Biotech companies plugging the innovation gap

Analysis

With so much talk of rapidly falling R&D productivity within the industry, as quantified by a declining trend in annual FDA approval rates for new products, whether small molecule, biological or vaccine, EP Vantage has conducted a review of the 350 new products approved by the FDA since 1998, focusing on the source of these new products to see if recent criticism, particularly of a lack of innovation at big pharma, is justified.

Of the 350 new products, big pharma is actually responsible for the lion’s share of innovation with 41%, ahead of biotech companies at 31%. However, dividing the 11-year period in two confirms that products discovered at biotech companies are becoming increasingly important and are rapidly closing the gap. Meanwhile, innovation at academic institutions remains an important source of new products, consistently responsible for around 9% of all new products over the entire period (see tables below).

Increasing importance of biotech

The following analysis, taken from EvaluatePharma, classifies each new product approved into four categories - big pharma, biotech company, academia, other – on the basis of the originator of the product, normally the organisation to which the main composition of matter patent is granted.

Number of annual US NMEs attributed to the originator of the product
1998  1999  2000  2001  2002  2003  2004  2005  2006  2007  2008 
Big pharma 19 14 10 15 14 14 11 15 7 12 11
Biotech company    12 10 9 10 5 11 13 9 14 6 10
Academia 2 3 4 2 3 4 3 1 5 1 3
Other 6 13 10 5 4 6 11 3 3 4 3
Total 39 40 33 32 26 35 38 28 29 23 27

This analysis shows that in most years products sourced from laboratories at big pharma companies outweigh those from biotechs, an understandable trend given the vastly superior resources available.

However, more recently, in 2004 and 2006, the proportion of new products assigned to biotech outstripped big pharma and last year the two sectors were evenly matched.

In 2008, 11 new products were sourced to big pharma, but these figures slightly mask a real picture of innovation as 4 of these products are actually sourced to companies that no longer exist, such as Astra, Rhône-Poulenc and Schering AG.

Whilst innovation across the industry is certainly declining, the biggest fall in R&D productivity is clearly coming from big pharma, despite the vast resources these companies have thrown at the problem.

Meanwhile the biotech model appears to be delivering the goods, suggesting that big pharma’s recent efforts to restructure their R&D operations into more accountable, biotech-style, units is unsurprising. What is more surprising is that these efforts were not initiated some time ago to try and address this decline in innovation.

Number of NMEs attributed by originator   5 year (04 - 08)    6 year (98 - 03)    11 year (98 - 08)   
number % number % number %
Big pharma 56 39% 86 42% 142 41%
Biotech company 52 36% 57 28% 109 31%
Academia 13 9% 18 9% 31 9%
Other 24 17% 44 21% 68 19%
Total 145 205 350

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