introduction of new pathogens, some of which spread very fast and are very difficult to treat. SARS moved from Asia to North America and Europe in a matter of days. Similarly, the H5N1 avian flu virus has spread from China and South East Asia to the Middle East. The human cost has been tiny so far, but the impact of an avian flu pandemic could be enormous. Global warming could also have a major effect on the world’s health. In February 2007, the Intergovernmental Panel on Climate Change (IPCC) reported that the global average temperature had increased by about 0.2°C per decade between 1990 and 2005. The IPCC projects that the average temperature will increase by another 0.2°C per decade for the next two decades, even if the concentration of all greenhouse gases remains constant at year 2000 levels, and that it will “very likely” increase still more, if mankind’s output of greenhouse gases continues to rise.7The bottom line: The global market for medicines is growing, although demand is moving to different therapeutic areas, a shift that global warming could accelerate2 PricewaterhouseCoopersIt is currently impossible to predict the full impact of a change in global weather patterns, or even to be absolutely certain that man-made pollutants are causing the change. But many scientists believe that global warming could bring diseases such as malaria, cholera, diphtheria and dengue fever to more developed regions. Cases of malaria have now been reported in Azerbaijan, Corsica, Georgia and Turkey, where the disease was eradicated after World War II.8Specialists argue that most vector-borne diseases are unlikely to become a major threat in North America or Western Europe, where the climate is cooler and better preventative measures are in place. The greater danger in such regions is an increase in respiratory illnesses like asthma and bronchitis, since higher levels of greenhouse gases are expected to boost the pollen production of ragweed and other common allergens.9But numerous other medical problems could also emerge everywhere, because even a small rise in temperature accelerates the proliferation of many common bacteria. The replication rate of Salmonella increases by 1.2% per degree above minus 10°C, for example, while the replication rates of Campylobacter (one of the most common causes of gastroenteritis) and E. coli increase by 2.2% and 6%, respectively.10 In short, all these changes are creating new openings for Pharma. Some of them may be in different therapeutic areas. But demand for innovative medicines for old and new conditions alike is growing, not shrinking. Emerging opportunitiesThe markets of the developing world are altering even more radically than those of the developed world. At one time, infectious diseases were the biggest killers. This is still true of sub-Saharan Africa and South Asia. But, elsewhere, chronic diseases are now the leading cause of death,11 a pattern that will become even stronger as the population of the developing world gets older, fatter and less physically active. Two specific instances illustrate just how much the epidemiological profile is shifting. In 2004, an estimated 639m people living in developing countries suffered from hypertension. By 2025, the number is forecast to reach at least one billion – more than twice the projected rate of increase in that same population over the same timeframe.12 The picture is very similar when it comes to diabetes. The number of people with diabetes in developing countries is expected to rise from 84m in 1995 to 228m in 2025, with India, the Middle East and South East Asia bearing the worst of the burden (see sidebar, India’s insulin dependence).13Demand for medicines that treat illnesses formerly associated almost exclusively with the developed world is thus expanding in the developing world, at the same time that some countries are becoming increasingly affluent. The E7 countries look especially attractive. Our economic modelling suggests that the real GDP of the E7 countries will triple from US $5.1 trillion in 2004 to $15.7 trillion in 2020, whereas that of the G7 countries will grow by just 40%, from India’s insulin dependenceThe number of Indians with diabetes is projected to reach 73.5m in 2025. The direct and indirect costs of treating such patients are currently about $420 per person per year. If these costs remained the same as they are now, India’s total bill for diabetes would be about $30 billion by 2025. But as its economic wealth grows and standards of care improve, treatment costs are likely to rise. The US spends an average $10,844 per year on each patient with diabetes. If India’s per capita expenditure rose to just one-tenth of this level, the total cost of treating all patients with diabetes would be $79.7 billion by 2025. The value of prophylaxis in India alone would thus be substantial； preventing 10% of the population from developing diabetes would save nearly $8 billion a year.Pharma 2020: The vision 3$25.8 trillion to $36.1 trillion.14Their wealth relative to that of the G7 will rise from 19.7% to 43.4% over the same period (see Figure 1).In 2004, the E7 countries spent 0.94% of their GDP on prescription medicines (although the precise percentage varied from one state to another). They collectively accounted for 8% of the $518 billion global market.15The G7 countries, by contrast, spent 1.31% of their GDP on medicines and accounted for 79% of all sales. So, if all 14 countries continue to spend the same proportion of their GDP on medicines as they do now (and if their GDP grows as we have projected), the global pharmaceuticals market will be worth about $800 billion in 2020, and the E7 countries will account for about 14% of sales.However, this is probably too conservative an estimate. The richer countries become, the more they tend to spend on healthcare. The E7 populations are also aging faster than those of the G7； by 2020, 338m of the people living in the E7 countries will be at least 65 years of age, compared with 152.8m of the people living in the G7 countries.16But the G7 countries will still be more than twice as wealthy as the E7 countries, and better able to afford the higher healthcare costs associated with an aging population. So it is likely that both the G7 and the E7 countries will spend a larger proportion of their GDP on medicines than they do now. But the rate of growth in the G7 economies will almost certainly be much slower than it is in the E7 economies – and that disparity could eventually make a significant difference. The bottom line: The diseases of the developing world increasingly resemble those of the developed world, and greater affluence is making some countries much more attractive marketsG7 Countries200418,00012,00014,00016,00010,0008,0006,0004,0002,00002020 forecastE7 CountriesGDP (US$ Billions)USJapanGermanyUKFranceItalyCanadaChinaIndiaRussiaBrazilMexicoIndonesiaTurkeyFigure 1: The E7 economies will treble their real GDP by 2020Source: PricewaterhouseCoopers Macro Economic Consulting GroupNotes: 2004 estimates based on World Bank World Development Indicators database (except China, which was adjusted for a later large data revision)； 2020 projections based on our model4 PricewaterhouseCoopersSuppose, for instance, that the G7 pharmaceutical markets grew by between 5% and 7% a year, while the E7 markets grew by between 10% and 15% a year, for the next 13 years. By 2020, the global pharmaceuticals market would be worth about $1.3 trillion, with the E7 countries accounting for about 19% of sales. China would be the second or third biggest market in the world, and Turkey and India might well be in the top 10. One thing is clear from these broad-brush calculations； the financial clout of the E7 countries is improving significantly. The economic, demographic and social changes of the next decade will make them very much more appealing places in which to make and market pharmaceuticals.Compound crisisYet Pharma will not be in a strong position to capitalise on these opportunities, unless it can change the way in which it operates. Its core problem is lack of innovation in making effective new therapies for the world’s unmet medical needs. Medicines have helped many individuals enjoy longer, healthier lives. But, as the global population becomes older and more prosperous, people’s expectations are rising – and the industry is finding it increasingly difficult to fulfil their hopes.We predicted that this would happen when we published “Pharma 2005: An Industrial Revolution” in 1998. We argued that the safety, efficacy and cost-effectiveness of new medicines would attract growing scrutiny, and that the industry’s total shareholder returns (TSRs) would plummet, unless it could “industrialise” its R&D.17Our forecasts were borne out by 2002, with the publication of “Pharma 2010: The threshold of innovation”. The Pharma 2010 report contended that the industry’s best hope of earning higher returns lay in the development of packages of products and services targeted at patients with specific disease subtypes and that, if it was to make such “targeted treatments”, it would have to start by focusing on diseases rather than compounds.18However, the human genome has proved more complex and less amenable to mechanistic analysis than many scientists anticipated, when the draft map was completed in 2001. Hence the fact that Pharmais still struggling to apply the insights it has gleaned from the molecular sciences – genomics, proteomics, metabonomics and the like – to improve its performance.In 2006, North American spending on biopharmaceutical R&D reached a record $55.2 billion (and the US accounts for about three-quarters of global expenditure in this area). The member companies of the Pharmaceutical Research and Manufacturers of America (PhRMA) spent an estimated $43 billion, while non-member companies spent another $12.2 billion.19But the US Food and Drug Administration (FDA) approved only 22 new molecular entities (NMEs) and biologics, a far cry from the 53 it approved in 1996 when R&D expenditure was less than half the sum it is now (see Figure 2).20G7 Countries200418,00012,00014,00016,00010,0008,0006,0004,0002,00002020 forecastE7 CountriesGDP (US$ Billions)USJapanGermanyUKFranceItalyCanadaChinaIndiaRussiaBrazilMexicoIndonesiaTurkeyPharma 2020: The vision 505,00010,00015,00020,00025,00030,00035,00040,00045,00050,0001995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005* 2006*0102030405060No.ofNMEsand Biologics Approved* includes BiologicsR&D Spending NMEs and New Biologics ApprovedR&DSpending(US$ Millions)Figure 2: R&D spending has soared but the number of NMEs and biologics approved by the FDA is downSources: FDA/CDER Data, PhRMA data, PricewaterhouseCoopers analysisNote: Data on R&D spending for non-PhRMA companies are not included here, because they are not available for all 11 yearsEven allowing for inflation, the industry is investing twice as much in R&D as it was a decade ago to produce two-fifths of the new medicines it then produced.21Moreover, only nine of the new treatments launched in the US in 2006 came from the labs of the 13 companies that comprise the Big Pharma universe,22a pattern that has changed very little over the past few years. Our analysis shows that, in 2006, only two Big Pharma companies earned more than 10% of their revenues from “major”products that are less than three years old.23Worse still, those 38 products generated only $10 billion of the $316 billion Big Pharma earned from its entire medicines portfolio.The situation is little better over a five-year timeframe. In 2006, only five Big Pharma companies earned more than 10% of their revenues from major products launched after 2001, and those 65 products generated sales of only $30.4 billion (see Figure 3). Thus more than 90% of Big Pharma’s total pharmaceutical revenues came from medicines that have been on the market for more than five years. Yet the patents on many of these products are due to expire quite shortly, exposing an estimated $157 billion worth of sales (measured in 2005 terms) to generic erosion.24Figure 3: Only five of the top Pharma companies generate more than 10% of their revenues from products that were launched in the last five yearsSources: IMS Health and PricewaterhouseCoopers analysisABT% Sales in last 3 Years % Sales in last 5 YearsAZN BMY GSK JNJ LLY MRK NVS PFE ROG SGP SNY WYE% Sales35302520151050Figure 4: Big Pharma delivered weighted average total shareholder returns of -2.4% per annum between January 2001 and March 2007Sources: Yahoo!Finance, PricewaterhouseCoopers analysisNote: Total returns have been calculated for the period January 2, 2001- March 30, 2007, with the exception of Sanofi (now sanofi-aventis) where the total return has been calculated from February 7, 2002. The weighted average return is based on the market capitalisation in 2001Avg. Weighted ReturnTotal Return (%) Jan 2001- Mar 2007PFE GSK SNY NVS AZN JNJ ROG MRK WYE BMY ABT LLY SGP806040200-20-40-606 PricewaterhouseCoopersThe revenues the industry leaders generate have also come at a very high price. Between 1995 and 2005, the percentage of total corporate spending accounted for by R&D rose from 15% to 17.1%, while the percentage accounted for by sales and general administration rose from 28.7% to 33.1%. Sales and marketing is by far the biggest corporate expense.25This increasing expenditure on sales and marketing could be seen as yet another sign of the paucity of innovative medicines reaching the market, since it is arguable that products for which there is real demand do not need to be heavily promoted. However, it has generated considerable criticism, too. In a survey of industry stakeholders conducted by the PricewaterhouseCoopers Health Research Institute, 94% of the respondents said that pharmaceutical companies spent too much money on advertising.26Six US states have now passed “gift laws” requiring all pharmaceutical companies to disclose how much they give doctors, hospitals and pharmacists each year, while another 15 states have similar bills in the offing.27Several European trade bodies, including the Prescription Medicines Code of Practice Authority of the Association of the British Pharmaceutical Industry (ABPI), have also launched new codes of practice imposing much tighter rules on the promotion of medicines.28And, in late 2003, Spain’s Autonomous Regions introduced restrictions on the number of promotional visits sales representatives can make.29In short, Pharma’s lack of R&D productivity lies at the root of many of the other difficulties it is now experiencing – difficulties that are reflected in its poor financial record over the past few years. Between 1985 and 2000, the industry’s market value increased 85-fold, far outpacing the stock market as a whole.30But in the six years to March 30, 2007, the FTSE Global Pharmaceuticals Index rose just 1.3%, while the Dow Jones World Index rose by 34.9%. Big Pharma’s TSRs followed the same downward path； between January 2001 and March 2007, it delivered weighted average TSRs of -2.4% a year (see Figure 4). The bottom line: Pharma must improve its R&D productivity, if it is to meet the world’s unmet medical needs and capitalise on the market opportunities now emergingPharma 2020: The vision 7External barriers to innovationPharma’s R&D processes have become so complex – even cumbersome, indeed – that it is hardly surprising its productivity has tumbled. Nevertheless, several political, legal and financial factors have arguably contributed to the problem. Most pharmaceutical companies use internal valuation mechanisms to assess the clinical and commercial potential of the compounds in their pipelines, and select the ones they want to pursue. In other words, like other organisations that are answerable to shareholders, they “follow the money”.But when they start developing a new medicine, they do not know whether it will be eligible for reimbursement if it reaches the market, unless it addresses a disease for which there is no existing treatment or looks likely to prove much better than any comparable therapies. And, in most countries, they are not allowed to seek guidance from the relevant government agencies. Many firms therefore try to minimise their risks by “playing it safe”. The Centre for Medicines Research International reports that, in 2004, more than 20% of the money 10 of the largest pharmaceutical companies invested in R&D went on line extensions and other work, as distinct from new development projects. In smaller companies, the percentage was over 40%.31The international laws governing intellectual property rights have compounded this conservatism. At present, all patents last 20 years, regardless of the quality of the intellectual property they protect. But if prophylactics and novel products serving an unmet medical need were granted longer patent lives, while me-too medicines and new formulations were granted shorter patent lives, pharmaceutical companies would have a direct incentive to become more innovative.32Determining which therapies were worthy of longer patent lives might sometimes be difficult. If, say, 20 new cancer treatments reached the market within a few months of each other, it might be hard to decide which were the most deserving – let alone who should make that judgement. But, given the typical product lifecycle, we estimate that an extra five years of patent life would increase the cash flows from a truly innovative medicine by between 50% and 100%, depending on how vulnerable it is to generic erosion.33 That, in turn, would furnish governments with much stronger grounds for arguing that the prices of such products should be reduced and thus brought within reach of many more patients, since the industry would have a longer period in which to recover its investment. Indeed, there may even be a case for extending the patent lives of groundbreaking vaccines like Gardasil to 50 years or more, on the understanding that they are priced at levels which are universally affordable.The bottom line: The legal framework in which Pharma operates must be altered to promote innovation and discourage imitation8 PricewaterhouseCoopersMixed signalsThe political and legal framework in which Pharma operates has thus deterred it from taking some of the risks that are required to produce genuinely innovative new therapies. Its communications with the capital markets may have muddied the waters still further. The preliminary results of some research we recently conducted show that there are significant variations in the value the top city analysts accord R&D pipelines, and that most analysts focus mainly on the quality of the molecules in Phase III. Two major changes during the past decade help to explain why. In the mid-1990s, the leading pharmaceutical companies announced plans to launch two or three NMEs a year. Most companies subsequently acknowledged that these aspirations were completely unattainable. But, in repeatedly altering the targets they then set themselves, they have failed to give the investment community a clear idea of what to expect. Attrition rates in Phase II have also deteriorated significantly over the same period.34The variations in the value different analysts place on pipelines are entirely understandable in light of these conflicting signals, as is their reluctance to attribute any value to molecules whose fate still remains extremely doubtful. However, in sending the capital markets such mixed messages, Pharma has also made life harder for itself. It is more difficult to determine how best to increase a company’s value when its pipeline is valued differently by different analysts. And it is more tempting to maximise the number of candidate molecules in Phase III, even though it would be better to weed some of them out at an earlier and cheaper stage of development.These are by no means the only problems. Analysts also look for evidence of sustainable returns. But most pharmaceutical companies’ revenues are becoming much more cyclical, as the billion-dollar blockbusters in their portfolios come off patent and they struggle to develop new medicines that can replace this income. Research by investment management firm AXA Framlington shows the scale of the challenge (see Table 1). Source: AXA FramlingtonNotes: * Estimate of global sales in 12 months prior to patent signing ** Value of products losing patent protection as a percentage of total company sales over next five yearsCompany 2010 2011 2012Share of Revenues (%)AstraZeneca Arimidex ($2.2bn)* Seroquel ($4.7bn) Symbicort ($3.7bn) 38**BMS US Plavix ($4.8bn) Abilify ($2.1bn) 30Avapro ($1.3bn)GSK Advair ($3.8bn) Avandia ($2.5bn) 23Eli Lilly Zyprexa ($4.8bn) 22Merck Cozaar/ Hyzaar($3.2bn) Singulair ($4.5bn) 22Novartis Femara ($1.1bn) Diovan ($6.0bn) 14Pfizer Aricept ($800m) Lipitor ($12.1bn) Viagra ($1.7bn) 41Xalatan ($1.6bn) Detrol ($860m)Geodon ($1.1bn)sanofi-aventis Taxotere ($2bn) US Plavix ($3.8bn) Lovenox ($3.1bn) 34Avapro ($2.1bn)Table 1: The leading pharmaceutical companies will lose between 14% and 41% of their existing revenues as a result of patent expiriesPharma 2020: The vision 9Many pharmaceutical companies face a serious dilemma, then. For the past 20 years, they have “sold” themselves on their ability to develop blockbusters, but they now have to alter their story without forfeiting the confidence of the capital markets. They also have to meet short-term earnings targets (from quarterly reporting or other, more subtle pressures) that may be at odds with their long-term aspirations – and they have to do these things at a time when competition for funding is getting more intense, thanks to the revival of interest in the biotech sector. In the US, where the sector is relatively mature, the cycles of investment in Pharma and biotech have converged. But, elsewhere, there is still a major disjunction between the two. So, if the biotech sector’s charms grow over the next couple of years, as some investors predict, Pharma could find itself out in the cold.The bill for every illThe same features that will ensure Pharma’s market continues to expand have also exposed the limitations of the current approach to healthcare funding: namely, that most of the world’s pharmaceutical spending goes on the treatment of disease rather than its prevention. This is partly because some diseases are so complex that scientific understanding of their pathology is still very limited, and developing cures or prophylactics for such illnesses is therefore extremely difficult. In addition, the risks associated with preventing disease in healthy people are quite different from those associated with treating people who are already sick. However, most countries invest much less in public health than they do in other forms of healthcare； the OECD average is just 2.9% of total health expenditure.35In effect, society’s spending priorities are back-to-front. A specific example shows the full extent of the bias. Gardasil, Merck’s breakthrough vaccine for cervical cancer, sells for just $360 in the US, compared with an average annual wholesale price of $19,289 for Betaseron, $22,875 for Rebif and $28,400 for Tysabri, all products that modify the symptoms of multiple sclerosis but cannot cure or prevent it.36As the global population grows and ages, and demand for better healthcare management increases, this emphasis on treatment rather than prevention will become increasingly unsustainable. Older The bottom line: The investment model used by the capital markets does not work very well for an industry that works to timelines of 10 years or more, and is unlikely to do so unless Pharma “re-sets” market expectations10 PricewaterhouseCooperspeople consume more healthcare than young people everywhere, although there are some huge national discrepancies. In Spain and Sweden, for example, the average level of healthcare spending on patients aged 80 or older is twice as much as it is on patients aged 50-64； in the US, by contrast, it is 11.5 times more (see Figure 5). We estimate that, by 2020, the OECD countries, excluding the US, will spend 16% of their GDP on healthcare, while the US will spend a huge 21%. In all, they will spend $10 trillion on healthcare (see Figure 6).37So, governments everywhere will have to reverse their approach. They will have to devote a much larger proportion of their healthcare expenditure to preventative measures, and reward the development of vaccines and cures more highly than they do palliative medicines. Without such a change of strategy, no country will be able to fund the healthcare needs of its inhabitants by 2020. The aging of the population, together with dietary changes and more sedentary lifestyles, will also increase the burden of chronic disease. The World Health Organisation (WHO) estimates that 60% of all the deaths that took place in 2005 could be attributed to chronic conditions, and predicts that the number of deaths from chronic diseases will increase by 17% over the next 10 years.38The toll is highest in developing countries, which account for 80% of all mortalities from chronic diseases and where the onset of disease is Figure 5: Older people consume more healthcare than younger people do0Canada UK Australia Japan Germany Spain SwedenUS50-64Age Group 65-69 70-74 75-79 80+3530252015105Increase in Healthcare Costs of Older Patients Relative to Those in 50-64 Age GroupSource: Laurence Kotlikoff & Christian Hagist, “Who’s Going Broke?” National Bureau of Economic Research, Working Paper No. 11833, December 2005Note: Ratio of average spending on individuals in each age group in each country relative to an individual aged 50-64 in the same country. Numbers roundedFigure 6: Health expenditure as a percentage of GDP is increasing rapidly in the OECD countries211917US OECD ex-US1513119% GDP2006 20072008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Source: PricewaterhouseCoopers Health Research InstitutePharma 2020: The vision 11often much earlier than it is in the developed world. In the US, for example, only 12% of deaths from cardiovascular disease (CVD) occur in working-age people, compared with 28% in Brazil, 35% in India and 41% in South Africa.39But the developed world is also paying dearly. One recent study puts the cost of CVD in the European Union (EU) alone at about €169 billion ($226.1 billion) a year.40And though the developed countries have been very successful in pushing some chronic diseases up the age ladder, increasing longevity will force more people to work longer. Most of these changes – like the raising of the retirement age in Belgium and the UK – will take place after 2020. However, the overall direction is clear； a bigger percentage of the population of the developed world will still be working at the point at which chronic diseases kick in.These trends have several implications for Pharma. As healthcare rises up the political agenda, the industry will have to engage in the debate on how it is funded and play its part in helping to control costs. The social and economic value of good medicines for chronic diseases will rise with the extension of working life around the globe – and many such medicines already exist, as falling mortality and morbidity rates in the developed world demonstrate. But there will simply not be enough money in the pot to cover the world’s future healthcare needs, unless Pharma can cut its operating costs and margins on these products.Washington blues The extent of the problem with healthcare funding is particularly apparent in the US, Pharma’s biggest and most profitable market. As an article recently published in The New York Times put it: “What is the most pressing problem facing the [US] economy? A good case can be made for the developing healthcare crisis.”41The impact on the automotive manufacturing industry has already been well documented. In 2006, General Motors and Ford spent about $5.9 billion and $2.9 billion, respectively, on healthcare – a bill that adds more than $1,380 to the cost of producing each car.42In fact, administrative costs are responsible for between 20% and 31% of US healthcare spending.43Hospital spending accounts for nearly 33% of all expenditure, and prescription products for just 10.1%.44But governments often focus on the prices of medicines because they are a relatively easy target, and many people believe the medicines bill is much higher than it really is. In a survey conducted by the PricewaterhouseCoopers Health Research Institute, 97% of consumers estimated that prescription medicines accounted for at least 15% of overall US healthcare costs, while 63% put the figure between 40% and 79%.45Moreover, with the Democrats now in the ascendant on Capitol Hill, Pharma could find itself much more exposed. Two measures, in particular, are worth discussing in further detail: the proposal to introduce a national health insurance scheme； and the bill to give the federal government the The bottom line: Pharma will have to participate in the debate on healthcare funding and demonstrate the value of its products or risk coming under huge pressure to cut the prices of many mass-market medicines12 PricewaterhouseCooperspower to negotiate medicine prices for Medicare Part D, the medicine benefit programme for the elderly.Some 16% of the 300m people living in the US currently have no medical cover, and the Democrats are keen to redress the situation by introducing a universal health system. However, such a move would be very expensive. In 2005, the US spent almost $2 trillion on healthcare, about $50-60 billion of which went on providing medical treatment for the indigent. It is extremely difficult to calculate the additional cost of covering the uninsured population as a whole, but one study suggests that it could be between $125 billion and $150 billion a year, depending on the particular model that is used.46Some public-policy researchers argue that the cost of restricting access to healthcare for the uninsured, measured in terms of shorter lives and poorer productivity, could be as much as $130 billion a year, and that the introduction of a federal healthcare programme for the uninsured would ultimately be revenue-neutral.47But even if this proved true, the initial investment would be many billions of dollars, and the government would find it difficult to raise such a sum. The introduction of a national health system in the US would thus increase the number of people who had access to modern medicines, but it might also result in more widespread use of treatment protocols, generics and over-the-counter (OTC) medications, making life more difficult for research-based pharmaceutical companies. The Democrats’ proposed changes to Medicare Part D could have an even bigger financial impact on the industry, if they are ever translated into practice. In January 2007, the House of Representatives approved a bill requiring the government to negotiate Medicare prescription drug prices, rather than having each plan provider deal directly with manufacturers, as is now the case.48President Bush has said that he will veto the Medicare Prescription Drug Price Negotiation Act if it passes the Senate.49And, even if the Act does become law, it makes no provision for altering a government programme that is administered by third parties. But the Democrats argue that negotiating medicine prices centrally could produce substantial savings. So what sort of sums might be involved? The net federal cost of Medicare part D is currently projected at $794 billion for the period 2007-2017.50The US Department of Health and Human Services estimates that the average level of discounts and rebates in 2006 was about 27%.51But research by the Congressional Budget Office shows that average discounts for the six federal programmes which negotiate prices directly with manufacturers range from 51% to 59%.52If the government were to secure similar discounts for Medicare Part D, its net expenditure on medicines under the programme would therefore fall from $794 billion to $532.9 billion – a total saving of $261.1 billion – by 2017 (see Figure 7).In practice, it is doubtful that the US government would introduce quite such draconian price controls. Critics claim that the programme administered by the Department of Veteran Affairs offers a relatively narrow range of treatment options in many classes of therapies, and that patients and physicians accustomedFigure 7: If the US government negotiated drug prices for Medicare Part D directly, Pharma’s revenues could drop Projected Net Federal Cost of Medicare Part DProjected Net Federal Cost With Average Discount of 51%US$ Billions20072008 2009 2010 2011 2012 2013 2014 2015 20162017140120100806040200Source: PricewaterhouseCoopersPharma 2020: The vision 13to a much wider range of choices under private health plans would be unlikely to accept such restrictions.53Nevertheless, it is clear which way the wind is blowing – and, if the Democrats have their way, Pharma will come under huge pressure to cut its prices.Moreover, if price controls are introduced, their impact will not be confined to Medicare Part D. By January 2010, the US government will pay for 37% of all prescription drug expenditure under Medicare and Medicaid. Employers will pay for another 39% under private insurance programmes.54Given the extent to which rising healthcare costs have already impaired the competitiveness of US industry, it seems reasonable to assume that any price controls the government adopted would soon spill over into the private sector. So Pharma cannot continue to rely on the US to bail it out of its current difficulties. Indeed, it may ultimately be unable to count on differential pricing in any market whatever. The Internet has already eroded geographical variations in the prices of consumer electronics, for example, and the European Commission recently threatened to fine Apple for charging higher prices to download music in some European countries than in others.55Buying medicines on the Internet is currently much more dangerous, of course, unless the supplier is a reputable company with an established track record. But, by 2020, the problem of counterfeiting should be largely resolved, thanks to electronic pedigrees, DNA labelling and the like. A growing number of governments are also using prices in other countries to benchmark the prices they pay. There may thus come a time when many medicines command a regional or even global price.Blurring healthcare boundariesChanges in the way healthcare is delivered will arguably play an even bigger role in shaping the industry’s future. The primary-care sector is expanding and becoming more regimented, as general practitioners perform more minor surgical procedures and healthcare payers increasingly mandate the treatment protocols they must follow, including the drugs they can prescribe. Conversely, the secondary-care sector is contracting, as clinical advances render previously terminal diseases chronic； healthcare providers like Clinovia in the UK, and Gentiva in the US, deliver secondary care at home； and hospitals focus on the specialist care that cannot be supplied anywhere else. The self-medication sector is also growing, as more and more products that would once have been available only on prescription are sold in OTC formats. Most medicines that acquire OTC status are used for non-chronic conditions which are relatively easy to self-diagnose and have little potential to cause harm, if abused. But, in May 2004, the UK Medicines and Healthcare products Regulatory The bottom line: Pharma cannot rely on the US market to bail it out. Nor can it assume that it will always be able to charge a lot more for its products in some markets than in others14 PricewaterhouseCoopersAgency (MHRA) broke with this convention by reclassifying simvastatin 10mg as an OTC medicine.56 Meanwhile, Australia’s Therapeutic Goods Administration approved the weight-management therapy Orlistat for OTC use in October 2003.57The FDA followed suit in February 2007,58and Boots, the British pharmacy chain, introduced a trial scheme to sell Viagra over the counter only a few days afterwards.59The definitions of primary and secondary care are thus blurring, as some forms of care that were traditionally delivered by secondary-care providers are transferred to a primary-care setting, and some forms of primary care are transferred to the patient (see Figure 8).This trend is particularly pronounced in the UK, but it is taking place in other countries, too. In the US, for example, some large discount stores and pharmacy chains have set up retail medicine outlets staffed by nurse practitioners who provide basic medical care, including writing prescriptions.60An increasing number of surgical procedures are performed in ambulatory surgery centres rather than hospitals. And the FDA has said that it hopes to boost the number of medicines it switches to OTC status by 50% a year.61The American Pharmacists Association is also advocating the introduction of a “behind-the-counter” option such as already exists in some European countries and the FDA has endorsed the idea, although any such move would require congressional approval.62A better understanding of the taxonomy of disease, together with better diagnostic tools and monitoring devices, will provide the means with which to bring healthcare delivery even closer to the patient. By 2020, it is quite conceivable that patients will be able to use web-based receiving algorithms to establish whether they have a condition that will sort itself out without recourse to prescription drugs. This would eliminate a substantial number of consultations, since self-limiting diseases are thought to account for about 85% of all visits to primary-care physicians.63Any patient who needed additional diagnostic tests or treatments would then see a nurse practitioner, and would only be referred to a doctor if his or her case were more complex or required surgical intervention.These changes in the healthcare system have obvious benefits for healthcare payers； healthcare is cheaper, the more it is planned and the closer it is delivered to the patient’s home. But they have huge ramifications for Pharma as well. First, as treatment protocols replace individual prescribing decisions and Figure 8: The provision of healthcare is moving closer to the patientPatientPrimary CareComplex diagnostics & treatments Minor surgical proceduresSelf-CareWeb-based self diagnosticsOTC drugs for chronic & non-“Wellness” servicesWeb based self-diagnosticsOTC drugs for chronic & non-chronicconditions -““Wellness” servicesBasic diagnostics & prescribing by nurse practitioners“Life checks”Secondary CareEmergency roomIntensive careMajor surgeryPatientPrimary CareComplex diagnostics & treatmentsMinor surgical proceduresInitial diagnosisPrescriptionsRoutine checks Self-Care-OTC drugsBasic medical adviceSecondary CareEmergency room, DiagnosticsIntensive care, Minor surgery,Major surgery, Other out-patient servicesHealthcare Delivery in 2007Healthcare Delivery in 2020Source: PricewaterhouseCoopersPharma 2020: The vision 15technology improves the ability to diagnose conditions, the decision-making authority is gradually moving from doctors to healthcare policy-makers and payers. However, the criteria policy-makers and payers use for adopting new medicines are different from those physicians use； payers typically focus on risk and cost-effectiveness,64whereas doctors put safety and efficacy before cost.65Second, the sales and marketing model on which the industry has historically relied is becoming increasingly obsolete.There is little point in sending out a large sales force to influence primary-care practitioners who do not choose which medicines they prescribe. Lastly, with the erosion of the conventional boundaries between self-care, primary care and secondary care, the needs of patients are shifting. Where treatment is migrating from the doctor to ancillary staff or self-care, for example, patients will require more comprehensive information about the medicines they take, more advice and more surveillance. Where treatment is migrating from the hospital to the primary-care sector, they will require new services such as home delivery. Thus Pharma should be focusing on the provision of a full range of products and services spanning the healthcare spectrum, and using different channels to distribute different kinds of products and services. In fact, some companies are already beginning to use different distribution channels in the US – a trend we shall discuss in more detail further on.Pay-for-performanceThe provision of healthcare is not all that is changing； so is the way in which it is measured. Several countries have set up agencies specifically to compare the safety and efficacy of different forms of intervention and promote the use of evidence-based medicine. The US Agency for Healthcare Research and Quality is one such body, as is the UK Centre for Health Technology Evaluation – a division of the National Institute for Clinical Health and Effectiveness (NICE) – although the latter also considers economic performance. The Australian Pharmaceutical Benefits Advisory Committee, New Zealand Pharmaceutical Management Agency and Finnish Office for Health Care Technology Assessment (to name just a few) also conduct pharmacoeconomic evaluations of new medicines, devices and procedures. But there is as yet no systematic process for measuring cost-benefit ratios, and the volume of outcomes data these agencies can analyse is still relatively small – a restriction that will end during the next decade with the widespread adoption of electronic medical records (EMRs).The US aims to develop a national health information network by 2014.66 The EU has also called for every member state to create an EMR,67and several countries have already made considerable headway. Denmark now has a comprehensive health data network,68while the British system is expected to be operational by 2012, despite the many problems that have dogged 16 PricewaterhouseCoopersThe bottom line:Pharma’s target audience is changing, as healthcare policy-makers and payers increasingly control the prescribing decisionit.69Thus, by 2020, some countries will have between six and eight years’ worth of longitudinal data. This may not be enough to assess the impact of treatments for diseases that progress quite slowly, but it will certainly be sufficient to evaluate the clinical and economic performance of many therapies.The effect on Pharma is likely to be two-fold. First, healthcare policy-makers and payers will use outcomes data to determine best practice. They will include medicines that are particularly safe, efficacious and cost-effective in their treatment protocols, and exclude those that are not – as recently happened in the UK, when NICE ruled that Aricept, Exelon and Reminyl should only be prescribed for people with moderate to severe symptoms of Alzheimer’s disease because they “did not make enough of a difference” to justify the cost of giving them to patients in earlier stages of the disease.70It is impossible to predict just how many medicines will fail to pass muster. But in one recent analysis of 45 frequently cited studies claiming that certain treatments worked, nearly a third of the original findings proved wrong.71If this were true of all the medicines on the market, and the industry were still reliant on blockbusters in 2020, the impact would be punitive； Big Pharma had 273 major products with average sales of $963m apiece in 2006, suggesting that the fate of about 85 medicines with aggregate revenues of about $82 billion (in today’s terms) would be in question. That said, the failure rate itself might not be so high. Extensive outcomes data would expose those instances in which a medicine works well for one patient population and not for others. And if the industry succeeds in changing its approach to R&D, and launching many more drugs with individually smaller revenues, it would also be spreading its risk to a much greater extent.Second, the price any therapy can command will be based on its performance, not what the manufacturer thinks it should fetch. This is essentially what the UK Office of Fair Trading proposed in its recent review of the British medicines pricing scheme. It recommended that the current “profit cap and price cut” scheme be replaced with a value-based pricing system in which the prices of products are set by comparing their clinical value with that of other treatments for the same condition.72When a new therapy is launched, the manufacturer will also be expected to assume a much greater share of the financial risk. At least one such deal already exists； in September 2006, GlaxoSmithKline struck an agreement with two European governments under which the prices of two new medicines will be increased or reduced, once enough data are available to judge their true efficacy and cost-effectiveness.73In future, such risk-sharing arrangements will be commonplace. The remit of healthcare payers is growing, then. They are not just negotiating prices, they are starting to stipulate best medical practice – and access to extensive amounts of outcomes data will give them much more ammunition. By 2020, Pharma The bottom line: Pharma will have to prove to healthcare payers increasingly interested in establishing best medical practice that its products really work and provide value for moneyPharma 2020: The vision 17will have to prove that its products really work, provide value for money and are better than alternative forms of intervention. It will have to charge much lower prices for new therapies or formulations offering only minor improvements on treatments that already exist, and even when it is marketing medicines that represent a genuine breakthrough, it will have to be much more flexible in its approach to pricing such therapies. Lastly, it will have to build very much better relationships with the agencies that perform the health technology assessments on which many healthcare payers will rely, since it currently has very little input into such evaluations.Medicines for different marketsThe changing global epidemiological profile has yet other implications. We have already discussed the extent to which demand for medicines for chronic diseases is spreading to the developing world. But differences in ethnic origin, diet and environmental factors have produced marked variations in the nature and incidence of the disease subtypes from which these populations suffer (see Table 2). Ethnic origins likewise play a large part in determining how people respond to particular therapies. The rate at which the E7 populations are aging – and thus likely to suffer from the diseases of aging – also varies substantially. By 2020, 15.2% of the Russian population will be 65 or older, compared with just 7% of those living in India.74And the level of affluence differs considerably both among and within countries. Mexico’s per capita gross national income (measured in international dollars) is over 10 times higher than India’s, for example, while the wealthiest 20% of the Brazilian population enjoy incomes that are over 30 times higher than those of the poorest 20% (see Table 3).In short, the markets of the developing world possess very different clinical and economic attributes – and these are by no means the only features that separate them. They vary in their use of traditional medicines, the robustness of their laws governing the protection of intellectual property, their healthcare infrastructure and so forth. Any company that wants to serve these markets successfully will therefore have to devise strategies that are tailored to their individual needs.Cancer site Brazil China India Indonesia Mexico Russia TurkeyOesophagus 6.4 26.2 5.5 0.4 1.4 8.4 1.7Stomach 15.5 39.9 4.2 2.5 9.0 44.4 9.6Colon & rectum 11.0 13.3 3.6 8.9 5.6 32.7 7.4Liver 2.6 37.9 1.7 8.4 3.3 5.6 2.1Pancreas 3.1 3.8 1.1 1.4 3.1 9.5 2.0Larynx 6.5 1.5 4.5 1.5 3.6 9.8 6.4Lung 15.8 40.7 6.6 14.2 11.2 80.4 37.3Skin melanoma 2.1 0.2 0.3 0.3 1.0 3.0 0.8Prostate 37.1 1.5 3.1 4.7 19.2 15.6 6.1Testis 1.5 0.5 0.6 0.9 3.3 2.2 1.4Kidney etc. 2.6 2.0 0.9 1.4 3.7 12.6 1.7Bladder 6.6 3.6 2.3 2.9 3.8 15.3 8.6Leukaemia 5.2 5.7 2.8 3.8 5.6 8.6 5.1Table 2: There are marked variations in the incidence of the disease subtypes from which the E7 populations sufferSource: International Agency for Research on Cancer, Globocan 2002 databaseNote: Crude rate of cancer in males in the E7 countries (incidence per 100,000 people)18 PricewaterhouseCoopersThe bottom line: The markets of the developing world are heterogeneous, and Pharma must understand their specific needsHealthy habits and fab jabsA growing number of governments in both developed and developing countries are also trying to shift the focus from the treatment of disease to its prevention. At least 18 countries have already introduced nationwide bans on smoking in enclosed public places, as have a number of US states.75Similarly, some countries are waging war against the world’s spreading waistlines, although recent research suggests that genes play a major role, too (see sidebar, Fat is an FTO issue).76Australia, the US and Chile have all launched national anti-obesity initiatives, for example,77 while Europe’s health ministers recently approved the world’s first charter to fight fat.78The Chinese government is battling the juvenile bulge by requiring students to exercise or play sports for an hour a day at school.79And, in 2006, the British government announced plans to introduce “Life Checks”, as well as providing more support services for keeping physically and mentally well.80Most of these initiatives are far too small to make a fundamental difference to mankind’s health, despite all the political grandstanding that accompanies them. The amount of money governments invest in such measures is still just a fraction of the sums they spend on healthcare as a whole. Nevertheless, they are indicative of the direction in which the world is slowly moving. CountryPer Capita GNI (PPP$)Percentage Share of Income or ConsumptionLowest 20% Highest 20%Brazil 3,000 2.6 62.1China 1,500 4.7 50.0India 630 8.9 43.3Indonesia 1,130 8.4 43.3Mexico 6,930 4.3 55.1Russia 3,410 6.1 46.6Turkey 3,750 5.3 49.7Table 3: The level of affluence varies substantially both among and within the E7 countriesSource: World Bank Development Indicators 2006Pharma 2020: The vision 19Fat is an FTO issueResearchers at the Peninsula Medical School and Oxford University recently found evidence that people with two copies of a particular variant of the FTO gene have a 70% higher risk of obesity than those with none, and weigh an average 3kg more. Those with one copy of the variant (which differs from the other allele by a single mutation in the DNA sequence) have a 30% higher risk of being obese. They estimate that half of all white Europeans carry one copy of the variant, and one in six has two copies. The team hopes that further research to understand the gene may help unravel the basic biology of obesity and pave the way for the development of medicines that can prevent it.Social and economic pressures are gradually causing a sea-change in attitudes towards healthcare. Fears about bio-terrorism and a flu pandemic have also kick-started a new wave of public investment in vaccines, while philanthropic institutions like the Bill & Melinda Gates Foundation are funding research into vaccines for malaria and other tropical diseases.81And the success of Gardasil has demonstrated that it is possible to make a profit from such products. The US, German, French, Italian and Austrian health authorities have recommended that every girl be vaccinated with Gardasil,82and the US public programme to vaccinate all minors will generate at least $2 billion of sales alone.83The vaccines sector is growing rapidly, then； there are now 245 pure vaccines and 11 combination vaccines in clinical development,84and some industry experts estimate that the market could be worth as much as $42 billion by 2015.85Five major players – GlaxoSmithKline, Merck, sanofi-aventis, Wyeth and Novartis (via its acquisition of Chiron) – have traditionally dominated the field, but a number of smaller pharmaceutical companies have also entered the fray.Moreover, the range of indications they are researching is surprisingly varied. It includes vaccines for cocaine addiction, diabetes, hypertension, Alzheimer’s disease, psoriasis, food allergies, rheumatoid arthritis and nicotine withdrawal. But oncology is by far the most significant new therapeutic area； according to IMS, there are 90 therapeutic (as distinct from prophylactic) vaccines for cancer in the pipeline, and more than two-thirds of them are in late-stage development (see Figure 9).86However, conventional vaccines are very different from other therapies in several respects. They usually require very large safety and efficacy trials using healthy volunteers； long-term surveillance to ensure The bottom line: The increasing emphasis on prevention of disease will provide Pharma with new business opportunitiesFigure 9: Many of the new vaccines in the pipeline depart from the conventional vaccines model0102030405060708090100OthersNo. ofVaccinesinDevelopmentCancerHIVInfluenzaHepatitisBorCMeningitisAllergyMalariaDiarrhoeaTuberculosisSmallpoxWestNilevirusHerpesAnthraxSARSBig FiveSource: IMS Knowledgelink, January 200720 PricewaterhouseCoopersthe persistence of the antibodies they induce； and strict control of live materials in the manufacturing process (although new technologies are emerging, which should help to stabilise production). More importantly still, any therapy aimed at the healthy carries a higher risk than one that treats the sick. This is not an insuperable obstacle, but it does suggest that Pharma may have to assume some sort of underwriting role. It could, for example, guarantee to cover the medical costs of any patient unfortunate enough to develop a disease against which he or she has been inoculated, where the patient has shown signs of a positive immune response after vaccination and the normal period of immunity still applies, in much the same way that insurance companies provide cover against accidents and thefts.The global shift in attitudes towards healthcare, and increasing emphasis on prevention, offers Pharma a number of new prospects, then – although governments will have to invest very much more, if they are serious about trying to forestall disease. It will enable the industry to enter the realm of health management, with wellness programmes that supplement what governments and employers provide. It will also boost demand for vaccines. This could ultimately generate totally new business opportunities in the health insurance sector, although Pharma currently lacks any such experience. Sticking to the rulesIn fact, two of the key elements of disease management will soon be in place. As we have already indicated, better patient monitoring and outcomes data will change the way in which medicines are prescribed and paid for, but they could also be used to improve compliance. This would put an end to the future of those “me-too” products that only garner sales because a first-line treatment seems to have failed when, in reality, the patient has not taken the medication properly. However, it could also provide a substantial increase in sales of some therapies that really work.In a perfect world, all patients would adhere to their treatment regimens. But the world is far from perfect. The FDA and National Council on Patient Information and Education report that 14% to 21% of US patients never fill their original prescriptions； 60% cannot identify their own medications； and 12% to 20% use other people’s therapies.87Even patients who do not commit such flagrant abuses often compromise the effectiveness of the therapies they take by consuming them at irregular intervals or failing to complete the course, while some people with chronic diseases stop taking their medications altogether (see Figure 10). The problem is not confined to patients with relatively minor illnesses； it applies equally to patients who suffer from life-threatening conditions. In a survey recently conducted by Cancer Research UK’s Psychosocial Oncology Group, for example, 72 of 131 women who had Pharma 2020: The vision 21Figure 10: Non-compliance is a major problem in people with minor and serious illnesses alikeSource: Manhattan Research, 2004Millions of US Patients% Non-Compliant Patients5045403530252015105025ADHDCancerMigraineSkin ConditionsNail InfectionsHRTBaldnessAnxietyInsomniaSmoking CessationDepressionChronic PainOsteoporosisMenopauseAcid RefluxHigh CholesterolAllergiesHypertensionArthritisWeight Mgmt.DiabetesAsthmaHeart DiseaseIrritable Bowel SyndromeEDOveractive BladderGlaucoma30 35 40 45 50 55been diagnosed with breast cancer at least two years previously said that they sometimes failed to take their treatments.88 More than half of all renal transplant recipients are also thought to be non-compliant, even though they depend on immunosuppressive medications to survive.89The impact of non-compliance on healthcare costs is horrendously high. In the US alone, it has been put at anything between $77 billion and $300 billion a year.90(The figures vary, depending on whether they cover direct costs like wasted medications, re-testing and acute or emergency care that would otherwise have been unnecessary, or include indirect costs like lost productivity.) No comparable financial data are available for other regions, although the problem seems equally widespread. WHO reports that adherence to long-term therapies for chronic illnesses in developed countries averages 50%. In developing countries, the rates are even lower.91Compliance rates for short-term medicines like antibiotics are not much better. In one recent survey, 22% of the respondents said that they had omitted doses or failed to complete their last course of antibiotics, and the non-compliance rate exceeded 30% in some countries.92Yet improper use of antibiotics can create disease-resistant bacterial mutations, and antibiotic resistance is now a major publich health concern. Seen from Pharma’s perspective, non-compliance thus represents a huge opportunity to maximise the value of its products. Indeed, Datamonitor estimates that better compliance could generate more than $30 billion a year in additional sales.93A simple illustration shows how the sums stack up. Data from the Medicines Monitoring Unit at the University of Dundee indicate that only one-third of patients are fully compliant with their prescriptions, another third are partially non-compliant and the remaining third are totally non-compliant.94Suppose, then, that a medicine for a chronic condition costs $3,000 a year； generates revenues of $3 billion a year； and has an annual patient turnover of 33%. In other words, it generates $1 billion a year from new sales and loses another $1 billion worth of sales through non-compliance, so its revenues are stable at $3 billion a year. What happens if, with better monitoring and mnemonic devices, the manufacturer can reduce attrition rates by 33% a year while continuing to generate an extra $1 billion a year from new sales? As Table 4 shows, its revenues will rise from $3 billion to $3.8 billion between the first and third year, generating an additional $1.7 billion in sales over the entire period. The total cost of a compliance programme (at about $300 per patient per year) would come to just over $1 billion,95 so it would see an additional profit of $700m over three years – a prize well worth having. More importantly still, compliance monitoring offers Pharma a means 22 PricewaterhouseCoopersTable 4: Reducing non-compliance rates could dramatically increase sales of some drugsSource: PricewaterhouseCoopersNote: We have calculated compliance costs based on the number of patients at the start of the year and half the additional increase in the number of patients at the end of the yearYearNo.of Patients at Start of YearPatient Attrition from Non-ComplianceSales Lost through Non-Compliance (US$ bn) New PatientsNew Sales (US$ bn)No. of Patients at Year EndTotal Revenues (US$ bn)Cost of Compliance Programme (US$ bn)0 1,000,000 3.001 1,000,000 222,222 0.67 333,333 1 1,111,111 3.33 0.3172 1,111,111 246,914 0.74 333,333 1 1,197,530 3.59 0.3473 1,197,530 266,118 0.80 333,333 1 1,264,745 3.79 0.371Pharma 2020: The vision 23of expanding into healthcare, improving outcomes and reducing overall healthcare costs (see sidebar, Driving the healthcare bill down).96The industry has already begun to make this transition in the US, where some companies have been funding specialty pharmacies providing clinical support for patients with serious illnesses for more than a decade. However, most countries currently lack such an infrastructure.One obvious solution to this dilemma, for conditions that fall outside the realm of specialty pharmacies and in countries where such channels do not exist, is the use of an intermediary to provide a personalised monitoring service. It is already possible, for example, to use behavioural algorithms to predict which patients are most likely to violate their medical regimens and design monitoring plans suited to their individual needs. A growing number of electronic devices such as mnemonic bottle tops are also reaching the market and, thanks to modern communication technologies like email, short message services and automated voice calls, it is becoming increasingly easy to reach people wherever they are (see Figure 11). Several firms already offer limited compliance services. But we believe that, by 2020, personalised monitoring will be a standard feature of the packages many pharmaceutical companies provide. That, in turn, will have a bearing on how they develop new medicines, since they will be required to test both the compounds themselves and the compliance programmes that are used to support them. It has even bigger implications for their supply chains, which will have to manage the mechanics of contracting and delivering these services to multiple customers. Driving the healthcare bill downAnalysis of healthcare expenditure in the US shows that 5% of the population account for 49% of the total bill. Conversely, 50% account for just 3%. The five most costly conditions are heart disease, cancer, trauma, mental disorders and pulmonary conditions； they collectively account for 32.7% of overall healthcare expenditure. So it makes good sense to focus on funding support services for patients with these diseases first. But big savings can also be achieved by helping people with chronic diseases. In a study of more than 137,000 US patients with diabetes, high cholesterol, hypertension or congestive heart failure, Medco Health Solutions measured the impact of compliance on healthcare costs. For each additional dollar spent on prescription treatments, the cost of caring for patients with diabetes was reduced by $7, that of caring for patients with high cholesterol was reduced by $5.10 and that of caring for patients with high blood pressure by $3.98. Figure 11: How compliance programmes work Patient-specific reports identify compliance issuesPatient and physician receiveindividualised report Physician invitespatient to participatePatient provides baseline information via device, physician or pharmacy Automated personalised,diagnostic with communications to patientsSales representative or compliance company recruits physician Compliance company and pharmaceutical company address compliance issues Source: PricewaterhouseCoopersNevertheless, the provision of support services for patients with specific diseases will enable the industry to target its products more effectively and boost its revenues. Handled responsibly, it might also create an opportunity to build stronger relationships with patients and improve its image in the healthcare community. What’s in a name? Billy Tauzin, PhRMA’s president and chief executive, recently summed up Pharma’s reputation, when he noted: “There is one great problem that seriously challenges the ability of America’s research-based pharmaceutical companies to continue doing what they do better than any other entity on the globe: research and develop new cures and treatments. In a word, it is ‘trust’.”97The problem is especially acute in the US, where respondents in the latest Harris Interactive poll ranked Pharma thirteenth out of 17 industries for honesty, behind life insurance companies and carmakers.98Research conducted by PricewaterhouseCoopers shows that many US consumers believe pharmaceutical companies do not focus primarily on health needs when setting their research agendas, that they are too aggressive in promoting products for unapproved uses and that they cannot adequately monitor the safety of medicines that are already on the market.99An increasing number of Americans also resent paying higher prices for medicines than people in other parts of the world, although they sometimes massively overestimate the real size of the nation’s pharmaceuticals bill. However, Pharma is under fire in other countries, too. In a recent survey of EU stakeholders, including Members of the European Parliament, respondents said that the industry was “too profit-driven”, “too faceless” and did not participate sufficiently in the healthcare debate.100Pharma’s poor reputation has also spread to the developing world, where prices have long been a sore topic and there is now growing concern about the recruitment of trial patients who are allegedly unable to look after their own interests.101In short, the industry has numerous issues, fair or otherwise, to resolve before it can recover its good name (see Table 5).This tarnished reputation has serious implications for Pharma’s future wellbeing. It will limit the industry’s influence on the political agenda at a time when healthcare is rising to the forefront of government concerns, and impair the credibility of its claims for its products. It will impede access to the outcomes data companies will need to make effective new therapies and move from making pills to helping patients manage the illnesses from which they suffer. And it will restrict Pharma’s ability to recruit the bright young scientists who can help it develop those medicines.The bottom line: Pharma needs to help patients and payers with compliance. But will a jaundiced public trust the industry to provide advice and monitoring services?24 PricewaterhouseCoopersDrug Safety Understating the adverse reactions associated with a drugExaggerating the dangers involved in importing drugsFailing to monitor the safety of marketed drugs adequatelyClinical TrialsFailing to disclose the full results of clinical trialsMaking improper financial arrangements with trial sitesManipulating trial data to maximise sales Drug Prices Charging prices that are perceived as too highIgnoring social responsibilities in pricing for the developing world Spending excessively to protect patentsSales PracticesPromoting products for off-label indicationsProviding physicians with financial incentives to prescribe products or write favourable articles about themInventing new lifestyle diseasesInvestor RelationsOver-managing price/earnings and earnings per share ratiosRemunerating senior management exorbitantlyIgnoring negative publicityInnovation Spending R&D funds to develop “me-too” drugsSpending too much on sales & marketing, and diverting funds from R&DDeveloping drugs on the basis of sales potential rather than medical needTable 5: Pharma has numerous stakeholder challenges to resolve before it can recover its good nameSource: PricewaterhouseCoopersThe bottom line: Unless Pharma improves its reputation, its political, commercial and clinical credibility will be eroded, with serious implications for its future successPharma 2020: The vision 25Pharma is at a pivotal point in its evolution. The dearth of good new compounds in its pipeline is central to all its other problems, including its rising sales and marketing expenditure, poor financial performance and battered reputation. Moreover, though global demand for medicines is growing, as demographic, economic and epidemiological trends reshape the marketplace, soaring healthcare costs will force Pharma to engage in the dialogue on healthcare funding and work much harder for its dollars. Clinical advances and financial constraints are already changing the way in which healthcare is delivered and will soon change the way in which it is measured. The political climate is likewise becoming much more aggressive – and no politician will stand up for an industry that does not win votes.These trends will ultimately apply everywhere. The US is struggling to foot a healthcare bill that touches $2 trillion and cannot continue to generate the bulk of the industry’s profits. And though the E7 countries look increasingly promising, they cannot afford to match the prices the developed world has historically paid. Thus Pharma’s traditional strategy of placing big bets on a few molecules, marketing them heavily to primary-care physicians and turning them into blockbusters will no longer suffice. J.P. Garnier, chief executive of GlaxoSmithKline, admitted as much in February 2007, when he noted: “This is a business model where you are guaranteed to lose your entire book of business every 10 to 12 years.” The “first reflex” for many companies is to merge and that buys them “a little time” to deal with patent expiries, but fundamental changes will ultimately be necessary, he concluded.102Some of these changes will depend on the nature of the products and services different companies offer, since there can be no one solution to the needs of an industry as complex as Pharma. The choices each organisation makes will have a bearing on the structure it adopts, alliances it forges, culture it espouses and people it employs. But some common themes are likely to emerge. We believe that Pharma will have to use new technologies to improve its understanding of disease, reduce its R&D costs significantly and spread its bets to increase its productivity in the lab. It will also have to work more closely with governments, regulators and the healthcare community to make the medicines patients really need, test them as quickly and effectively as possible, and provide a more holistic healthcare service. Lastly, it will have to tailor its sales, marketing and pricing strategies to new audiences and markets； show that its products are worth the money that is spent on them； and rebuild its reputation by adhering to the highest ethical standards. We shall discuss some of the changes we believe will be required in more detail in this next section of our report.The need for a dynamic new approachPharma 2020: The vision 27Degrees of changeThe number of doctorates awarded in the natural sciences and engineering has levelled off or declined in the US, UK and Germany since the late 1990s. Conversely, it has been rising steadily in Asia. The US still leads the way； it accounted for 22.5% of the 50,644 doctorates that were awarded in the physical and biological sciences in 2002 (the most recent year for which global data are available). The EU accounted for 37.2% and Asia for 18%. However, foreign students earned 32.3% of the doctoral degrees in the physical or biological sciences that were awarded in the US； 28.5% of those that were awarded in the UK, and 15.7% of those that were awarded in Germany. Many of these foreign students returned to their countries of origin, once they graduated. The scientific literature published outside the established scientific centres of the US, EU and Japan is likewise growing rapidly. Between 1988 and 2003, the number of published articles rose from 466,000 to 699,000. The US share fell from 38% to 30% over this period, while the EU share rose from 28.9% to 31.5%. China’s output rose by a huge 530% and that of the Asia-8 (South Korea, India, Indonesia, Malaysia, the Philippines, Singapore, Taiwan and Thailand) by 235%, boosting their combined share of the world total from less than 4% in 1988 to 10% in 2003.Access to basic researchPharma will have to begin by expanding the pool in which it fishes for basic research. It has traditionally scoured the scientific literature to get leads or bought them in from academic institutions and niche biotech companies, but this approach is becoming increasingly unviable. Most of the Western universities in which scientific research is performed are under huge pressure to commercialise their findings. Between 2000 and 2004, for example, there was a 70% increase in the number of patents the leading US research institutions filed (although the number of patents they were granted remained broadly the same).103British universities are also getting much smarter about the value of their research. There was a three-fold increase in the number of licences and options they executed, and a two-fold increase in the gross income they generated from intellectual property, over the same period.104So, where basic research is available, it is generally costing the industry considerably more.The same is true in the biotech sector. Between 2000 and 2005, the average cost of an early-stage compound increased by a factor of eight, and the competition for assets is now so intense that valuations have started to overtake the figures recorded for Phase III deals just a few years ago. Many biotech companies are also securing more favourable rights, in the form of co-promotion arrangements or other options, suggesting that they are keen to make the transition from pure R&D to commercialisation.105Much of the scientific research performed in the West is becoming prohibitively expensive, then, but the research base itself is also shifting east – and Pharma is not in a strong position to exploit these new sources of knowledge (see sidebar, Degrees of change).106Most of the industry leaders are trying to establish a foothold in Asia. Wyeth has, for example, opened a joint early development centre with Peking Union Medical College Hospital in Beijing；107Roche has set up a research base at Zhangjiang Hi-Tech Park in Shanghai；108and AstraZeneca is planning to do likewise.109Meanwhile, Novartis is building an $83m R&D centre in Suzhou, near Shanghai； and GlaxoSmithKline is contemplating a move to China, too.110Similarly, Eli Lilly, Novartis and GlaxoSmithKline have all set up research centres in Singapore.111Novartis has also just embarked on a new clinical research venture in Indonesia.112AstraZeneca has opened a process R&D laboratory in Bangalore.113And GlaxoSmithKline plans to set up a global drug development support centre in Mumbai with Indian software firm Tata Consultancy Services.114But these investments are tiny, compared with the amount Big Pharma is spending on R&D in the West. Moreover, although the majority of multinationals are keen to expand their presence in Asia, relatively few are focusing on research. In a survey recently conducted by PricewaterhouseCoopers, only 8% of respondents said they were interested in doing more research in Asia, whereas 50% wanted to increase their sales and marketing activities, and 25% to increase their manufacturing activities, in the region.115This may prove a rather short-sighted approach. If Pharma is to get access to the basic research it needs, it will either have to establish a much stronger footprint in Asia or forge close links with the most reputable centres of scientific excellence in the area. That, in turn, means it will have to overcome barriers of language and culture. And, as experience in the IT sector shows, following the herd can prove a costly mistake. Many parts of India are now short of the very 28 PricewaterhouseCoopersPharma 2020: The vision 29resources that prompted numerous companies to flock there in the first place, so it is essential to choose the right location.Pharmaceutical researchBut even if Pharma can get access to good basic research, it will still need to transform the way in which it performs R&D. At present, many companies concentrate on investigating new molecules before they have created a clear picture of the pathology of the diseases they are trying to address and the physiological responses those diseases cause. This is too narrow a focus at such an early stage in the research process, and helps to explain why attrition rates in development are so high. We believe that, by 2020, the most successful companies will be those that focus on building a much better understanding of the pathophysiology of disease.116 They will study the disease variability arising from multifactorial aetiology, the underlying disease mechanisms, targets that are amenable to therapeutic intervention and what markers could be used to distinguish between patients with similar clinical symptoms but distinct biological conditions. Scientists currently use public-domain information on disease epidemiology, pathways, mechanisms and targets to formulate hypotheses about the likelihood of being able to alter the course of disease via pharmacological intervention. They then use internally generated data derived from in vitro cellular models or in vivo animal studies to achieve limited validation of a specific target and, when they have established a certain degree of non-clinical “confidence in rationale” (CIR), they begin high throughput screening to find a molecule that can interact with the target protein. Once they have identified a series of leads, they initiate a full programme of lead optimisation and experiments to test the physical and toxicological properties of a given molecule, but it is only after several more years have elapsed that the molecule is ready for studies in man. Even then, early clinical studies do not test the central hypothesis that the target has any pathophysiological link to the disease being investigated； they focus on establishing what the human body does to the molecule. It is not until Phase II (some five to seven years after the first high throughput screen against the target) that the CIR is truly tested – and this is the point at which most compounds fail, although some fail at an even later stage in development (see sidebar, Molecular fallout).117The key to reducing the time and costs involved in researching new molecules is to test the hypotheses underpinning them in man as early as it is safe and practicable to do so, and to invest far more in creating a more holistic understanding of disease pathophysiology and epidemiology before embarking on expensive development programmes. Today, it is clear that the real source of intellectual capital is a robust understanding of disease, and that the research process should no longer be limited to a specific therapeutic area, disease mechanism, target or biological pathway. Recent research indicates, for example, that there are eight different disease mechanisms underlying Type 2 diabetes.118In order to develop a treatment for patients with Type 2 diabetes, it is therefore necessary to understand the “context” of the disease, including:The nature and incidence of the various disease subtypesWhether all eight mechanisms are amenable to therapeutic intervention The relevant targets for therapeutic interventionThe feasibility of developing biomarkers to identify which patients suffer from which disease subtypesThe safety characteristics of different potential therapies； andThe commercial viability of those therapies.Once it has acquired an in-depth understanding of the pathophysiology of disease, a company can develop a probe molecule and biomarkers for early testing of the CIR in humans. ••••••Molecular falloutIn one recent analysis of 73 molecules that failed in Phase III, 50% of the compounds that failed did so because they could not be proved effective. Compounds with novel mechanisms of action failed more than twice as often as those using established ones. Such studies show that the industry is sinking large sums of money in developing molecules whose pharmacological impact it does not comprehend in sufficient detail beforehand. 展开阅读全文