NEWS OF THE WEEK
RETURN ON PHARMA R&D HITS NEW LOW ANALYSIS: Increasing costs, declining drug sales put 2015 R&D payback at six-year low
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VERY SILVER LINING has its cloud. Although
FDA’s approval of 45 new drugs in 2015 is an almost two-decade high (see page 12), the returns that large pharmaceutical companies generated from their R&D COUNTERFLOW Rate of return on investments hit a new low. In 2015, drug company R&D hit a low in 2015. the average rate of return fell to 4.2% from 10.1% in 2010, according to the Average return, % Deloitte Centre for Health Solutions. 12 10 Deloitte, a consulting firm, factored 8 in development costs and forecasts 6 of peak annual sales for the late-stage 4 drug pipelines of 12 major pharma 2 companies. The poor return in 2015 0 compared with 2010 came from a 2010 11 12 13 14 15 “stark imbalance” between costs, NOTE: Calculated with data from Amgen, which have risen 33% to an average AstraZeneca, Bristol-Myers Squibb, Eli Lilly & Co., GlaxoSmithKline, Johnson & Johnson, Merck & Co., $1.58 billion per drug, and predicted Novartis, Pfizer, Roche, Sanofi, and Takeda. peak sales, which have fallen 50% to SOURCE: Deloitte $416 million.
JAMAL RAFIQUE
CHEMISTS KILLED IN PAKISTAN ATTACKS OBITUARY: Community mourns loss
of professor Syed Hamid Hussain and student Sajid Hussain
ZARBAD SHAH
Syed Hamid Hussain
Sajid Hussain
B
ACHA KHAN UNIVERSITY chemistry professor
Syed Hamid Hussain, 34, and undergraduate student Sajid Hussain, 22, were among the people killed in a terrorist attack at the school in northwest Pakistan on Jan. 20. The assault involved four gunmen and was orchestrated by a Pakistani Taliban militant based in Afghanistan, Reuters reported on Jan. 23. Because of concern about terrorist attacks, university faculty had requested and received permission to carry handguns, Syed Hamid Hussain told former lab mate and friend Jamal Rafique last year. When the Jan. 20 attack occurred, Syed used his handgun to defend faculty and students before he was killed, Bacha Khan chemistry department chair Zarbad Shah says. Syed received an M.S. and Ph.D. from the University of Peshawar, where he worked with chemical sciCEN.ACS.ORG
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Since 2010, the 12 drug firms have launched 186 products with estimated lifetime revenues of $1.26 trillion and moved 306 candidates into late-stage development. Between external market pressures and internal productivity challenges, “life sciences R&D is not currently generating a significant return on investment,” says Deloitte Partner Julian Remnant. On a positive note, the impact from terminated R&D projects dropped by more than 60% to about $30 billion for the group. And at individual companies, good returns can arise from consistent efforts in a therapy area and a focus on specialized drugs. Deloitte also looked at four mid- to large-sized companies—AbbVie, Biogen, Celgene, and Gilead. With 25% lower costs and 130% higher forecast sales than the group of 12 large firms, the four had an R&D return of 17%. This success, Deloitte concluded, points to the “economic viability of a different R&D business model.” For this smaller group, the revenue side of the equation is greatly skewed by high-priced products, such as Gilead’s hepatitis C drug Sovaldi, points out John LaMattina, a director at the venture firm PureTech and former Pfizer research head. Even excluding Sovaldi, Deloitte analysts say the small group’s forecast sales remain 57% higher. Declining peak sales will continue to influence returns at companies of all sizes. With payers trying to negotiate down drug costs, LaMattina says, “there are going to be more downward pressures on drug revenues.”—ANN THAYER
ences professor Mohammad Arfan on phytochemistry research. “He always loved chemistry, and we were always staying late in lab for research work,” says Rafique, who also worked in Arfan’s lab in Peshawar and is now a postdoctoral fellow at the Federal University of Santa Catarina in Brazil. “He was extremely devoted in teaching and research, always helped students and common individuals, and was an extremely honest and polite person,” Rafique adds. “I lost the most precious and dearest friend.” Syed joined the faculty at Bacha Khan in 2013 and continued to study phytochemicals. “He was very friendly with students and very cooperative with his colleagues,” Shah says. “He was also a very good experimentalist and a good researcher.” Syed is survived by his wife, three-year-old son, and infant daughter. Sajid Hussain, who is not related to Syed, was in his final year as a chemistry major at Bacha Khan. He was famous at the school for writing “Sajid Chemist” on his table in the student residence and to identify his lab space, Shah says. “He was very keen on research” and was working with Shah on a research project to synthesize calcium complexes with N-donor organic ligands, Shah says. Sajid had just finished exams and was starting to focus on his research work on the day that he was killed, Shah says.—JYLLIAN KEMSLEY
FEBRUARY 1, 2016
