Robert R. Ruffolo, Jr., Ph.D., D.Sc.(h), D.Eng.(h)President, Research & Development Wyeth PharmaceuticalsSenior Vice President Wyeth (Corporation)
Directors of Graduate Studies in PharmacologySalt Lake City, Utah July 25, 2007
Training Needs for the Training Needs for the Pharmaceutical Industry in the Pharmaceutical Industry in the 21st Century 21st Century
Brief Overview of the Pharmaceutical Industry
What is the Pharmaceutical Industry?
It is the most technically complex, costly, risky and regulated industry in the world
Attrition rates Development times R&D Investment Costs Risk – Consolidation Regulation
How Can We Assess Risk In The Pharmaceutical Industry?
Odds of Bringing a Product to the Market
Time and Costs associated with R&D
Required R&D Investment Company Survival Regulatory Burden
Some Realities of Pharmaceutical R&D
R&D costs have grown dramatically; disproportionately to R&D budgets or output. The result is decreased R&D productivity.
R&D Inflation is >12%; R&D Budget increases have been between 3-6%
The Regulatory climate is growing more unfavorable and uncertain. Regulatory and patient expectations for safety may be unrealistic and
approaching the unachievable. Unrealistic safety expectations have exposed the Industry to
unprecedented levels of product liability. Innovative new drugs will likely take longer to develop as the Industry
focuses on even higher levels of innovation. The good news: There is more innovation in R&D than ever before.
Stages of R&D: A Long, Expensive and Risky Process
Discovery(2-10 years)
Pre-clinical TestingLaboratory and animal testing
Phase 120-80 healthy volunteers used todetermine safety and dosage
Phase 2100-300 patient volunteers used to look for efficacy (POC) and side effects
Phase 33,000-5,000 patient volunteers used to monitor
adverse reactions to long-term use
FDA Review/Approval
AdditionalPost-marketing Testing
1614121086420
Source: PhRMA, based on data from Center for the Study of Drug Development, Tufts University
Years
Compound SuccessRates by Stage
>10,000Screened
250Enter Preclinical Testing
10Enter Clinical Testing
1Approved by the FDA
Clinical Development Cycle Times are Increasing
Source: Centre for Medicines Research (CMR)
1.4(62)
1.6(58)
1.3(64)
1.5(65)
1.2(64)
1.1(69)
1.0(76)
3.8(17)
2.6(15)
3.0(16)
2.1(28)
2.0(23)
1.7(29)
1.9(46)
3.5(6)
2.3(13)
2.1(20)
2.4(22)
2.1(18)
2.2(27)
2.5(36)
1.6(7)
1.2(14)
1.4(13)
1.0(17)
0.8(21)
0.9(17)
0.8(29)
0 2 4 6 8 10 12
1997
1998
1999
2000
2001
2002
2003
Duration in years
Phase 1 Phase 2 Phase 3 Phase R
Original Patent Term – 20 years
20100Years
PatentApplication Filed
NDA/BLA Approved Pediatric Drug
Patent Certification
Patent Issued IND EffectiveNDA/BLA
Filed
PTR*
Period to Recoup Investment
The Evolving Healthcare Technology Arena
Description of diseaseprocesses
Empirical intervention
Disease homogeneity
Uniform patient populations
Reactive medicine(post-symptoms)
Causal molecular pathology
Rational intervention directedto specific molecular pathology
Disease heterogeneity anddifferent progression/prognosis
Patient heterogeneity andindividual risk profiles
Proactive disease managementbased on risk assessment(targeted care)
This is leading to more innovative drugs in company pipelines
Innovation Comes With a Price: Higher Attrition, Longer Timelines and Higher Costs
IND filings with FDA
0
20
40
60
80
100
1996-1999
2000-2004
(%)
Morenovel
Less novel
NDA filings with FDA
0
20
40
60
80
100
1996-1999
2000-2004
(%)
More novel
Less novel
Source: BCG industry compound database; BCG analysis
More Novel Drugs: Higher Attrition Rates and Longer Development and Approval Times
Source: BCG industry compound database; BCG analysis
Attrition Rates by Novelty Status Development Times by Novelty Status
0
20
40
60
80
100
Less novel
%
Current status of INDs filed 1996 – 1998
0
20
40
60
80
100
Less novel
Mo
nth
s
Average cycle time for NDAs submitted 1996 – 2003 and approved
FDA approved
Failed
Still in Development
Development time
Approval time
More novel More novel
Costs of Discovering and Developing a New Drug are Staggering
Source: Bain drug economics model, 2003
Launch
Phase III/File
Phase II
Phase I
Preclinical
Discovery
Historic 1995-00 2000-02 average
$1.1B
$1.7B
0.0
0.5
1.0
1.5
$2.0B
Change in Average Cost to Develop Successful Drugs Over Time
Pharmaceutical R&D Requires the Highest Level of Investment in the World; A Measure of Risk
Source: PhRMA, 2001, Based on Data from PhRMA Annual Survey and Standard & Poor’s Compustat, a Division of McGraw-Hill
17.0%
Domestic R&D
Industrial Sector Comparison:
10.5%
8.4%
7.8%
5.3%
4.7%
3.9%
1.2%
3.9%
0.73%
3.8%
Computer Software & Services
Office Equipment & Services
Automotive
Telecommunications
Leisure Time Products
Aerospace & Defense
Metals & Mining
Paper & Forest Products
All Industries
Electrical & Electronics
The Pharmaceutical Industry Outspends the NIH on Biomedical Research
Expenditures (Billions of Dollars)
$11.5 $12.7 $13.4 $15.2 $16.9$19.0
$21.1 $22.0
$26.0$30.3 $31.0
$33.0$37.0
$39.0
$44
$8.9 $10.3 $11.0 $11.3 $12.0 $12.7 $13.6$15.6
$17.8$20.3 $20.3
$27.0 $27.0 $27.5 $28.9
$0.0$5.0
$10.0$15.0$20.0$25.0$30.0$35.0$40.0$45.0$50.0
1992199319941995199619971998199920002001200220032004200520062006
PhRMA
NIH
Ref: PhRMA, “What Goes Into the Cost of Prescription Drugs?”& AAAS, OMB Data FY2006
Industry, 93.3%
Academia/Non-Profit, 3.5%
Government, 3.2%
The Pharmaceutical Industry is the Source for Most New Drugs
Source: DiMasi et al., J Health Econ, 2003;22:151-185
Journal of Health Economics, Vol. 13, 1994, pp 383-406.Journal of Health Economics, Vol. 13, 1994, pp 383-406.Journal of Health Economics, Vol. 13, 1994, pp 383-406.Journal of Health Economics, Vol. 13, 1994, pp 383-406.
Most Drugs Do Not Make Money: Only 3 in 10 Medicines Return Development Costs
Present Values by Decile
11 22 33 44 55 66 77 88 99 1010
200200
400400
600600
800800
10001000
12001200
Average R&D Cost
00
1990
Do
llar
s (M
illi
on
s)A
fter
- tax
Pre
sen
t V
alu
e
Industry Consolidation; A Measure of Risk
We May Look Highly Profitable, But What Is The Reality?
Companies Merge Because They Are In Trouble
Another Measure of Risk
The Outlook for our Sales and Earnings is Not Bright
Source: IMS, FDA, Lehman Brothers, BCG analysis
‘03 ‘05 ‘07 ‘090
5
10
5 yr avg. growth
% Sales Growth for Big
PharmaRight now, our Industry
is less profitable than most others
Growing Regulatory Conservatism:Application of the “Precautionary Principle”
“The Committee’s decided to ban further researchuntil it can be proven your ‘wheel’ poses no
threat to the environment, society or public health”
Regulatory Burden on The Pharmaceutical Industry is Increasing at an Alarming Rate
Increasing Review Times
Increasing Safety, cGCP and cGMP Requirements Worldwide; to unnecessary levels that do not increase public safety
Lack of Harmonization among Regulatory Agencies in the US, Europe, & Japan - Despite ICH
Different Standards of Medicine in the US, Europe, and Japan Complicate Clinical Trials
Increasing Post Approval Commitments
Training Needs of the Pharmaceutical Industry
Communication Skills are Paramount
WrittenPublications, Publications, Publications
- It’s necessary to become an opinion leader
- Recognition in the scientific community is crucialFeasibility Study Proposals (equivalent to NIH Grants; except
longer)
- Why should we fund your idea as opposed to somebody else’s?
VerbalPublic Presentations Internal PresentationsThe Power of Persuasion
- Many scientists have good ideas, but we have only a limited amount of money
Team and Leadership Skills
Scientific Breadth and Depth
Our resource needs change constantly, and our scientists must be able to change with our needs (or we need to replace them, a traumatic and expensive process)
Use your time in Graduate School to take as many courses as possible; don’t avoid the physical sciences, mathematics and statistics
Learn as many skills as possible; avoid the temptation to become too highly specialized; there’s time for that later
The broader a scientist’s background, and the more rounded the skill sets, the more valuable the scientist is in the long run
Avoid the mistake of becoming an expert in a technique or technology; they become obsolete quickly
Be conscious of the “technology wasteland” Learn how to write and communicate science verbally!
Understand the Pharmaceutical Industry; The Myths and Stereotypes May Not be True
We are not all stupid and rejects from Academia
We do publish (and if you work for me, it is publish or perish). If you don’t want to publish, then stay in academia
We don’t just do “mindless screening”
We don’t make a “ton of money” You CAN go to meetings/congresses You CAN follow your own research
interests We are not in Industry to escape
“grant writing”; we write feasibility studies, which are worse
The science is just as good You do receive scientific direction But there IS scientific freedom (vs
Academia?) You can’t get in without a post-doc We do science for profit (and to help
humankind and to earn our salaries and pay our bills (just like academia; Professors don’t work for free either, and universities charge overhead to pay bills)
The Pharmaceutical Industry does not live off the science of Academia; Actually the Industry is the largest source of funds for Biomedical Research in the World
Understand the Pharmaceutical Industry; The Myths and Stereotypes May Not be True
We are not all stupid and rejects from Academia
We do publish (and if you work for me, it is publish or perish). If you don’t want to publish, then stay in academia
We don’t just do “mindless screening”
We don’t make a “ton of money” You CAN go to meetings/congresses You CAN follow your own research
interests We are not in Industry to escape
“grant writing”; we write feasibility studies, which are worse
The science is just as good You do receive scientific direction But there IS scientific freedom (vs
Academia?) You can’t get in without a post-doc We do science for profit (and to help
humankind and to earn our salaries and pay our bills (just like academia; Professors don’t work for free either, and universities charge overhead to pay bills)
The Pharmaceutical Industry does not live off the science of Academia; Actually the Industry is the largest source of funds for Biomedical Research in the World
You only have to work half-a-day, but 1 day = 24 hours!*
*Stolen from Dr. H. Wolf, Pharmacology 870, 1974
There are More Similarities Between Academia and Industry Than Differences
Science is our foundation Innovation is key Work begins with the identification of a new molecular
target Scientific credentials matter; a lot! Consistent productivity is essential (and a requirement of
continued employment; the equivalent of tenure) Industry doesn’t have enough money either to fund all of
the research it wants or needs either We work on mostly the same molecular targets as in
academia
What’s Life Like in the Pharmaceutical Industry? It’s a hard life The hours are long; it’s not 9 to 5 Science is more directed Scientists are held accountable Greater reliance on a “team approach” to science; but individual
research matters a great deal Industry is not where you go “to retire” Failure is the norm; one needs to be able to cope with failure Change is the norm; one must become comfortable with change Competition is keen for research money and jobs The most common complaint I hear from scientists who move
from Academia to Industry is “I never knew how hard the work was, and I never had to work THIS hard before”
HOWEVER, very few scientists who move from Academia to Industry ever move back
Personality Matters Too!
But Many Scientists Do Not Inherently Have The Traits Necessary To Work In A More Structured Environment Than Academia
Key Findings from “Managing the Innovator” by ISR - Scientists:
Typically like their immediate supervisors
Suspicious of “upper management”
Feel un-empowered
Uncomfortable in taking direction
Criticize their performance appraisals
Are highly dissatisfied with their compensation
Feel less secure in their jobs
Believe that they cannot challenge Company norms
They identify themselves as scientists; not as company employees
Feel limited opportunities for career development
Have a very high degree of stress on the job
Are typically the most dissatisfied employees in any company
Personality Matters Too! What We Look For
Ambitious Team payer Driven Ability to work independently AND with others Risk-taker Comfort with change and uncertainty Ability to deal with stress Ability to cope with failure Managing conflict Looks for ways to make things work, and not for reasons why
things will not work Ability to take direction Motivation (science vs money)
Post-Docs: You Need One (or More) To Get In The Door
One Post-Doc is OK, two is better, and beginning to become the norm
Take advantage of your post-doctoral fellowship(s) and explore your new environment, not just your own project
Collaborate with others; try to develop team skills Develop additional scientific and people skills Work hard; you should have nothing else to worry
about during a post-doc Have fun; it’s the last real freedom you’ll ever have
whether you work in Academia or Industry
What Can You Expect When You Enter Industry At The PhD “Entry Level” A comparable salary to academia (sorry) A laboratory with one or two “associate staff” (technicians) A boss (who you might or might not like; but they can change
quickly) Somebody like me who spends approximately $2 million/year
on you (so you need produce consistently) Some new equipment; equivalent of “seed money” Some freedom to work on your own ideas, and on some
existing programs; DO BOTH! Budget problems A unique opportunity to combine basic and applied research
What Kind of Research Will I Do in Industry?
If you work in Discovery, basically the same kind of research you would do in Academia
Basic research in areas of your own interests and collaboration on research projects of others
Do I publish on “My Research” and do “Company Research” separately?; No, they are one and the same thing
Make sure you publish enough to “get tenure”. If you can’t make it in Academia, then people like me won’t want you either
But, unlike Academia, there are many other opportunities if you find that research is not you true calling (Clinical, Operations, Project Management, Corporate, Marketing, etc)
Can I Get Fired From Industry?
You bet you can; and much easier than from Academia There have been massive lay-offs in R&D throughout the Pharmaceutical
Industry as a result of consolidation and decreasing sales Some R&D groups set “tenure requirements” that are similar to
Academia. If you’re not good enough to get tenure in Academia, why would we want you?
One of the main reasons that I have let people go is because of the failure to publish or failure to align with the direction of R&D
Abuse of research animals Falsification of data Violation of company policies Sexual, gender, race etc harassment/bias/discrimination Willful misconduct Insubordination; Industry is a little bit more like the military, and rules and
appropriate behavior/conduct matter
Summary
The Pharmaceutical Industry is not for everyone; but I love it It’s a hard place to work, and becoming harder every day Our risks, costs and degree of regulation are extremely high The work is challenging, and often frustrating, but sometimes
highly rewarding Communication is key Breadth and depth in training are critical We depend on the motivation and innovation of our scientists,
and their individual as well as team approachs to research We have the resources and scale to do things that cannot be
done by Academia or Government And we make new medicines; there’s no better feeling than to
be part of the discovery and/or development of a new drug
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