The Research and Development market has seen the greatest changes over the last 10 years within the industry. With big pharma wrestling to adapt a formerly successful model that each year is producing decreased levels of output, we are now amidst the middle of the cycle with a move away from investing in single large-scale R&D sites to diversifying interests across geographic regions, technologies and partnering firms.

This approach is leading itself to increased open innovation, out-licencing and in-licencing of technology, and outsourcing models that drive down development costs and even partnering and profit sharing arrangements.

By decentralising the industry away from big pharma and downsizing into a greater number of smaller and more nimble biotech, CRO and discovery and development companies, pharma has vastly increased flexibility and the ability to switch between innovative targets.

The downsize of this approach has obviously been that it has decentralised regulation and increased the number of different methodologies used- meaning that many projects have a unique set of challenges and a greater degree of variants between timelines.

This model, however, has matured over the past couple of years and we are now seeing a solution that enables increased innovative output from the R&D industry, whilst maintaining a more standardised approach to R&D and, crucially, approaches to measure effectiveness and ROI.

This CPhI Pharma Insights Report examines the current trends in evaluation, adoption and partnering solutions that have been implemented across the industry to drive greater innovations and cost efficiencies.

Cancer is the main R&D focus in 2014
Almost a quarter of survey respondents indicated that they are focusing their R&D efforts on cancer. This is an unsurprising yet welcome result, particularly as the World Health Organisation (WHO) has predicted a cancer “tidal wave” on the horizon- with an estimated 24million cases a year by 2035. In the past oncology and the quest to seek effective anti-cancer treatments have been subject to significant problems, conceding their chances of being brought to market.

There are two branches relating to anticancer research. The first is built upon understanding and counteracting the cause of cancer progression (e.g. the mechanism of metastasis), whilst the other (largely adopted by big pharma) focuses on bringing clinical products to market faster, by developing drugs which action on tumour shrinking, rather than inhibiting progression.

The latter of which may well be more attractive to big pharma, owing itself to a more clear regulatory pathway to the former.

However, more recently new manufacturing practices and single use technologies which have lead to the rise in cytotoxic drugs and Antibody Drug Conjugates (ADCs), are now seen by big pharma as having a clear regulatory pathway to market, providing a plausible explanation for the increased R&D focus.

Looking to the future, perhaps we will witness the two branches coming together- a sign of which is evident in a current clinical trial being carried out by a big-name pharma company. This study of early stage anticancer treatment addresses initial causes of the disease and is looking towards the development of novel therapeutics, such as kinase inhibitors, epigenome modulating compounds and immunotherapies. Taking kinase inhibitors as an example, the drugs in development will target protein and lipid kinases to inhibit the consequential over-activation of the kinases, causing mutations and/or over-expressions- resulting in cancer. There are currently an estimated 150

kinase-targeted drugs within clinical development, comprised within the overall approximate of 1000 anticancer drugs in development at present.

Delving deeper into the survey results, CNS, Cardiovascular and Antibiotics were identified as the joint-second highest R&D focus areas. However, focus on diabetes seemed somewhat low considering the amount of worldwide cases- with just 5% of respondents revealing this as a focus.

Is this reflective of a lack of promising targets or the success of existing drugs in the market and therefore a reduced potential market share for newer, more expensive drugs?

The significant focus on antibiotics may come as a surprise, despite being an increasingly important R&D need, in light of increased bacterial adaptations, lending itself to multi-drug resistance. The fact that antibiotics do not generate a regular stream of income within the pharmaceutical market poses a threat to the research and development advancements, however survey results have provided positive re-assurance.

Combination drugs and personalised medicines are key novel focus areas
CPhI’s research has indicated that both Combination Drugs and Personalised Medicines are key novel focus areas for R&D (at 37% and 20% respectively). These findings are supported by the survey results reflecting that cancer is the main focus area for 2014. Combination drugs and personalised medicines are complementary and it is likely that we will see the two go hand in hand more often, as industry looks to evolve within the oncology field.

Currently, many oncology targets have been focused on cytotoxics and other highly potent APIs, which is now establishing itself as a key driver within the industry. Furthermore, anti-body drug conjugates (ADCs), the combination of monoclonal antibodies and active drugs, were at the forefront of cancer R&D in 2013, and this breakthrough trend is likely to continue over the next few years, aided by Combination Drugs and Personalised Medicines.

Cardiovascular and CNS drugs will also benefit considering the usage of high-potency drugs throughout treatment. This highlights the growing trend and need in manufacturing and R&D research to have specialist skills to handle high potency compounds and controlled drugs.

Nanotechnology and drug devices
Another area showing prominence within industry innovation research projects is nanotechnology (17%) and drug devices (12%) suggesting improvements in drug delivery mechanisms are being actively sought.

Partnering and outsourcing
One clear trend that has been well documented over recent years has been the rise in partnering and outsourcing models across the industry. CPhI research shows that over three quarters of the respondents are now partnering in their R&D programs and nearly two thirds are using a contract service provider (e.g. CDMO/CRO). However, a more surprising finding and one suggesting that R&D companies are looking for even closer ties is that 20% of companies have actually merged or acquired an R&D partner in the last year alone. In the longer term, should this trend continue, we can envisage more ‘outside of the box’ partnerships between larger players such as the one between Genentech and Roche.

The rise in industry partnerships (75%) has been anticipated by many analysts, as the need to lower costs increases. Forming partnerships between companies generates more innovative technologies and ensures better manufacturing and development practices. Respondents said that they are mainly partnering with research institutes (32.5%), diversified pharma companies (15%) and smaller, research-focused companies (15%), suggesting that R&D activity has moved towards finding pre-existing targets with the potential to be developed and is no longer focused on discovering personal NCEs.

Technological collaboration
A key differentiator in the future of the R&D sector will be access to the most innovative techniques and processes allowing previously unstable and/or difficult to formulate products with poor release profiles to come to market. Beyond this, however, technologies that enable quicker development timelines, reduced costs and/or regulatory approvals are also keenly sought in a globally competitive marketplace.

Improving efficiency a significant R&D challenge
Our research revealed some key concerns and potential problems for the industry. Respondents disclosed that their main challenge within R&D is balancing long-term and short-term goals, with 52.5% highlighting this as the major obstacle- suggesting a difficulty in meeting targets, milestones and financing between clinical trial stages whilst also balancing the objective of bringing the product to market.

Overall, it seems that the industry has matured its approach to measuring value and ROI of R&D, with only 25% of the market viewing this as a top challenge.

Diversified knowledge
A progressive trend over the last 10 years has been the gradual shift of knowledge from big pharma to the CRO and outsourced market. It is apparent that pharma companies and suppliers should be open about their respective skill sets to ensure that regulation and good manufacturing practice is not compromised. With this increased risk, it makes it vital that companies select the right partners or outsourced suppliers- as being able to meet regulatory hurdles and milestone achievements in a timely fashion is now a key market differentiator. This concern is highlighted by the fact that knowledge management (30%) and ensuring regulatory compliance (32.5%) are seen as major R&D challenges, resulting in a new area of outsourced specialisms to ensure regulatory approvals do not hold a barrier to market. What we are now seeing is the rise of the specialist within outsourced partners- a skill set to navigate the approvals process and QP release is vital in keeping R& D on time and on budget.

Improving efficiency surveyed as a top challenge also, at 37.5%, with the industry acknowledging the importance of adopting processes and mechanisms in order to improve efficiency and streamline R&D. However, this challenge is yet to be overcome sufficiently to ease capital pressures. For instance, US and European markets are progressively forced to compete with India and China which are enabling comparatively lower cost research and development and, once patent concerns are more tightly regulated, we may witness a more seismic shift in the research landscape. For now, however, it seems that the industry is committed to improving efficiency to drive down costs and improve time to market.

The rise of continuous processing and the quest to get to market faster
The quest to get drugs to market faster and reduce product failures and costly manufacturing corrections has understandably resulted in companies bringing in commercial side considerations at an earlier and earlier stage. Nearly one third of those surveyed were in fact undertaking commercial considerations even at the pre-clinical stage. However, in light of the need to focus more prescriptively on quality controls and regulatory changes it is disappointing, and unforeseen, that some 20% do not evaluate these until after phase iii.

With budgets becoming ever more squeezed and new product approvals shrinking, a key trend has been for the industry to start quantifying the value of its work produced. Process analytical technology (PAT) and Quality by Design (QbD) are increasingly being used across the board, with 40% using QbD to measure effectiveness for both technical and analytical. Ensuring drug product quality at this earlier stage will be invaluable in meeting regulatory requirements during the approvals process, particularly for those in generics as a Question-Based Review approach is now required by the FDA’s Office of Generic Drugs. 6 Sigma, Stage Gate and Lean are also used by 18, 15 and 12 per cent of respondents.

A stage gate approach has been particularly effective in analysing the jump to continue financing a product when between pre-clinical and clinical trial phase- the wider question is whether this provides an effective model for evaluating success at Phase II and III trial stages. 6 Sigma and Lean, particularly when used in combination with each other, have been shown to be effective in reducing waste. However, some concerns are still voiced around whether this reduces true innovation or makes innovation work better towards business goals.

Drawing together these findings there is a clear desire amongst all companies to ensure future R&D spend is prudent and focused on bringing future products to market. Together these changes, alongside the evolving regulatory environment, should mean that increasingly we will see continuous processing being used through the development cycle and into commercial scale manufacturing. Further, with QbD on the increase it should allow for a faster transfer between stages and allow manufacturers to move away from batch style processing- in theory at least, this could even remove the need for QP release altogether.

With cost effective innovation models now becoming the de jour approach it is unsurprising that we are witnessing a more open innovation approach to technology licensing- with over half (55%) of all companies out-licencing their technologies and more than 60% using licensed technologies within their own R&D efforts. This is an encouraging trend for the industry and one that, in the longer term, should provide increased cross-pollination of projects and enable even the smallest R&D companies access to technologies that could bring their products to market faster and, crucially, with a reduced R&D spend. With the viability of product development processes being increasingly managed through quality and control methods, the cost and access to crucial technologies will be the essential action point on a project’s success.