Transforming Biopharma Innovation via Global ... - ACS Publications

Chapter 17

Transforming Biopharma Innovation via Global Collaboration Downloaded by UNIV LAVAL on April 5, 2016 | http://pubs.acs.org Publication Date (Web): March 10, 2014 | doi: 10.1021/bk-2014-1157.ch017

Tao Guo* Department of Medicinal Chemistry, WuXi AppTec Co., Ltd., Shanghai 200131, China *E-mail: [email protected]

Global collaboration is transforming biopharma innovation. The biopharma industry is facing tremendous challenges from an increasing number of patent-expiring existing drugs to an increasing cost to develop innovative new drugs. In order to improve productivity and reduce cost, global biopharma has been increasingly outsourcing its R&D services. WuXi AppTec, founded in 2000, has built a comprehensive integrated drug discovery platform with the vision to improve the success of research and shorten the time of development. Having grown from four founders to over 7,000 employees, including over 3,000 chemists, with operations in both China and the US, WuXi AppTec has become the valued collaboration partner of choice for global biopharma. With its integrated drug R&D platform, WuXi is transforming innovation for global biopharma to allow any company use of the platform to discover and bring to market innovative medicines addressing unmet medical needs more quickly and cost-effectively. This paper will examine what it takes to be successful in the globalization of today and the future and how to go about seeking and seizing the opportunity.

© 2014 American Chemical Society Cheng et al.; Vision 2025: How To Succeed in the Global Chemistry Enterprise ACS Symposium Series; American Chemical Society: Washington, DC, 2014.

Downloaded by UNIV LAVAL on April 5, 2016 | http://pubs.acs.org Publication Date (Web): March 10, 2014 | doi: 10.1021/bk-2014-1157.ch017

Introduction The biopharma industry, including small and large pharmaceutical and biotechnology companies, experienced a decline in the forecasted growth, based on prescription drug sales globally. “Prescription drug sales forecast falls $26bn to $827bn in 2016 vs. forecasts in May 2011 (1)” Reasons for the decrease are attributed to the so-called patent cliff and a general decrease in R&D productivity based on the traditional biopharma business model that was successful up until the early 2000’s. 2012 was the most significant time frame for companies facing a patent cliff, the top ten pharmaceutical companies recognized a collective loss of $33 billion of prescription drugs sales due to introduction of generic drugs post patent while forecasts for the next 6 years show a potential loss of over “$290 billion of sales at risk from patent expirations in 2012-18 (1)” The loss of sales from approved patented drugs only begets the question as to the overall productivity of the industry. How are companies approaching filling their pipelines to replace revenue lost as patents on existing drugs expire? Will early stage and discovery level research be neglected in pursuit of late stage candidates? Will companies decrease investment in R&D to show respectable margins while facing lower revenues? WuXi feels that there have been fewer ‘shots on goal’ coming from the traditional R&D model, and has invested in building a platform of R&D capabilities that any company or anyone can access to reach their goals faster and at lower costs.

Patent Cliff “For the pharmaceutical industry, the last days of 2012 will mark the end of the patent cliff, an approximately 18-month stretch during which major drug companies lost exclusive rights to many billion-dollar-selling drugs (2).” As an example of the devastating effects of the patent cliff we can look at Merck’s top selling drug Singulair, a leading asthma and allergy drug. In 2011, this single therapy accounted for U.S. sales of $3.5 billion and global sales of $5 billion. Within four weeks after the patent expiration, Aug. 2012 in the U.S. and Feb. 2013 in major European markets, generic copies of the drug (Leukotriene D4 antagonist) were introduced and Merck faced a 90% drop in sales revenue (1). “Market-watchers say the generic competitors will quickly take two-thirds of the market share for the drug’s sales, with Datamonitor going farther to say generic versions will take over 90 percent of the sales in the United States within a year (3).”

Decreasing R&D Productivity “The number of new drugs approved by the US FDA per billion USD (inflation-adjusted) spent on R&D has halved roughly every 9 years (4).” 184 Cheng et al.; Vision 2025: How To Succeed in the Global Chemistry Enterprise ACS Symposium Series; American Chemical Society: Washington, DC, 2014.


While the patent cliff loomed menacingly over the prospects of the industry’s top biopharma companies, publically held companies worried about showing a profit with plateauing or diminishing revenues. One strategy was to reduce investment in discovery level R&D and invest in later stage prospects. Investment in R&D spending on preclinical candidates or compounds at later stages has remained high, and even increased. However, the increase, in the seven years from 2011-2018 of an average 1.5% compound annual growth rate (CAGR), was much lower than the average increase for the seven years from 2004-2010 of 6.5% CAGR (1). Deloitte and Thomson Reuters conducted an R&D productivity study in which 2012 study results showed “the number of new drug approvals increased by around 30 percent, yet the expected revenue from these medicines actually fell by a similar amount (5).” How are companies planning to fill the pipeline in the coming decade while facing significant decrease in revenues? While cutting discovery costs is a short term solution to showing profits, a long term strategy needs to be developed. In the last few years we have witnessed a plethora of new business model ideas come to the fore. Purchasing preclinical candidates from biotechs, alliances with academic institutes, strategic outsourcing partnerships, and even partnerships or consortiums among competitors have made headlines. So far, the first strategy of buying into a viable entity has shown the most promise. Among the other three strategies, academic and consortium strategies may take ten years to be truly evaluated. Strategic outsourcing, with the right partner is most likely to show results in the next five years. Outsourcing discovery R&D is a recent innovation, as most top biopharma companies considered targets, target validation, and mechanism of action knowhow to be a core competency and the ultimate secrete that separated them from the competition increasing their chance of reaching the market first. WuXi has seen in the last five years an increase in discovery R&D outsourcing. Starting from our foundation as a chemistry powerhouse, we recognized a real need from our partners for a full medicinal chemistry approach to save time and cut costs when developing leads. This expanded into lead optimization and eventually into the preclinical work conducted in cooperation and with the know-how of the lead development teams. The trust extended in this increased willingness to outsource can be seen in today’s novel partnerships. Only five years ago, competitors would not have joined forces nor would top biopharma have handed their target ideas to academic institutions. The loss of the blockbuster ‘one size fits all’ approach with the simultaneous rise in the new paradigm of personalized medicine also accounts for loss of R&D productivity. Recognizing the change in the science and market segments and investing in new technology and training can be demanding for long standing R&D teams. “It has been eye-opening to realize how significantly we will need to invest in transformative partnerships and the broader health care ecosystem to be relevant in 3.0,” says Kim Park of Johnson & Johnson’s Janssen Healthcare Innovation Unit (6). 185 Cheng et al.; Vision 2025: How To Succeed in the Global Chemistry Enterprise ACS Symposium Series; American Chemical Society: Washington, DC, 2014.


As mentioned, cutting costs is an easy start, but increasing productivity is a larger solution. “With an average internal rate of return (IRR) from R&D in 2012 of 7.2 percent -- against 7.7 percent and 10.5 percent in the two preceding years – drug makers are barely covering their average cost of capital, estimated at around 7 percent (7).” A key to WuXi’s success with discovery outsourcing goes back to the ‘shots on goal.’ As the low hanging fruit are harvested and new targets become harder to qualify, the traditional screening approach has recognized a higher attrition rate than in the preceding ten years. Now, a high throughput approach is still productive, but requires more sophisticated techniques to simultaneously look at mechanisms of action. The WuXi advantage in this scenario is the sheer number of scientists and broad spectrum of techniques that can be applied to a target (Figure 1). WuXi has a large staff of highly skilled scientist, that partner with clients offering a flexible and eminently expandable capacity. This increase brings a real increase in throughput and a greater number of viable candidates, yielding more preclinical candidates in less time.

Figure 1. WuXi’s open drug R&D platform helps partners to improve success and shorten development. Larger capacity and more data yield better compounds, thereby increasing success rate of discovery and shortening the time to market, which will result in tremendous savings for the industry and companies.

Core Strength: Our People According to a recent study, scientists at outsourcing firms have “Contributed to the development of all of the top 20 selling prescription medicines and were involved in the development of at least 33 of 38 new medicines approved for use last year in the United States and Europe (8)” “At a time when many people are asking “where are the jobs?” we have a clear answer with the tremendous growth that contract research organizations (CRO) have experienced over the past 10 years,” said Doug Peddicord, PhD, Executive Director of Association of Clinical Research Organizations (ACRO). 186 Cheng et al.; Vision 2025: How To Succeed in the Global Chemistry Enterprise ACS Symposium Series; American Chemical Society: Washington, DC, 2014.


“Our members continue to expand the range and scope of their services, from drug discovery through post-approval studies, developing deep expertise in complex areas like vaccines, biosimilars, comparative effectiveness research, and regenerative medicine (8).” WuXi’s core strength is our people (Figure 2). WuXi AppTec today employs more than 7,000 people globally. WuXi has focused on hiring seasoned leaders from top academic and industry institutions. Our theory is that bringing the brightest minds together is similar to the consortium approach being explored by top biopharma today. Our leadership teams have an average of fifteen, or more, years’ experience and a proven ability to bring discovery concepts to the patients. From authoring patents for their institutions to publishing articles in scientific journals, our leaders are at the top of their field. This seasoned leadership, 70% of which have a MS or higher, is the key to ensuring that the new graduates we hire every year have the mentorship to reach their potential. With thousands employees and customers, stellar program management has become the essential to our shared success. WuXi recognized the need for experienced program managers since the early days of large library synthesis. Now, our program management teams include over 300 western trained professionals with 5-10 years of industry experience. The program management program has been a resounding success, managing over 80 programs across all major therapeutic areas. Over 12 preclinical candidates were delivered in 2012.

Figure 2. WuXi’s core strength is our people.

WuXi Vision WuXi has been building a bench to patient platform for over ten years. Our idea is to make our technology and our know-how accessible for any size company to accelerate innovation, lower the costs and shorten time to market. Like our customers who test new ideas, WuXi has a four tiered approach to making this 187 Cheng et al.; Vision 2025: How To Succeed in the Global Chemistry Enterprise ACS Symposium Series; American Chemical Society: Washington, DC, 2014.


open platform successful. We endeavor to constantly enhance our capabilities, work closely with customers to transform innovation, broaden our reach to meet global needs, and fuel innovation by investing in promising companies. ‘Enhancing our capabilities’ means investing in new technologies and partnering with resources that marry well with our existing technologies. Lowering costs of R&D has been an ongoing strategy for many of our customers, but still the cost of developing an asset has risen since 2010, “The average cost of developing an asset between 2010 and 2012 has increased by four percent, from $1,089 million in 2010, to $1,137 million in 2012.” In addition, the cost of failure for discovery compound increased 6% per asset (5). WuXi’s approach has been to focus on investing in the discovery or ‘front end’ of innovation in order to help our clients build pipelines. Recently we have invested in later stage technologies to keep up the momentum to the clinic and market. One result of this investment has been a transformation in innovation. Partnerships with our large pharma customer have led the way to more strategic outsourcing paradigms. Our partners recognize our commitment and benefit from our investment to help reach their pipeline goals at a margin that pleases their stakeholders. More recently, WuXi began an investment fund to kick-start promising companies. Starting with Hua Medicine in 2011, to Novira and Foundation Medicine in 2012, we believe these innovators are on the verge of breakthrough technologies and therapies. Our latest approach is to help launch novel therapies in China, which is the fastest growing healthcare market in the world, and eventually can be a platform for global launch.

Global Collaborations WuXi PharmaTech joined forces with AppTec Laboratories in 2008 with the aspiration to providing global solutions to the biopharma industry. Today, the combined company WuXi AppTec has over 12 total R&D sites, with offices in Europe as well. Five years ago, the advantage of global collaboration was access to high quality low-cost scientific skills in China combined with expert scientific, regulatory and market access experience in the US and EU. Today the advantage of global collaboration is broader, still taking advantage of scientific know-how in both China and the US but now looking towards China’s fast growing healthcare market as a significant unmet need. WuXi AppTec is well positioned globally to provide efficient, cost-effective value across the entire spectrum of research, preclinical development, manufacturing, and commercialization.

188 Cheng et al.; Vision 2025: How To Succeed in the Global Chemistry Enterprise ACS Symposium Series; American Chemical Society: Washington, DC, 2014.

In Conclusion


The biopharma industry is at a cross roads, but the horizon looks promising. Outsourcing, once exclusively in the clinical field, or isolated to niche technologies in R&D fields, has become one of the ways forward through the ‘storm’. WuXi has had the advantage of moving quickly to offer a trusted, efficient, and low cost solution for R&D, growing from early discovery all the way to the clinic. Combining resources in China and the U.S. was another approach to bring together global competencies to accelerate development. Our four tiered strategy supports innovation and transformation. For chemists looking for jobs today, a well-respected global outsourcing provider is an optimal choice.

Acknowledgments Thanks are due to Megan Rooney at WuXi AppTec for her help on the manuscript preparation.

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189 Cheng et al.; Vision 2025: How To Succeed in the Global Chemistry Enterprise ACS Symposium Series; American Chemical Society: Washington, DC, 2014.

Transforming Biopharma Innovation via Global ... - ACS Publications

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