Figure 4.1

NEW PRODUCT DEVELOPMENT

PROCESS

Finance

Corporate strategy and portfolio decisions

Regulatory affairs

Marketing and sales + market research

Manufacturing

Basic R&D

Reimbursement / Health economics

MANUFACTUREMARKETING

SALES

CLINICAL TRIALS

DISCOVERY&

PRECLINICAL $

In vitro studies with cells, proteins,

nucleic acids; animal studies, product

design and testing for safety and efficacy

Clinical research in humans for

evaluating safety and efficacy, statistical validity of results,

regulatory approval for marketing

Regulatory standards apply to these

functions: Manufacturing to

marketing, sales and distribution

Reimbursement through a

complex network of third party

payers

Figure 4.2

Define the product –market need and

product characteristics

Understand key issues and plan prototypes and

path to final product; Prepare budget

Get support for your project from senior

management. Build team. Get started.

Figure 4.3

Figure 4.4

Figure 4.5

Stages(activities) Gates

1

2

3

3

Go

Kill / Hold / Recycle

- inputs (deliverables)

- evaluation criteria

- output

1

2

3

Stage-Gate process

Figure 4.6

FIGURE 4.7

Idea

GATE 1

InitialScreen

Preliminaryassessment

STAGE 1

GATE 2

Second Screen(e.g. feasibility)

Detailed investigationBusiness case

preparation

STAGE 2

GATE 3

Decision on

business case

STAGE 3

Testing andvalidation

GATE 4

Post-development

review

STAGE 4

Development

GATE 5

Pre-commer-cializationbusiness analysis

Full productionAnd market

launch

STAGE 5 $$

Postimplem-entationreview

Time&Cost of Drug Development (NDA)

Dis

cove

ry p

hase

Pre

clin

ical

stu

dies

Reg

ulat

ory

appr

oval

fo

r m

arke

ting

Mar

ketin

g, S

ales

and

P

ost l

aunc

h st

udie

s

Clin

ical

test

ing

(pha

se I-

III)

0

20

40

60

80

100

years (not to scale)

cost

($

mill

ion

s)

5 7 13 14.5

FIGURE 4.8a

Functional costs for drug development

Biological screening

16%

Clinical trials45%

Synthesis/extraction

12%

Manufacturing9%

Dosage formulation

7%

Toxicology6%

Regulatory f iling3%Bioavailability

2%

Figure 4.8b

MANUFACTUREMARKETING

SALES

CLINICAL TRIALS

DISCOVERY&

PRECLINICAL $Target Biology Lead drug candidate

Disc-overy

Identi-fication

Valid-ation

preclinicalValidation,Toxicology

PhaseI

PhaseII

PhaseIII

Manufacturing,MarketingPhase IV study

DistributionChannels, Regulatory

Manufacturing

Figure 4.9

Validated

targets

Target biology Biochemistry (high throughput

screening)

Compound library

Lead OptimizationImproved leads

Hits

Structural Biology Molecular Modeling

MedicinalChemistry

Leads

Pharmacology

Pharmacokinetics (PK) & Metabolism (ADME)

Selection of a drug candidate

Preclinical development

Clinical developmentRegistration

Launch

Figure 4.10

Discovery

Hit to Lead

Lead to Drug Candidate

Clinical studies

Approval

Launch and Phase IV studies

Management Review

Technical Review

Formal Management review

Formal Management Review

Formal FDA Review

Follow Up

Figure 4.11

Biomarker identification and validationInternal R&DIn-licensing

Manufacturing requirements

Clinical Test DevelopmentProduct specificationsTechnical platformPerformance criteria

Analytical performance optimization/assessment

Scale up and manufacturing

Retrospective clinical validation

CommercializationResearch Use Only (RUO), ASR

Performance,Utility Criteria

Performance,Utility Criteria Prospective clinical validation

Registration & CommercializationPMA, CE Mark test

Registration & CommercializationCE Mark, 510(k) tests

Figure 4.12

Figure 4.13

BasicResearch

PrototypeDesign orDiscovery

PreclinicalDevelopment

Phase I Phase II Phase III

FDA Filing/Approval &Launch

Clinical

Marker AssayValidation

Analytical ValidationDiagnostic Kit

Clinical Validation DiagnosticKit; Final Platform

Platform Change

Product concept

Animal testing

DeviceSpecs, design

Production prototype

Pilot trial

Manufacturing production

PhysicianHospitalConsumer

DistributionSales, Mktg

MANUFACTUREMARKETING

SALES

CLINICAL TRIALS

DISCOVERY&

PRECLINICAL$

Pivotal trial

Figure 4.14 A

Figure 4.14 B

Dis

cove

ry p

hase

Pre

clin

ical

stu

dies

Reg

ulat

ory

appr

oval

for

mar

ketin

g

Mar

ketin

g, S

ales

and

P

ost l

aunc

h st

udie

s

Clin

ical

test

ing

(pilo

t+pi

vota

l stu

dies

)0

2

4

6

8

10

12

years (not to scale)

cost

($

mill

ion

s)

F

1 3 5 7 8

Customer Needs(Voice of Customer)

Product

Design Inputs(functional requirements)

Design Outputs(Product Specs)

Product Development(Design Reviews)

VALIDATION

VERIFICATIONQUALIFICATION

Figure 4.15

Discovery

Feasibility

Optimization

Demonstration

Production

Market Launch

Management Review

Informal Design Review

Formal Design Review

Formal Design Review

Formal Design Review

Follow Up

Figure 4.16

MONTHSMILESTONES/TASKS Location FTEs Days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Compound1 (PO dosage) to IND PK and MTD studies US 0.3 90 Chemistry - compound scaleup UK/China 1 180Prelim tox/ADME/SAR Comp1&2 UK/China 0.67 120Compound1 efficacy study-disease1 Disease1 model1 animal study UK/China 0.17 150 Pilot study/controls UK/China 30Disease1 model2 animal study US 0.17 150 Pilot study/controls US 30

Compound1 efficacy study disease2 Model1 animal study US 0.5 120 Pilot study /controls US 45Pre-IND meeting w FDA US 0.08 90

Compound1&2 efficacy for disease3 Disease 3 model US 0.5 120

Formal GLP toxicology UK/China 0.1 180Pre-IND meeting with FDA USIND preparation and submission US 0.3 30

FTEs UK/China 2.0FTEs US 1.8

MILESTONES1. Efficacy in animals for diseases2. FDA interaction3. GLP Toxicology4. IND(s) filed

1

1

1

3

2

4

Figure 4.17

NDA

Target Biology Lead drug candidate

Disc-overy

Identi-fication

Valid-ation

MarketingPhase IV study

FDAOptim-ization

Early clinical studies

Advanced studies

RegistrationMarketing

Sales

PhaseI

PhaseII

PhaseIII

preclinical

GLP studies

R&D personnel

Marketing personnel

Regulatorypersonnel

Figure 4.18

Figure 4.19

Sr. Management/ Board/Steering Committee

Project A

Project B

Project C

Functio

n-specific orders

Project-specific orders

Project manager Team member

Functional area 1

Functional area 2

Functional area 3

Stage PERSONNEL/FTE Number Time UnitBase Cost

(over 1 year)

Cost per year = Base cost X time

4a & 4b & 4c. Project manager 1 0.8 FTE $170,000 $136,000Senior Chemist 1 0.4 FTE $250,000 $100,000Senior Biologist 2 0.75 FTE $225,000 $337,500Biology research asstnt 1 0.6 FTE $115,000 $69,000Senior Biomedical Engineer 1 0.2 FTE $200,000 $40,000

CONSUMABLES/ SUPPLIES

Pressure transducers, assay kits, chemicals, materials costs

$85,000

CAPITAL EXPENDITURES

micro-centrifuge $18,000

CONTRACTED/ OUTSOURCED

Outsourced animal study $92,000

TOTAL $877,500

Note: Base Cost for personnel includes taxes, benefits, overhead costs, some materials

In vivo test in healthy animals, hypertensive animals, toxicity tests

Figure 4.20

Marketing & SalesR&D

FDA Process& Clinical

Trials

ManufacturingUS International

Do ItYourself

StrategicPartners/Licenses

Figure 4.21

BUY/BUILDOutsource to well

established contractor as collaborator

BUILD

BUY

BUY/BUILDSelectively contract

parts only as needed. Keep assembly and

testing in house.

HIGHLOW

LOW

HIGH

Trade secrets, IP concerns

Technical Complexity

Figure 4.22