DRUDIS 1526 1–5 Drug Discovery Today Volume 00, Number 00 November 2014
PERSPECTIVE
feature Post-approval fate of pharmaceutical companies Q1 Michael S. Kinch, [email protected]
Introduction The pharmaceutical industry is largely a phenomenon of the 20th Century. Although some industry component companies were established in the late 19th Century or earlier, the relationships and interactions that facilitated the formation of one of the world’s largest and most robust industries is a more recent event, starting in the 1930s [1–3]. Two generations later, converging lines of evidence, which consider the impact of consolidation and innovation, suggest the pharmaceutical industry is at a crossroads [4–6]. The coming years will be vital to determine if and how new drug discovery and development be performed in the future. Within this context, an analysis of FDA-approved new molecular entities (NMEs) has been conducted and many aspects of the development and approval process, including the identity of organizations awarded NME approvals over time, have been catalogued. In this present study, the fate of those companies is assessed.
As a brief overview, 224 different organizations received at least one FDA approval (Fig. 1a). The number of successful organizations entering the pharmaceutical industry (defined herein as the collection of organizations awarded an NME approval) generally ranged from one to three new companies per year from the 1930s through the 1980s. More-recent years have witnessed a twofold surge in the number of new entries, which presently stands at six companies per year. The vast majority of these companies were viable as evidenced by a 2% rate of dissolution and only a minority (5%) voluntarily left drug development. Almost half (47%) of the companies that received one NME approval went on to achieve a second approval for a distinct molecule. The interval separating the first and second NME approvals was assessed and it was found that this ranged from six to eight years (Fig. 1b). Put another way, an average of seven years of active and independent activity was usually required
for a company to achieve a second approval for an NME. An exception occurred in the most recent complete decade (2001–2010) but the accuracy of this observation is suspect given the short time and small subset represented by such a recent time point (e.g. only six of 60 companies having yet achieved this benchmark). Because the average time for clinical investigation alone routinely exceeds six years [5], this suggests that much of the early-stage research and development was performed in parallel with the approval campaign for the first product. The fraction of companies gaining a second approval exceeded 70% from the 1930s through the 1970s (Fig. 1a). Starting in the mid-1970s, the likelihood a company would achieve a second NME approval began to shrink. This trend largely reflects increasing levels of corporate consolidation. Overall, 58% of companies that achieved at least one NME approval were subsequently acquired and only one-third remain independent at time of writing. This led to assessing
www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
1359-6446/06/$ - see front matter ß 2014 Published by Elsevier Ltd. http://dx.doi.org/10.1016/j.drudis.2014.10.013
Features PERSPECTIVE
For a fortunate subset of pharmaceutical companies, a regulatory approval is the culmination of massive investment in time, work and money. What happens next? Some companies proceed to build a pipeline and obtain additional approvals. Others do not. In this present report, post-approval fate is evaluated and it was found that most companies are ultimately acquired. A subset achieved a second approval six-to-eight years after the first approval, whereas a shrinking subset, designated as ‘singlets’, remains active in drug discovery with only a single approval. The likelihood that a company will remain a singlet or be acquired relates to therapeutic indication, with oncology associated with increased acquisition potential and infectious-disease-based companies being less commonly acquired.
1
DRUDIS 1526 1–5 PERSPECTIVE
Drug Discovery Today Volume 00, Number 00 November 2014
Time period
1st approval Defunct
Left drug dev.
2nd approval
Active & independent
Acquired
All dates
223
4 (2%)
13 (5%)
106 (47%)
87 (35%)
142 (58%)
Before 1940
10
0
0
8 (80%)
4 (57%)
3 (43%)
1941–1950
19
0
1 (5%)
18 (95%)
7 (35%)
12 (60%)
1951–1960
25
2 (8%)
1 (4%)
18 (72%)
3 (12%)
19 (76%)
1961–1970
10
0
1 (10%)
7 (70%)
3 (30%)
6 (60%)
1971–1980
12
1 (8%)
0
7 (58%)
4 (33%)
7 (58%)
1981–1990
32
0
2 (6%)
14 (44%)
8 (25%)
22 (69%)
1991–2000
56
0
6 (11%)
26 (46%)
19 (34%)
31 (55%)
2001–2010
60
1 (2%)
2 (3%)
6 (10%)
24 (40%)
33 (55%)
4 2
11 Year 5 Years 110 Years
20%
-1
95 -1
51
19
19
31
-1
94
0
0
0%
41
0 -1 51
19
19
40%
96
95
94
-1
-1
41 19
31 19
61 0 19 197 71 0 19 198 81 0 19 199 91 0 20 200 01 0 -2 01 0
0
60%
Decade of first approval
61 0 19 -19 71 70 19 -19 81 80 19 199 91 0 20 20 01 00 -2 01 0
6
80%
96
Active and independent
8
100%
19
(c)
10
0
(b)
Time to 2nd approval (years)
(1st approval)
19
(a)
Decade of first approval Drug Discovery Today
Features PERSPECTIVE
FIGURE 1
Overview of companies receiving an FDA approval for a new molecular entity (NME). (a) Information pertaining to companies receiving at least one NME approval is shown, along with the fate of the company. The dates indicate the time period, during which the first NME approval was granted by the FDA. (b) For those companies obtaining a second NME approval, the average time interval between the first and second approvals is indicated. (c) The likelihood of a company to remain active in drug research and independent (not acquired or merged) is indicated after one (blue), five (red) or ten (black) years after their first approval. For companies receiving a recent approval, only those that have had an opportunity to be active and independent for ten years (e.g. an approval before August 2004) were analyzed.
the time that companies remained active and independent following approval of their first NME (Fig. 1c). Most (>95%) companies remained active and independent for at least ten years after receiving their first FDA approval. Starting in the 1970s, the ten-year ‘survival rate’ plummeted and, in the most recent full decade (2001–2010), stood at 20%. The five-year survival rate demonstrates a similar trend and now stands at 45% and even the one-year survival rate now stands at just over 80%. These latter two findings could be particularly significant given the average of six-to-eight years of independence required to gain a second NME approval and thus is consistent with the fact that fewer companies were able to achieve this milestone. The question was then asked as to whether geographic differences might relate to the findings presented above (Fig. 2). Data were compared from companies headquartered in 2
the USA, the European Union (EU) or Asia (including Israel). Overall, there were minor variations among the different geographic areas. The most notable findings were that US (63%)
and EU (54%) companies were more likely to be acquired than their Asian (31%) counterparts. US-based companies also had a somewhat shorter average time separating the first and
Event
All
US
Europe
Asia
1st approval
246
160
69
13
Defunct
4 (2%)
4 (3%)
0
0
Left drug development
13 (5%)
6 (4%)
6 (9%)
1 (8%)
Acquired
104 (42%)
101 (63%)
37 (54%)
4 (31%)
Active & independent
87 (35%)
49 (31%)
26 (38%)
8 (62%)
6.8 years
5.8 years
8.0 years
9.0 years
nd
Time to 2 NME
Drug Discovery Today
FIGURE 2
Geographic comparison of companies headquartered in the USA, Europe or Asia. Utilizing the same approaches as Fig. 1, the fate of companies was assessed based on the geographic location of the corporate headquarters. Note: the total number of companies analyzed (n = 246) differs from that in Fig. 1 owing to the inclusion of organizations receiving their first new molecular entity (NME) approvals since 2011.
www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
DRUDIS 1526 1–5 Drug Discovery Today Volume 00, Number 00 November 2014
could be identified. The type of molecule (i.e. small-molecule versus biologic) did not relate to an outcome of being acquired (data not shown). Whereas 66% of singlet companies were acquired in this timeframe, an acquisition was more likely if a company had an approval for an indication associated with oncology (89%) Q2 or immunology (75%). NMEs for an orphan indication (46%) were less likely to be acquired as were companies where approvals were for infectious diseases (30%).
Concluding remarks: outcomes and implications The major finding of the present study is that fewer than half of all companies that ever received one approval for an NME proceed to obtain an FDA approval for a distinct NME. It is also shown that mergers and acquisitions are the primary impetus preventing a second approval. Whereas the average time required for a second approval is six-to-eight years following the initial approval, most acquisitions occur within the first five years. This has important implications for the
2nd approval
Acquired
Defunct
(2nd approval)
All Dates
106
68 (64%)
0
0
38 (36%)
1931–1940
3
2 (67%)
0
0
1 (33%)
1941–1950
15
9 (60%)
0
0
6 (40%)
1951–1960
18
16 (89%)
0
0
2 (11%)
1961–1970
11
8 (73%)
0
0
3 (27%)
1971–1980
7
5 (71%)
0
0
2 (29%)
1981–1990
7
4 (57%)
0
0
3 (43%)
1991–2000
25
16 (64%)
0
0
9 (36%)
2001–2010
20
8 (40%)
0
0
21 (60%)
Left drug Active & development independent
100% 80% 60% 40%
1 year 5 years 10 years
20%
-1 97 0 19 71 -1 98 0 19 81 -1 99 0 19 91 -2 00 0
0
19 61
-1 96
-1 95
19 41
119 19 3
0
0% 40
(b)
19 51
Time period
Active & independent
(a)
different companies received FDA approval for only one NME (Fig. 4a). Five singlet companies (4%) are now defunct and 11 (9%) have left drug development (e.g. focusing on consumer products or generic medicine). Twenty singlet companies currently remain active and independent. Remarkably, all current active and independent singlets gained their only approval within the past two decades. Stated another way, there are no singlet companies actively researching new medicines that obtained an NME during the past 20 years. The fate of most (87, or 70%) singlets was to be acquired. The acquisition rate has remained strong over time, including almost two-thirds of all companies receiving their first approval in the decade ending in 2010. This led to ask what criteria relate to the likelihood of an acquisition (Fig. 4b). To do so, the therapeutic indication for each singlet approval was identified. These analyses were limited to the timeframe from 1991 through 2010 to provide relevant comparators for singlets and are reported only if at least four different NMEs for any indication
Features PERSPECTIVE
second approvals (5.8 years) as compared with EU (eight years) or Asian (nine years) organizations. On the basis of these results, the fate of the 106 companies that did obtain a second approval for a distinct NME was researched. None of the companies was dissolved nor did any leave drug development (Fig. 3a). However, two-thirds were ultimately acquired, leaving one-third active and independent (which includes all established pharmaceutical companies). Although most were acquired, this generally occurred beyond ten years after their second approval (Fig. 3b). For example, virtually all companies that achieved a second NME before 1980 remained active in drug discovery and independent for at least ten years. This trend has changed somewhat in recent years and, as of the past complete decade, 40% of companies that obtain their second approval are now acquired within the ten-year window. Another line of questioning addressed the fate of companies that obtained only one approval, designated hereafter as ‘singlets’. In total, 123
PERSPECTIVE
Decade of 2nd approval Drug Discovery Today
FIGURE 3
Fates of companies receiving a second new molecular entity (NME) approval. (a) Information pertaining to companies receiving a second NME approval is shown. The dates indicate the time period during which the second NME approval was granted by FDA. (b) The likelihood of a company remaining active in drug research and independent (not acquired or merged) is indicated after one (blue), five (red) or ten (black) years after their second approval. For companies receiving a recent approval, only those that have had an opportunity to be active and independent for ten years (e.g. a second approval before August 2004) were analyzed. www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
3
DRUDIS 1526 1–5 PERSPECTIVE
Drug Discovery Today Volume 00, Number 00 November 2014
(a)
Active & Left drug Defunct development independent
Time period (1st approval)
Singlet
Acquired
All Dates
123
87 (70%)
5 (4%)
11 (9%)
20 (17%)
1941–1950
2
2 (100%)
0
0
0
1951–1960
6
4 (67%)
1 (16%)
1 (16%)
0
1961–1970
3
2 (67%)
0
1 (33%)
0
1971–1980
5
4 (80%)
1 (20%)
0
0
1981–1990
18
16 (89%)
0
2 (11%)
0
1991–2000
33
23 (70%)
1 (3%)
5 (15%)
4 (12%)
2001–2010
56
36 (64%)
2 (4%)
2 (4%)
16 (29%)
Singlets acquired
(b) 100%
80% 60% 40% 20%
us
n In
fe
ct
io
ha
in
rp O
Pa
la
y
C
ar
di
ov
as
cu
og
y
ol
og ol
un
m
nc O
Im
r
0%
Indication Drug Discovery Today
Features PERSPECTIVE
FIGURE 4
An analysis of singlets: companies receiving only one FDA approval. (a) Information pertaining to companies receiving only one new molecular entity (NME) approval is shown, along with the fate of the company. The dates indicate the time period during which the only NME approval was granted by the FDA. (b) The likelihood of an acquisition is assessed for all singlets receiving their sole NME approval in the period from 1991 through 2010. The therapeutic application of the NME relates to the likelihood of acquisition.
sustainability of drug development. The loss of experienced organizations is problematic given the parallel trend of established companies that are dismantling their drug discovery infrastructures [7,8]. Where will new drugs come from? Start-up companies are often dismantled following their acquisition, particularly if they are purchased by the subset of companies that market products but does not directly perform new drug discovery [3]. This generally occurs within a year or two following acquisitions. From an optimistic standpoint, such turbidity recycles experienced personnel and allows them to join other organizations and begin afresh. Realistically, the dismantling of successful teams does not seem an efficient use of time or resources when viewed from a business or global public health perspective [9]. At time of writing, a mere 20 organizations that have ever obtained a single approval still remain active and independent today. 4
This represents fewer than 10% of the 224 organizations that ever achieved an FDA approval. There are clear differences in the likelihood of being the target of an acquisition and these relate to the therapeutic indications. An approval for an oncology product seems greatly to increase the likelihood that a singlet company will be acquired, whereas a focus on infectious diseases has the opposite effect. This is presumed to reflect perceptions of market value. For example, oncology products are presently perceived as conveying greater value than infectious diseases [10,11]. However, we cannot exclude that the likelihood to be targeted also reflects the fact that the management of or investors in oncology companies, for example, might be more open to acquisition than those of companies focused on infectious diseases. An unexpected finding was the rarity of acquiring singlets focused on orphan indications. On the basis of recent trends favoring orphan diseases in terms of pricing advantages as well as
the increasing number of approvals targeting orphan diseases, one might have anticipated that singlets with orphan approvals would be particularly susceptible to consolidation [10,12,13]. However, the opposite seems to be the case. This outcome could reflect the market value or expansion potential of the specific product. For example, one approach for oncology drugs is to target an orphan indication for an initial approval and then expand to additional disease subsets [14]. It is thus possible that the subset of orphan indication targeted by the singlets does not fall within such a category. Alternatively, the strategic plan, management or investors in companies focused on uncommon diseases might likewise be unconventional. If the chance of being acquired relates directly to the likelihood of attracting investment, then the findings reported herein could have long-lasting implications. Increasing evidence suggests that investors favor oncology opportunities while shunning infectious diseases [10,15]. Indeed,
www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
DRUDIS 1526 1–5 Drug Discovery Today Volume 00, Number 00 November 2014
health economics suggests that new cancer drugs convey considerable value to companies, patients and society [16]. However, new antibiotics could convey even greater benefits to society but are not presently deemed sufficiently lucrative to warrant the considerable investment needed to develop a new drug [17]. Given the implications of prolonged neglect of urgent needs (such as antibiotics) [18,19], the public health ramifications could be profound.
Acknowledgements This work was conducted as part of a project at the Yale Center for Molecular Discovery (http://ycmd.yale.edu) to develop a collection of all FDA-approved small molecules as a resource for screening to emphasize drug re-purposing. Please contact the author if you or your organization would be interested in potential participation in this project. References
7 Abou-Gharbia, M. and Childers, W.E. (2014) Discovery of innovative therapeutics: today’s realities and tomorrow’s vision. 2. Pharma’s challenges and their commitment to innovation. J. Med. Chem. 57, 5525–5553 8 Abou-Gharbia, M. and Childers, W.E. (2013) Discovery of innovative therapeutics: today’s realities and tomorrow’s vision. 1. Criticisms faced by the pharmaceutical industry. J. Med. Chem. 56, 5659–5672 9 Guthrie, J.P. and Datta, D.K. (2008) Dumb and dumber: the impact of downsizing on firm performance as moderated by industry conditions. Organ. Sci. 19, 108–123 10 Kinch, M.S. et al. (2014) Trends in pharmaceutical targeting of clinical indications: 1930–2013. Drug Discov. Today http://dx.doi.org/10.1016/j.drudis. 2014.05.021 11 Loftus, P. et al. (2014) In drug mergers, there’s one sure bet: the layoffs. Wall Street J.
12 Wastfelt, M. et al. (2006) A journey of hope: lessons learned from studies on rare diseases and orphan drugs. J. Int. Med. 260, 1–10 13 Scherer, F.M. (1993) Pricing, profits, and technological progress in the pharmaceutical industry. J. Econ. Perspect. 1993, 97–115 14 Soares, M. (2005) Off-label indications for oncology drug use and drug compendia: history and current status. J. Oncol. Pract. 1, 102–105 15 Haber, D.A. et al. (2011) The evolving war on cancer. Cell 145, 19–24 16 Lakdawalla, D.N. et al. (2010) An economic evaluation of the war on cancer. J. Health Econ. 29, 333–346 17 Piddock, L.J.V. (2012) The crisis of no new antibiotics – what is the way forward? Lancet Infect. Dis. 12, 249–253 18 Outterson, K. et al. (2013) Approval and withdrawal of new antibiotics and other antiinfectives in the US, 1980–2009. J. Law Med. Ethics 41, 688–696 19 Kinch, M.S. et al. (2014) An analysis of FDA-approved drugs for infectious disease: antibacterial agents. Drug Discov. Today 19, 1283–1287
Michael S. Kinch Washington University in St Louis, 4240 Duncan Street, Suite 110, St Louis, MO 63110, USA
Q1 Q3
Features PERSPECTIVE
1 Daemmrich, A. and Browden, M. (2005) A rising drug industry. Chem. Eng. News 83, 28–42 2 Jones, A.W. (2011) Early drug discovery and the rise of pharmaceutical chemistry. Drug Test. Anal. 3, 337–344
3 Kinch, M.S. et al. (2014) An overview of FDA-approved new molecular entities: 1827–2013. Drug Discov. Today 19, 1033–1039 4 Munos, B. (2009) Lessons from 60 years of pharmaceutical innovation. Nat. Rev. Drug Discov. 8, 959–968 5 Kaitin, K.I. and DiMasi, J.A. (2011) Pharmaceutical innovation in the 21st century: new drug approvals in the first decade, 2000–2009. Clin. Pharmacol. Ther. 89, 183–188 6 Horrobin, D.F. (2000) Innovation in the pharmaceutical industry. J. R. Soc. Med. 93, 341
PERSPECTIVE
www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
5
PERSPECTIVE
feature Post-approval fate of pharmaceutical companies Q1 Michael S. Kinch, [email protected]
Introduction The pharmaceutical industry is largely a phenomenon of the 20th Century. Although some industry component companies were established in the late 19th Century or earlier, the relationships and interactions that facilitated the formation of one of the world’s largest and most robust industries is a more recent event, starting in the 1930s [1–3]. Two generations later, converging lines of evidence, which consider the impact of consolidation and innovation, suggest the pharmaceutical industry is at a crossroads [4–6]. The coming years will be vital to determine if and how new drug discovery and development be performed in the future. Within this context, an analysis of FDA-approved new molecular entities (NMEs) has been conducted and many aspects of the development and approval process, including the identity of organizations awarded NME approvals over time, have been catalogued. In this present study, the fate of those companies is assessed.
As a brief overview, 224 different organizations received at least one FDA approval (Fig. 1a). The number of successful organizations entering the pharmaceutical industry (defined herein as the collection of organizations awarded an NME approval) generally ranged from one to three new companies per year from the 1930s through the 1980s. More-recent years have witnessed a twofold surge in the number of new entries, which presently stands at six companies per year. The vast majority of these companies were viable as evidenced by a 2% rate of dissolution and only a minority (5%) voluntarily left drug development. Almost half (47%) of the companies that received one NME approval went on to achieve a second approval for a distinct molecule. The interval separating the first and second NME approvals was assessed and it was found that this ranged from six to eight years (Fig. 1b). Put another way, an average of seven years of active and independent activity was usually required
for a company to achieve a second approval for an NME. An exception occurred in the most recent complete decade (2001–2010) but the accuracy of this observation is suspect given the short time and small subset represented by such a recent time point (e.g. only six of 60 companies having yet achieved this benchmark). Because the average time for clinical investigation alone routinely exceeds six years [5], this suggests that much of the early-stage research and development was performed in parallel with the approval campaign for the first product. The fraction of companies gaining a second approval exceeded 70% from the 1930s through the 1970s (Fig. 1a). Starting in the mid-1970s, the likelihood a company would achieve a second NME approval began to shrink. This trend largely reflects increasing levels of corporate consolidation. Overall, 58% of companies that achieved at least one NME approval were subsequently acquired and only one-third remain independent at time of writing. This led to assessing
www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
1359-6446/06/$ - see front matter ß 2014 Published by Elsevier Ltd. http://dx.doi.org/10.1016/j.drudis.2014.10.013
Features PERSPECTIVE
For a fortunate subset of pharmaceutical companies, a regulatory approval is the culmination of massive investment in time, work and money. What happens next? Some companies proceed to build a pipeline and obtain additional approvals. Others do not. In this present report, post-approval fate is evaluated and it was found that most companies are ultimately acquired. A subset achieved a second approval six-to-eight years after the first approval, whereas a shrinking subset, designated as ‘singlets’, remains active in drug discovery with only a single approval. The likelihood that a company will remain a singlet or be acquired relates to therapeutic indication, with oncology associated with increased acquisition potential and infectious-disease-based companies being less commonly acquired.
1
DRUDIS 1526 1–5 PERSPECTIVE
Drug Discovery Today Volume 00, Number 00 November 2014
Time period
1st approval Defunct
Left drug dev.
2nd approval
Active & independent
Acquired
All dates
223
4 (2%)
13 (5%)
106 (47%)
87 (35%)
142 (58%)
Before 1940
10
0
0
8 (80%)
4 (57%)
3 (43%)
1941–1950
19
0
1 (5%)
18 (95%)
7 (35%)
12 (60%)
1951–1960
25
2 (8%)
1 (4%)
18 (72%)
3 (12%)
19 (76%)
1961–1970
10
0
1 (10%)
7 (70%)
3 (30%)
6 (60%)
1971–1980
12
1 (8%)
0
7 (58%)
4 (33%)
7 (58%)
1981–1990
32
0
2 (6%)
14 (44%)
8 (25%)
22 (69%)
1991–2000
56
0
6 (11%)
26 (46%)
19 (34%)
31 (55%)
2001–2010
60
1 (2%)
2 (3%)
6 (10%)
24 (40%)
33 (55%)
4 2
11 Year 5 Years 110 Years
20%
-1
95 -1
51
19
19
31
-1
94
0
0
0%
41
0 -1 51
19
19
40%
96
95
94
-1
-1
41 19
31 19
61 0 19 197 71 0 19 198 81 0 19 199 91 0 20 200 01 0 -2 01 0
0
60%
Decade of first approval
61 0 19 -19 71 70 19 -19 81 80 19 199 91 0 20 20 01 00 -2 01 0
6
80%
96
Active and independent
8
100%
19
(c)
10
0
(b)
Time to 2nd approval (years)
(1st approval)
19
(a)
Decade of first approval Drug Discovery Today
Features PERSPECTIVE
FIGURE 1
Overview of companies receiving an FDA approval for a new molecular entity (NME). (a) Information pertaining to companies receiving at least one NME approval is shown, along with the fate of the company. The dates indicate the time period, during which the first NME approval was granted by the FDA. (b) For those companies obtaining a second NME approval, the average time interval between the first and second approvals is indicated. (c) The likelihood of a company to remain active in drug research and independent (not acquired or merged) is indicated after one (blue), five (red) or ten (black) years after their first approval. For companies receiving a recent approval, only those that have had an opportunity to be active and independent for ten years (e.g. an approval before August 2004) were analyzed.
the time that companies remained active and independent following approval of their first NME (Fig. 1c). Most (>95%) companies remained active and independent for at least ten years after receiving their first FDA approval. Starting in the 1970s, the ten-year ‘survival rate’ plummeted and, in the most recent full decade (2001–2010), stood at 20%. The five-year survival rate demonstrates a similar trend and now stands at 45% and even the one-year survival rate now stands at just over 80%. These latter two findings could be particularly significant given the average of six-to-eight years of independence required to gain a second NME approval and thus is consistent with the fact that fewer companies were able to achieve this milestone. The question was then asked as to whether geographic differences might relate to the findings presented above (Fig. 2). Data were compared from companies headquartered in 2
the USA, the European Union (EU) or Asia (including Israel). Overall, there were minor variations among the different geographic areas. The most notable findings were that US (63%)
and EU (54%) companies were more likely to be acquired than their Asian (31%) counterparts. US-based companies also had a somewhat shorter average time separating the first and
Event
All
US
Europe
Asia
1st approval
246
160
69
13
Defunct
4 (2%)
4 (3%)
0
0
Left drug development
13 (5%)
6 (4%)
6 (9%)
1 (8%)
Acquired
104 (42%)
101 (63%)
37 (54%)
4 (31%)
Active & independent
87 (35%)
49 (31%)
26 (38%)
8 (62%)
6.8 years
5.8 years
8.0 years
9.0 years
nd
Time to 2 NME
Drug Discovery Today
FIGURE 2
Geographic comparison of companies headquartered in the USA, Europe or Asia. Utilizing the same approaches as Fig. 1, the fate of companies was assessed based on the geographic location of the corporate headquarters. Note: the total number of companies analyzed (n = 246) differs from that in Fig. 1 owing to the inclusion of organizations receiving their first new molecular entity (NME) approvals since 2011.
www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
DRUDIS 1526 1–5 Drug Discovery Today Volume 00, Number 00 November 2014
could be identified. The type of molecule (i.e. small-molecule versus biologic) did not relate to an outcome of being acquired (data not shown). Whereas 66% of singlet companies were acquired in this timeframe, an acquisition was more likely if a company had an approval for an indication associated with oncology (89%) Q2 or immunology (75%). NMEs for an orphan indication (46%) were less likely to be acquired as were companies where approvals were for infectious diseases (30%).
Concluding remarks: outcomes and implications The major finding of the present study is that fewer than half of all companies that ever received one approval for an NME proceed to obtain an FDA approval for a distinct NME. It is also shown that mergers and acquisitions are the primary impetus preventing a second approval. Whereas the average time required for a second approval is six-to-eight years following the initial approval, most acquisitions occur within the first five years. This has important implications for the
2nd approval
Acquired
Defunct
(2nd approval)
All Dates
106
68 (64%)
0
0
38 (36%)
1931–1940
3
2 (67%)
0
0
1 (33%)
1941–1950
15
9 (60%)
0
0
6 (40%)
1951–1960
18
16 (89%)
0
0
2 (11%)
1961–1970
11
8 (73%)
0
0
3 (27%)
1971–1980
7
5 (71%)
0
0
2 (29%)
1981–1990
7
4 (57%)
0
0
3 (43%)
1991–2000
25
16 (64%)
0
0
9 (36%)
2001–2010
20
8 (40%)
0
0
21 (60%)
Left drug Active & development independent
100% 80% 60% 40%
1 year 5 years 10 years
20%
-1 97 0 19 71 -1 98 0 19 81 -1 99 0 19 91 -2 00 0
0
19 61
-1 96
-1 95
19 41
119 19 3
0
0% 40
(b)
19 51
Time period
Active & independent
(a)
different companies received FDA approval for only one NME (Fig. 4a). Five singlet companies (4%) are now defunct and 11 (9%) have left drug development (e.g. focusing on consumer products or generic medicine). Twenty singlet companies currently remain active and independent. Remarkably, all current active and independent singlets gained their only approval within the past two decades. Stated another way, there are no singlet companies actively researching new medicines that obtained an NME during the past 20 years. The fate of most (87, or 70%) singlets was to be acquired. The acquisition rate has remained strong over time, including almost two-thirds of all companies receiving their first approval in the decade ending in 2010. This led to ask what criteria relate to the likelihood of an acquisition (Fig. 4b). To do so, the therapeutic indication for each singlet approval was identified. These analyses were limited to the timeframe from 1991 through 2010 to provide relevant comparators for singlets and are reported only if at least four different NMEs for any indication
Features PERSPECTIVE
second approvals (5.8 years) as compared with EU (eight years) or Asian (nine years) organizations. On the basis of these results, the fate of the 106 companies that did obtain a second approval for a distinct NME was researched. None of the companies was dissolved nor did any leave drug development (Fig. 3a). However, two-thirds were ultimately acquired, leaving one-third active and independent (which includes all established pharmaceutical companies). Although most were acquired, this generally occurred beyond ten years after their second approval (Fig. 3b). For example, virtually all companies that achieved a second NME before 1980 remained active in drug discovery and independent for at least ten years. This trend has changed somewhat in recent years and, as of the past complete decade, 40% of companies that obtain their second approval are now acquired within the ten-year window. Another line of questioning addressed the fate of companies that obtained only one approval, designated hereafter as ‘singlets’. In total, 123
PERSPECTIVE
Decade of 2nd approval Drug Discovery Today
FIGURE 3
Fates of companies receiving a second new molecular entity (NME) approval. (a) Information pertaining to companies receiving a second NME approval is shown. The dates indicate the time period during which the second NME approval was granted by FDA. (b) The likelihood of a company remaining active in drug research and independent (not acquired or merged) is indicated after one (blue), five (red) or ten (black) years after their second approval. For companies receiving a recent approval, only those that have had an opportunity to be active and independent for ten years (e.g. a second approval before August 2004) were analyzed. www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
3
DRUDIS 1526 1–5 PERSPECTIVE
Drug Discovery Today Volume 00, Number 00 November 2014
(a)
Active & Left drug Defunct development independent
Time period (1st approval)
Singlet
Acquired
All Dates
123
87 (70%)
5 (4%)
11 (9%)
20 (17%)
1941–1950
2
2 (100%)
0
0
0
1951–1960
6
4 (67%)
1 (16%)
1 (16%)
0
1961–1970
3
2 (67%)
0
1 (33%)
0
1971–1980
5
4 (80%)
1 (20%)
0
0
1981–1990
18
16 (89%)
0
2 (11%)
0
1991–2000
33
23 (70%)
1 (3%)
5 (15%)
4 (12%)
2001–2010
56
36 (64%)
2 (4%)
2 (4%)
16 (29%)
Singlets acquired
(b) 100%
80% 60% 40% 20%
us
n In
fe
ct
io
ha
in
rp O
Pa
la
y
C
ar
di
ov
as
cu
og
y
ol
og ol
un
m
nc O
Im
r
0%
Indication Drug Discovery Today
Features PERSPECTIVE
FIGURE 4
An analysis of singlets: companies receiving only one FDA approval. (a) Information pertaining to companies receiving only one new molecular entity (NME) approval is shown, along with the fate of the company. The dates indicate the time period during which the only NME approval was granted by the FDA. (b) The likelihood of an acquisition is assessed for all singlets receiving their sole NME approval in the period from 1991 through 2010. The therapeutic application of the NME relates to the likelihood of acquisition.
sustainability of drug development. The loss of experienced organizations is problematic given the parallel trend of established companies that are dismantling their drug discovery infrastructures [7,8]. Where will new drugs come from? Start-up companies are often dismantled following their acquisition, particularly if they are purchased by the subset of companies that market products but does not directly perform new drug discovery [3]. This generally occurs within a year or two following acquisitions. From an optimistic standpoint, such turbidity recycles experienced personnel and allows them to join other organizations and begin afresh. Realistically, the dismantling of successful teams does not seem an efficient use of time or resources when viewed from a business or global public health perspective [9]. At time of writing, a mere 20 organizations that have ever obtained a single approval still remain active and independent today. 4
This represents fewer than 10% of the 224 organizations that ever achieved an FDA approval. There are clear differences in the likelihood of being the target of an acquisition and these relate to the therapeutic indications. An approval for an oncology product seems greatly to increase the likelihood that a singlet company will be acquired, whereas a focus on infectious diseases has the opposite effect. This is presumed to reflect perceptions of market value. For example, oncology products are presently perceived as conveying greater value than infectious diseases [10,11]. However, we cannot exclude that the likelihood to be targeted also reflects the fact that the management of or investors in oncology companies, for example, might be more open to acquisition than those of companies focused on infectious diseases. An unexpected finding was the rarity of acquiring singlets focused on orphan indications. On the basis of recent trends favoring orphan diseases in terms of pricing advantages as well as
the increasing number of approvals targeting orphan diseases, one might have anticipated that singlets with orphan approvals would be particularly susceptible to consolidation [10,12,13]. However, the opposite seems to be the case. This outcome could reflect the market value or expansion potential of the specific product. For example, one approach for oncology drugs is to target an orphan indication for an initial approval and then expand to additional disease subsets [14]. It is thus possible that the subset of orphan indication targeted by the singlets does not fall within such a category. Alternatively, the strategic plan, management or investors in companies focused on uncommon diseases might likewise be unconventional. If the chance of being acquired relates directly to the likelihood of attracting investment, then the findings reported herein could have long-lasting implications. Increasing evidence suggests that investors favor oncology opportunities while shunning infectious diseases [10,15]. Indeed,
www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
DRUDIS 1526 1–5 Drug Discovery Today Volume 00, Number 00 November 2014
health economics suggests that new cancer drugs convey considerable value to companies, patients and society [16]. However, new antibiotics could convey even greater benefits to society but are not presently deemed sufficiently lucrative to warrant the considerable investment needed to develop a new drug [17]. Given the implications of prolonged neglect of urgent needs (such as antibiotics) [18,19], the public health ramifications could be profound.
Acknowledgements This work was conducted as part of a project at the Yale Center for Molecular Discovery (http://ycmd.yale.edu) to develop a collection of all FDA-approved small molecules as a resource for screening to emphasize drug re-purposing. Please contact the author if you or your organization would be interested in potential participation in this project. References
7 Abou-Gharbia, M. and Childers, W.E. (2014) Discovery of innovative therapeutics: today’s realities and tomorrow’s vision. 2. Pharma’s challenges and their commitment to innovation. J. Med. Chem. 57, 5525–5553 8 Abou-Gharbia, M. and Childers, W.E. (2013) Discovery of innovative therapeutics: today’s realities and tomorrow’s vision. 1. Criticisms faced by the pharmaceutical industry. J. Med. Chem. 56, 5659–5672 9 Guthrie, J.P. and Datta, D.K. (2008) Dumb and dumber: the impact of downsizing on firm performance as moderated by industry conditions. Organ. Sci. 19, 108–123 10 Kinch, M.S. et al. (2014) Trends in pharmaceutical targeting of clinical indications: 1930–2013. Drug Discov. Today http://dx.doi.org/10.1016/j.drudis. 2014.05.021 11 Loftus, P. et al. (2014) In drug mergers, there’s one sure bet: the layoffs. Wall Street J.
12 Wastfelt, M. et al. (2006) A journey of hope: lessons learned from studies on rare diseases and orphan drugs. J. Int. Med. 260, 1–10 13 Scherer, F.M. (1993) Pricing, profits, and technological progress in the pharmaceutical industry. J. Econ. Perspect. 1993, 97–115 14 Soares, M. (2005) Off-label indications for oncology drug use and drug compendia: history and current status. J. Oncol. Pract. 1, 102–105 15 Haber, D.A. et al. (2011) The evolving war on cancer. Cell 145, 19–24 16 Lakdawalla, D.N. et al. (2010) An economic evaluation of the war on cancer. J. Health Econ. 29, 333–346 17 Piddock, L.J.V. (2012) The crisis of no new antibiotics – what is the way forward? Lancet Infect. Dis. 12, 249–253 18 Outterson, K. et al. (2013) Approval and withdrawal of new antibiotics and other antiinfectives in the US, 1980–2009. J. Law Med. Ethics 41, 688–696 19 Kinch, M.S. et al. (2014) An analysis of FDA-approved drugs for infectious disease: antibacterial agents. Drug Discov. Today 19, 1283–1287
Michael S. Kinch Washington University in St Louis, 4240 Duncan Street, Suite 110, St Louis, MO 63110, USA
Q1 Q3
Features PERSPECTIVE
1 Daemmrich, A. and Browden, M. (2005) A rising drug industry. Chem. Eng. News 83, 28–42 2 Jones, A.W. (2011) Early drug discovery and the rise of pharmaceutical chemistry. Drug Test. Anal. 3, 337–344
3 Kinch, M.S. et al. (2014) An overview of FDA-approved new molecular entities: 1827–2013. Drug Discov. Today 19, 1033–1039 4 Munos, B. (2009) Lessons from 60 years of pharmaceutical innovation. Nat. Rev. Drug Discov. 8, 959–968 5 Kaitin, K.I. and DiMasi, J.A. (2011) Pharmaceutical innovation in the 21st century: new drug approvals in the first decade, 2000–2009. Clin. Pharmacol. Ther. 89, 183–188 6 Horrobin, D.F. (2000) Innovation in the pharmaceutical industry. J. R. Soc. Med. 93, 341
PERSPECTIVE
www.drugdiscoverytoday.com Please cite this article in press as: Kinch, M.S. Post-approval fate of pharmaceutical companies, Drug Discov Today (2014), http://dx.doi.org/10.1016/j.drudis.2014.10.013
5
