During the last two decades,  pharmaceutical companies have been plagued with an issue of great relevance to the industry’s survival and growth. That is related to the declining productivity of R&D which is indeed the life line of the industry. While the costs of research and development of new drugs are increasing and the top companies are spending up to 20 per cent  of their revenues on this activity alone, the number of new drugs reaching the market after all regulatory approvals, during the last few  years have reached all time lows.

In 2010 the U.S.FDA approved only 21 new molecules of which four  were biologicals (based on biotechnology) and the rest, synthetic molecules. Against a global turnover of $ 875 billion in 2010, R&D expenditure the same year was over $ 75 billion. The high prices of new drugs launched are due to the fact that successful drugs have to recover the costs of failures during the drug development process. Therefore new drug discovery models should aim at   reducing the number of failures and identifying potential failures at an early phase of the development process.

The role of patents
The survival of the present day model is dependent on the ability of the investing company to recover the costs incurred  on new drug discovery and development through the exclusivity it enjoys in the market through an effective patent system. While the system provides the rights to the patent holder to fix the prices of patented drugs, in actual practice there are compulsions  in the market place which limit prices  as low as possible. Moreover, the healthcare systems in most countries as well as the insurance agencies who reimburse drug costs, put further restrictions on the pricing front. In addition, many countries have statutory price controls  for drugs, regardless of the monopolistic prices which the patent holders are entitled to charge the patients. Further, the Doha Declaration of 2001 stipulated that regardless of  the  rights  of the patent holder,  whenever and wherever public health issues are involved and drug prices act counter to such interests, the latter will supersede the former. In such cases the  countries  affected have a right to issue compulsory licenses to offset issues connected with affordability of drugs. This is over and above the provisions in the TRIPS Agreement itself which mandates the issue of compulsory licenses to third parties in  cases of   national emergencies or   extreme     urgency facing the country such as in the case  of an epidemic.

Need for new models of R&D
Considering such an emerging scenario, it has become imperative for R&D based pharma companies to ensure that the much needed new drugs are discovered and developed through more cost -effective approaches and delivered to the target markets expeditiously. Yet another challenge facing the pharma industry is to ensure that side by side with the discovery of drugs  for life style related diseases , efforts are deployed to develop drugs for many of the neglected diseases, largely affecting the developing countries where 70 per cent of the world’s population reside. Purely from a return on investments perspective, markets for drugs for such diseases are not  as attractive as for those affecting the more affluent populations. Apart from malaria, TB and HIV/AIDS which have attracted attention of  public funded  and philanthropic R&D organisations and are therefore not neglected, a large number of others such as Leishmaniasis, Trypanosomiasis, Schistosomiasis, Onchocerciasis and various  viral, helminthic and protozoal infections  affecting over a billion people have no satisfactory drugs for control or cure.

Rational  approaches to  drug  discovery
The compulsions to rationalise drug discovery approaches stemmed from the following imperatives. 1) Better  drugs with a higher therapeutic ratio (efficacy to safety)  and therapeutic rationale were  needed for most disease conditions 2) the time required for the discovery and development of new drugs needed to be  shortened  3)  overall   costs   needed   to   be reduced to contain escalating costs on drugs as a component of healthcare costs and  4) companies had to have products with unique properties to gain competitive advantages and market share.

Generally the new  approaches to  rationalise  new drug discovery are:
1) building large chemical libraries of new synthetic molecules as well as natural product extracts, subjecting them to High Throughput and Ultra High Throughput Screening using robotic systems 2) Structure Activity Relation (SAR) studies on the lead molecules and 3) development of QSAR techniques to minimize the number of molecules  which needed to be synthesized.
2)
Christopher Lipinski of Pfizer  looked at over 2000 drugs in the market in search of common properties and qualities  which made them  ‘druggable’ candidates. Using the     Lipinsky’s rule of five he evaluated over 7000 molecules subsequently and observed that  90 per cent of them obeyed the basic rules of needing five or more hydrogen bonded donor  sites and   solubility in fat and water. These rules, however empirical they appear to be are being utilised by many groups involved in drug design particularly for modifying lead molecules.

Open source drug research models
In recent times,  the idea of open source drug research models have been mooted as one possible way of expediting drug discovery research and   reducing costs and time required to discover and develop new drugs. Several variations are available. However it is clear that this approach  could assist only the discovery component and  not the development efforts, which includes extensive pre-clinical and clinical testing and as such  are the major cost components.

Many companies are also offering  free patent pools on neglected diseases to be made available to potential drug development teams. Here too only a very small part of total costs can be saved since patents only provide the basic knowledge on the invention with little  other practical inputs useful for drug development per se.

Biotechnology products
With the advent of biotechnology products based on recombinant DNA  drugs and monoclonals, interest in biologicals is growing. In 2010, four of the  10 top selling drugs were biotechnology drugs. It is estimated that by 2020 , half of all drugs discovered will be biologicals. All the major pharma companies are already in the biotech space looking at biotechnology as the source of new drugs. However,    most   of   the    newer biotechnology products still are patent protected except the first generation drugs, human insulin, human growth hormone, erythropoeitin, interferons, interleukins and Hepatitis B Vaccine whose patents have expired. Launching of biogenerics to replace the original patented products has  not been straightforward as in the case of conventional drugs, since  bioequivalence of biosimilars is not easily established.

Biotech products, in any case  cater to niche markets and are useful only for specific disease conditions. They are high priced (annual costs of treatment could be $ 50,000-100,000) and hence are unaffordable and inaccessible to the majority of poor patients who need them.

What then are the possible alternatives?
Three major strategies have been adopted by Big Pharma in recent times to reduce overall costs of drug discovery and development.

The first one is the strategy of acquisitions and mergers to make drug R&D investments more affordable for the larger merged entities.  Second strategy is to outsource parts of drug discovery and development activities from third parties at considerably lower costs. Third one which has been somewhat   successful   particularly   in  the Biotech area is to  license in drug candidates from small R&D based start- up companies, thereby reducing the costs of early and high risk research. Empirical studies show that none of them singly or together have indeed worked and delivered the desired results. There are yet other approaches which merit consideration. Historically during the drug development process several valuable candidates are never developed for purely commercial or patentability reasons. There is a strong case for relooking at those molecules to see whether useful  drugs can be salvaged  from  those.

Similarly,  searching  and  identifying  new indications for existing drugs would be a very valuable exercise. After all, 20 per cent of drugs currently marketed  are for conditions other than those for which they were delivered and registered in the first place. Such discoveries have been made on the basis of clinical observations or through understanding the nature of unexpected adverse reactions when the drug is used in large populations. Newer delivery systems  based on frontier technologies such as nanotechnology and the development of chiral molecules from currently used racemates would provide opportunities to develop new drugs with better efficacy and/or less toxicity.

Traditional medicines
Systematically evaluating products which have been used as traditional medicines and validating their efficacy and safety would     contribute   many    useful   drugs,   particularly   for conditions for which current therapy is ineffective. In most of these cases one of the major issues would be lack of IPR protection for many of them since they would fall short of the criteria laid for patentability. The TRIPS Council  through  the World Trade Organisation   should  find  legal  means  for   ensuring  grant  of exclusivity  for such discoveries through a new and untested protection system, along the lines of an internationally accepted  “Sui Generis” mode.

It is obvious that the pharmaceutical industry which has been responsible for the discovery and development of new drugs should take a fresh look at developing new  cost effective approaches, if its prime objective of providing effective and safe drugs as a strong support system for healthcare for populations around the world is to be achieved.