Soup to Nuts Replay

Almost one year ago, I wrote about Epirus Biopharmaceuticals, Inc., a Boston-based start-up, that is developing a line of biosimilar drugs, the first being a biosimilar for Remicade™, an anti-inflammatory antibody sold by Janssen. Here’s that post from July 4, 2013, with an update at the end.

Although there’s a little voice inside my head telling me to get a life, I thought I would peck out another blog posting about a business model for bringing affordable pharmaceuticals profitably (or at least with a positive cash flow) to underserved markets. The model I have doodled about in previous posts involves a company providing a high-value, but non-novel/off-patent biopharmaceutical drug (or vaccine) that is manufactured in a relatively low-cost manner and sold in volume with a modest mark-up, possibly to public sector buyers (e.g. government health agencies) and/or subsidized by multinational donors. In the post, “Generics Play” (September 2011), I noted the Indian generic companies like the mid-tier pharma, Cipla, and the biotech, Biocon, are developing such “biosimilar” drugs and building manufacturing capacity. In a follow-up the next week (“Biosimilar Fever”), I wrote about the multi-national pharmaceutical companies’ interest and investment in developing biosimilars for the major markets of the US/EU/Japan and that, thanks to industry lobbying, the US FDA proposed a challenging approval path, making the EU market a better target for the biosimilar makers since the European Medicines Agency (EMA) has based its approval on the less-rigorous concept of proving “interchangeability.”

As for the manufacturing factors in the model, in “More Grease on the COGs” (December 2011), I noted that GE Healthcare, a multi-billion dollar division of GE, and the M+W Group, a multi-billion dollar German engineering and construction firm, announced that they had formed “a strategic alliance aimed at overcoming the lack of key biopharmaceuticals, especially in emerging nations … [and] will assist countries worldwide to become self-sufficient in the manufacture of vital biopharmaceuticals such as vaccines, insulin and biosimilars.” To me, this alliance indicated the partners had concluded that middle-income countries are serious about becoming pharmaceutically independent and were willing to commit multi-hundreds of millions of dollars. I also noted in a posting after BIO 2012 (“See Change”) that GE Healthcare seemed to be complementing its super-scale factory option by buying a local (Marlborough, MA) company, Xcellerex, for its flexible, modular, and relatively inexpensive biomanufacturing system. Finally, in my post, “Discount Drugs” (May 2012), I wrote about the $2 billion launch of Samsung Biologics (by a company better known for its consumer electronics) and wondered if the company will apply biomanufacturing efficiencies analogous to those that allow $50 smart phones and also where it may find those new process efficiencies.

All of the above activity is evidence for big corporations (except for Biocon, which is India’s largest biotech) adopting a non-major market biosimilar business model, but none of these players has made a product and gotten it approved, let alone generated revenue, in a non-major market. So I’ve been on the lookout for validation in the form of a venture-capital-backed start-up with an explicit mission statement of developing biosimilars for the non-US/EU/Japan, rest-of-world markets, and recently found one: Epirus Biopharmaceuticals, Inc. (Epirus).

Epirus was apparently in stealth mode as “fourteen22, Inc.” and based in San Francisco in 2011-12 and now is located in an office in the Prudential Building here in Boston. Epirus’s approach, which it has nicely branded as In Market, For Market™, is to “combine new technologies and strategies to address macroeconomic trends in emerging environments in order to deliver biosimilar products to patients” (Approach). The new technologies are the single-use, disposable techniques and equipment that enable lower-cost, customizable biomanufacturing (branded as SCALEÔ), and the new strategies are to contract with local/regional pharma companies, with the encouragement and possibly financial support of local governments, to enable testing, regulatory approval, and sale of biosimilars in regional markets. As described in the company fact sheet (Fact Sheet), the company “is focusing on a range of emerging markets, including, Brazil, Turkey, Russia, MENA [Middle East, North Africa], and the ASEAN [ten countries of southeast Asia] markets,” but notably not India and China. The financial rationale behind this soup-to-nuts approach with partners (product candidate through manufacture, testing, and approval) is that it sidesteps the regulatory and launch hurdles of the major market countries, shares the cost/risk with the partners who know the local markets (and regulators), and results in opportunities for selling multiple, regional contracts/licenses and for governmental subsidy. For the company customers, the upside is increasing their manufacturing capability, product development experience, and eventually revenues in a regional market.

Epirus has an impressive management team and investment (unspecified amount) from three top notch firms: 5AM Ventures, Montreux Equity Partners, and TPG (Texas Pacific Group) Biotech. The seven senior managers have had roles in multiple biotech/pharma companies each with lots of manufacturing and product development experience (I may know one, Mark Melville, who was with Wyeth Biopharma/Andover when I did business development for that group). The board member representing TGP Biotech is Geoff Duyk (our paths intersected when he was an assistant professor at Harvard Medical School and I did tech transfer there) who has also been involved in another start-up for emerging market pharmaceuticals, moksha8. The company has also made impressive progress on its lead product, a biosimilar for RemicadeÒ, an anti-inflammatory antibody sold by Janssen, that is in a Phase III trial, announcing in January the successful completion of a Phase I bioequivalency trial in the UK (News). The company expects to launch this product and another unnamed protein therapeutic in 2014 and has four preclinical products (Capabilities). Although the company has no partners for any of its products, it claims it is “in active discussions for regional partnerships in certain markets.”

I wondered how Epirus, a virtual company, had sufficient personnel to manage its own product development and market those products and its biomanufacturing platform globally (and wondered about the source of its product candidate and platform). Epirus lists five corporations as “technology partners” who “help us deliver the EPIRUS Biopharmaceuticals solution to market. Our partners have expertise in product development, infrastructure design and manufacturing,” although the nature of the relationships is not clear, i.e., who is paying whom. One of the partners is GE Healthcare, probably the source of the manufacturing platform via its Xcellerex acquisition. I am assuming that these partners have granted Epirus agency (a right to represent), but the idea of negotiating a geographically-specific, product/platform, technology support and transfer deal with multiple parties one of which may be an autocratic government and satisfying multiple suppliers makes my head spin. Clearly, deal-making in emerging markets can be complicated (see the recent product and tech transfer agreement between Protalix and the Brazilian Ministry of Health, Protalix press release), so I look forward to Epirus’s first deal.

Update: since the start of 2014, Epirus has:

  •  signed a deal with Ranbaxy, the India-based division of the Japanese pharma, Daiichi Sankyo, for commercial rights to BOW015 (its lead product) for a “broad range of territories including India, selected South East Asian market, North Africa, and several other markets” (January 8 press release);
  • raised an additional $36 million and brought in new investors and announced it plans to go public through a merger with a Nasdaq-listed company, Zalicus (to be completed this summer) (April 16 press release);
  • announced Phase III results for BOW015 that showed similar, if not slightly superior, efficacy in comparison to Remicade (June 11 press release); and
  • apparently is no longer presenting on its website the approach I cited above, to wit, to “combine new technologies and strategies to address macroeconomic trends in emerging environments in order to deliver biosimilar products to patients”. My guess is that the management thought that this theme will be difficult for public investors to understand and buy into.

 

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One Trillion Plus

That’s a big number and it is also the total amount to be spent globally on medicines in 2014 as estimated by the Institute for Healthcare Informatics, a subsidiary of the for-profit pharmaceutical and health care information company, IMS Health.  In its just-released report, “Global Use of Medicines:  Outlook Through 2017” (IMS report), the Institute provided a readable summary of trends and drivers for those interested in global pharmaceutical business.  Using the multiple data streams of the parent company, the authors forecasted a modest growth rate of about 3% with higher rates of growth outside the major market countries.  In the mature market countries, defined as having have health care spending of more than $100 per capita, they gave growth forecasts of 0% (Spain) to 5% (South Korea), and in the “pharmerging” market countries (less than $100 per capita) rates of 5% (Turkey) to 15% (China).  The report also noted the geographic distribution of spending between the major markets of the US/EU/Japan and the rest of the world (ROW) will be approaching 50/50 in 2014-17.  The authors reported their forecasts are more uncertain than those of the past and prepared three alternative scenarios to attempt to bracket the uncertainty.  Here is my abstract of their key observations:

  • cost containment and slow economic recovery in Europe will limit spending on meds there;
  • remodeling of the health care system in the US will affect spending but the direction and magnitude are uncertain in part due to the unpredictable political situation;
  • in the major market countries, medicines for cancer, rare diseases, and diabetes will have an increase in their share of the spending;
  • in the ROW countries, increases in government investment in health care and the number of out-of-pocket payers will drive the increase in spending with an emphasis on generic meds; and
  • while new medicines in the pipeline will significantly improve treatment of a number of diseases that have the large impacts on health in both major market and ROW countries (heart disease, stroke, lower respiratory infections), the pipeline is lacking for meds for diseases like malaria, tuberculosis, neonatal sepsis, and diarrhea that have major impacts in the ROW (HIV treatment is an exception).

Not surprising is that I found the Institute’s big picture confirmed my bias that the future of the pharma industry depends on its ability to meet ROW needs.  The report also provides an economic and social framework against which to evaluate the actions and plans of the major global health actors- governments, multi-lateral funding groups, unilateral funders, and companies (multinationals and regionals).  As regular readers know, my themes are that to improve global health governments and funding groups should be building countries’ health care systems (including payers like insurance, regulatory and approval agencies, and delivery infrastructure; see my posts, “From Bad to Worse” and “Victory!”) and companies should be building their abilities to sell existing meds affordably and inventing new ones for unmet needs (e.g., my posts, “Playing the Long Game”  and “Trickle Down”).

Speaking of ROW strategies for companies, in a recent interview, Andrew Witty, CEO of the big pharma, GlaxoSmithKline (GSK), spoke of GSK’s strategy for India, an important pharmerging market, and gave advice to the industry.  As reported by the Economic Times of India (Economic Times article) and noted in FiercePharma (FiercePharma article), he said that he understands the need for the Indian government’s controls on drug prices and its attempt to increase competition by deceasing patent protection, but he also noted that the government should take a less adversarial position with big pharma companies.  He was quoted as saying that “there are alternative ways to achieve” cost savings, “and having a good dialogue may create positive ways to do it.”  To succeed in the ROW markets, he said that companies need operate in the “real world,” look at the long term, and come up with competitive and efficient business models.  Along the lines of the last point, during the same visit to India, he announced GSK’s intent to add to its multi-million dollar investment in expanding manufacturing capability in India by building a $135 million facility, likely in Bangalore (FiercePharmaManufacturing article).  In addition to having the capacity to produce upwards of nine billion doses of meds per year, the factory will utilize “continuous processing” technology to reduce waste and cost and will be the second of its kind for GSK, the first being a $50 million plant being built in Singapore.  It is interesting that GSK chose southeast Asia for the new plants, not Europe or China, and that Witty stated in an earnings call earlier this year that its commitment to this technology will result in very significant improvement in efficiency and reduction in costs, both capital and operating (also a FiercePharmaManufacturing article).  Close behind GSK is Novartis.  Starting in 2007, Novartis has been the sponsor of a 10-year, $65 million collaborative program on continuous processing at MIT and last year demonstrated a process that integrated several new chemical processes and equipment and could make a higher-quality drug faster and with less waste (Technology Review article).  Novartis’s CEO has said that the company will build a continuous processing facility by 2015 but not where.

Rxs for Vxs

The international and multilateral effort to deploy vaccines against the infectious diseases of childhood and poverty has resulted in millions of lives saved and illnesses averted, contributing substantially to personal and national health and well-being.  But at the same time, there are scientific and political challenges that are limiting the extension the benefits of vaccination.  To overcome these challenges, the experts of the vaccine community have identified a set of goals.  In the technical/scientific category these include:

  • Vaccines that confer long-lasting immunity with a single dose (e.g., through new adjuvants);
  • Vaccines that do not require refrigeration;
  • Alternatives to delivery via injection;
  • Antigen design especially for parasitic diseases; and
  • Curative vaccines (see Gates Grand Challenges 1-6 and 12).

Under policy goals there are:

  • Expansion of funding options, especially for the low- and middle-income countries;
  • Strengthening immunization delivery and monitoring systems;
  • Improving public acceptance of vaccination; and
  • Utilization of evidence-based vaccination programs (Cochi 2011).

Often overlooked by the experts though is the role the biopharmaceutical industry can have by improving existing vaccines, inventing new ones, and increasing access and affordability through competition.  Thanks to the Bill & Melinda Gates Foundation, progress was announced on three efforts involving industry in the past month.

In early October, PATH’s program to help Chinese vaccine manufacturers enter the global health vaccine market reached a milestone (PATH is a Seattle-based product development program largely funded by the Gates Foundation).  WHO announced that it had added a vaccine for Japanese encephalitis made by China National Biotec Group (CNBG) to its list of prequalified vaccines, meaning UN agencies like UNICEF can purchase the vaccine for their immunization programs and purchases by eligible countries may be subsidized by the GAVI Alliance (WHO press release).  PATH has spent a substantial sum (I’m not sure how much) and has provided expertise over the past ten years to Chinese companies and the Chinese drug regulatory authority to meet the stringent requirements of manufacturing quality and processes of prequalification program (see the 2011 interview with PATH’s China program leader).  Japanese encephalitis is an important vaccine target since the mosquito-borne disease is endemic in much of south Asia and causes 10-15,000 deaths per year and the other available vaccine is expensive and requires multiple doses (WHO JE vaccine).  To achieve prequalification status, PATH provided CNBG $39 million since 2004, and CNBG invested about $131 million (China Daily article).  According to the Financial Times, the CNBG vaccine costs $.30 per dose, eight times lower than the retail price of a competing vaccine (FT blog and FierceVaccines article).

Also, last week at the 9th annual Grand Challenges Meeting held in Rio de Janeiro, two steps were announced to involve industry and increase competition.  In the first, Trevor Mundel, president of global health for the Gates Foundation, said that the foundation is starting a Vaccine Discovery Partnership program (VxDP) through which it will be funding research at companies from preclinical to Phase II trials to “reduce the risks associated with early-stage vaccine research, and increase the likelihood that the most promising new vaccines are developed quickly, and at lower cost” (Mundel blog post).  Also announced were the first two company participants, GlaxoSmithKline (GSK) and Sanofi.  According to its press release, GSK and the VxDP will devote a combined $1.8 million to explore how to make adjuvants, compounds that are co-administered with vaccine antigens to stimulate a robust immune response, more heat stable and thus improving he heat-stability required for vaccines to be used in under-resourced environments where refrigeration is lacking (GSK press release).  Specifically, the work will focus on the adjuvant, AS01, that is a component of GSK’s malaria vaccine candidate, RTS,S.  RTS,S is in Phase III testing in partnership with the Gates-backed PATH Malaria Vaccine Initiative.  Also given in the release were the details that VxDP projects may include multiple partners including academic and not-for-profit organizations, that companies will agree to match foundation funding and to provide global access, and that projects may also address nontechnical problems like the affordability and delivery of vaccines.  Sanofi Pasteur, the vaccine group of Sanofi, also announced its participation in the VxDP in a press release but did not specify its projects or funding (Sanofi press release).  While the VxDP’s emphasis on funding early-stage and higher risk projects is good, as I have noted in the past, the Gates Foundation often shies away from providing meaningful funding for highly speculative research, such as may be found at small biotech companies, and the requirement for matching funding will likely exclude them.  But then until the VxDP puts up a website with information on how to apply for participation, the amounts and commitment of funds, and its coordination and management functions, the potential of the program to help vaccine development broadly is not clear.

Also announced at the conference was the Gates Foundation’s first grant, as far as I know, to a government to make a vaccine, and hence possibly improving the competitive landscape and resulting in lower prices cost and increased availability.  As was reported by Reuters (Reuters article), Brazil’s minister for health, Alexandre Padilha, said that Bio-Manguinhos, a unit of the government’s Oswaldo Cruz Foundation (Fiocruz), will make a new measles/rubella vaccine specifically for export to developing countries in Africa, Asia, and Latin America.  The Gates is providing a grant of $1.1 million and possibly additional funds for development.  The goal will be to produce 30 million doses per year starting in 2017.  Measles is a potentially fatal viral disease for children and rubella, while mild in children can be spread to pregnant women causing miscarriage and defects.  Combined vaccines now reach 80% of the world’s children before the age of one year, but an estimated 158,000 children still die of measles annually (WHO Fact Sheet).  This is a small, but possibly meaningful, step given that Fiocruz will need at least tens of millions of dollars more to get the vaccine to market, the vaccine will not be on the market for 4-5 years, and its market share will be small, 10-20% (according to the WHO 225 million doses of combined measles vaccines were given in 2011).  But Fiocruz is a unique government entity having extensive experience in vaccine development and production, including being the recipient of the transfer of the technology for the measles vaccine production from GSK (for more about Fiocruz, see the Fiocruz website and my 2010 posting, “Fio-Cruise”).  I’m guessing that the Gates grant is a one-time deal, but if it is part of a wider plan to improve the ability of vaccine manufacturing programs of governments to meet their and other countries’ needs for basic vaccines, it could be a significant move.

Soup to Nuts

Although there’s a little voice inside my head telling me to get a life, I thought I would peck out another blog posting about a business model for bringing affordable pharmaceuticals profitably (or at least with a positive cash flow) to underserved markets.  The model I have doodled about in previous posts involves a company providing a high-value, but non-novel/off-patent biopharmaceutical drug (or vaccine) that is manufactured in a relatively low-cost manner and sold in volume with a modest mark-up, possibly to public sector buyers (e.g. government health agencies) and/or subsidized by multinational donors.  In the post, “Generics Play” (September 2011), I noted the Indian generic companies like the mid-tier pharma, Cipla, and the biotech, Biocon, are developing such “biosimilar” drugs and building manufacturing capacity.  In a follow-up the next week (“Biosimilar Fever”), I wrote about the  multi-national pharmaceutical companies’ interest and investment in developing biosimilars for the major markets of the US/EU/Japan and that, thanks to industry lobbying, the US FDA proposed a challenging approval path, making the EU market a better target for the biosimilar makers since the European Medicines Agency (EMA) has based its approval on the less-rigorous concept of proving “interchangeability.”

As for the manufacturing factors in the model, in “More Grease on the COGs” (December 2011), I noted that GE Healthcare, a multi-billion dollar division of GE, and the M+W Group, a multi-billion dollar German engineering and construction firm, announced that they had formed “a strategic alliance aimed at overcoming the lack of key biopharmaceuticals, especially in emerging nations … [and] will assist countries worldwide to become self-sufficient in the manufacture of vital biopharmaceuticals such as vaccines, insulin and biosimilars.”  To me, this alliance indicated the partners had concluded that middle-income countries are serious about becoming pharmaceutically independent and were willing to commit multi-hundreds of millions of dollars.  I also noted in a posting after BIO 2012 (“See Change”) that GE Healthcare seemed to be complementing its super-scale factory option by buying a local (Marlborough, MA) company, Xcellerex, for its flexible, modular, and relatively inexpensive biomanufacturing system.  Finally, in my post, “Discount Drugs” (May 2012), I wrote about the $2 billion launch of Samsung Biologics (by a company better known for its consumer electronics) and wondered if the company will apply biomanufacturing efficiencies analogous to those that allow $50 smart phones and also where it may find those new process efficiencies.

All of the above activity is evidence for big corporations (except for Biocon, which is India’s largest biotech) adopting a non-major market biosimilar business model, but none of these players has made a product and gotten it approved, let alone generated revenue, in a non-major market.  So I’ve been on the lookout for validation in the form of a venture-capital-backed start-up with an explicit mission statement of developing biosimilars for the non-US/EU/Japan, rest-of-world markets, and recently found one:  Epirus Biopharmaceuticals, Inc. (Epirus).

Epirus was apparently in stealth mode as “fourteen22, Inc.” and based in San Francisco in 2011-12 and now is located in an office in the Prudential Building here in Boston.  Epirus’s approach, which it has nicely branded as In Market, For Market(TM), is to “combine new technologies and strategies to address macroeconomic trends in emerging environments in order to deliver biosimilar products to patients” (Approach).  The new technologies are the single-use, disposable techniques and equipment that enable lower-cost, customizable biomanufacturing (branded as SCALE[TM]), and the new strategies are to contract with local/regional pharma companies, with the encouragement and possibly financial support of local governments, to enable testing, regulatory approval, and sale of biosimilars in regional markets.  As described in the company fact sheet (Fact Sheet), the company “is focusing on a range of emerging markets, including, Brazil, Turkey, Russia, MENA [Middle East, North Africa], and the ASEAN [ten countries of southeast Asia] markets,” but notably not India and China.  The financial rationale behind this soup-to-nuts approach with partners (product candidate through manufacture, testing, and approval) is that it sidesteps the regulatory and launch hurdles of the major market countries, shares the cost/risk with the partners who know the local markets (and regulators), and results in opportunities for selling multiple, regional contracts/licenses and for governmental subsidy.  For the company customers, the upside is increasing their manufacturing capability, product development experience, and eventually revenues in a regional market.

Epirus has an impressive management team and investment (unspecified amount) from three top notch firms:  5AM Ventures, Montreux Equity Partners, and TPG (Texas Pacific Group) Biotech.  The seven senior managers have had roles in multiple biotech/pharma companies each with lots of manufacturing and product development experience (I may know one, Mark Melville, who was with Wyeth Biopharma/Andover when I did business development for that group).  The board member representing TGP Biotech is Geoff Duyk (our paths intersected when he was an assistant professor at Harvard Medical School and I did tech transfer there) who has also been involved in another start-up for emerging market pharmaceuticals, moksha8.  The company has also made impressive progress on its lead product, a biosimilar for RemicadeÒ, an anti-inflammatory antibody sold by Janssen, that is in a Phase III trial, announcing in January the successful completion of a Phase I bioequivalency trial in the UK (News).  The company expects to launch this product and another unnamed protein therapeutic in 2014 and has four preclinical products (Capabilities).  Although the company has no partners for any of its products, it claims it is “in active discussions for regional partnerships in certain markets.”

I wondered how Epirus, a virtual company, had sufficient personnel to manage its own product development and market those products and its biomanufacturing platform globally (and wondered about the source of its product candidate and platform).  Epirus lists five corporations as “technology partners” who “help us deliver the EPIRUS Biopharmaceuticals solution to market.  Our partners have expertise in product development, infrastructure design and manufacturing,” although the nature of the relationships is not clear, i.e., who is paying whom.  One of the partners is GE Healthcare, probably the source of the manufacturing platform via its Xcellerex acquisition.  I am assuming that these partners have granted Epirus agency (a right to represent), but the idea of negotiating a geographically-specific, product/platform, technology support and transfer deal with multiple parties one of which may be an autocratic government and satisfying multiple suppliers makes my head spin.  Clearly, deal-making in emerging markets can be complicated (see the recent product and tech transfer agreement between Protalix and the Brazilian Ministry of Health, Protalix press release), so I look forward to Epirus’s first deal.

Epirus and other companies with a non-major market generics/biosimilars strategy would benefit from a harmonized approval system.  Currently the default is that most countries accept data accepted by the regulatory authorities of the US (the FDA) or the EU (EMA), but this default has limited the access to existing and new medicines in under-resourced countries (see my post, “Bottleneckrophobia”).  My suggestion was to build up the WHO’s Prequalification of Medicines Programme (PQP) into an approval agency specific for non-major markets.  Begun in 2001, the program reviews medicines for treating HIV/AIDS, tuberculosis, malaria, and more recently for reproductive health for eligibility for purchase by international procurement agencies like UNICEF.  These purchases are made by the countries of need, are often subsidized by donors (governments and foundations), and run into billions of dollars per year (PQP Fact Sheet).  Although the PQP has approved 240 products, it is slow (a two-year average for approvals) and only evaluates generic drugs which there are substantial data and sometimes US/EU approval on the original product.  Using the PQP or an improved version is probably not on Epirus’s radar but then its radar has lots of blips on it already.

Have a safe Fourth.

Trick not Treat

Thanks to the crack editorial team at the newsletter, FierceBiotech, I learned of a recent publication by several USFDA officials on a topic of interest to me- the strengthening of regulatory authorities in the low- and mid-income countries (FB article).  In their paper (Preston et al. 2012 ), the authors argue that strengthening regulation should be a “global health priority” for two reasons, to prevent injury to the US public by poor quality medicines made in these countries (self-serving but understandable) and to assure the quality of much-needed medicines including those purchased by global health programs.  They noted that improved monitoring is needed starting with manufacturing through trials and approval and into the marketplace and that there are on-going efforts (e.g., African Medicines Regulatory Harmonization Initiative) and the multiple challenges to be met.  Noticeably however, the authors do not cite nor propose any specific efforts by the FDA or other parts of the US government.

The points of Preston et al. were reinforced by two papers published in July 2012 and cited in the FB article as well as in a press release (FB press release).  In the first (Bates et al. 2012a), the authors reported that a study of the quality of anti-infective medicines in 17 low- and mid-income countries in cities such as Bangkok, Istanbul, Sao Paulo, Moscow, and Beijing found that only one-third had been approved by a national regulatory authority and/or WHO and a good percentage failed to have required level of active ingredient (4% of approved and 13% of unapproved).  Further, products made (or allegedly made since some could be total counterfeits) in three regions had high failure rates:  26% from Africa, 16% from China, and 4% from India.  In the second paper (Bates et al. 2012b), the authors reported the analysis of antimalarial drugs obtained from pharmacies in four African countries.  The drugs, which contain artemisinin in combination with other drugs, are called ACTs and are promoted by the Global Fund to Fight AIDS, Tuberculosis and Malaria and approved by its Affordable Medicines Facility- malaria (AMFm) as better alternatives to the artemisinin-only drugs to which the malaria parasite has evolved resistance.  Of concern, they found that 40% of the nonAMFm drugs were substandard (not enough active ingredient) and that, also worrying, 8% of the AMFm drugs were substandard.  While some of the loss of quality may have been due to degradation due to storage conditions, the degree of loss (more that 25%) suggested poor manufacture, possibly deliberate.  In addition to these substandard drugs possibly resulting in the death of malarial patients, they may also induce more ACT-resistant malaria and reduce the efficacy of the full-strength products.  As noted by the authors, with more than 100 million ACT treatment ordered through the AMFm for Ghana and Nigeria this year alone, a possible 7 million ineffective treatments is a serious problem.

So much better monitoring of the quality of drugs used against global diseases is needed.  One approach is to strengthen the testing and monitoring abilities of individual countries’ regulatory authorities.  Bates et al 2012a mentioned one US government program, the Promoting the Quality of Medicines in Developing Countries project (PQM) sponsored by the USAID under a five-year, $35 million contract to the US Pharmacopeial Convention (USP) that was granted in 2009 (PQM).  The USP is a non-profit group that sets standards for medicines, food ingredients, and supplements and is self-funded through the sales of those standards to manufacturers around the world.  The PQM’s mission is to work with countries to ensure the quality of medicines essential to USAID priority diseases, particularly malaria, HIV/AIDS, and tuberculosis, but, based on my read of the February 2012 progress report (PQM report), I thought the PQM hasn’t made much progress in the past three years.  Highlights were:  setting up web-based forum for information exchange; helping four national drug-testing labs get international certification; running a communication campaign in Senegal; holding two workshops; and helping the Global Fund set up antimalaria medicine monitoring sites in the southeast Asia.

A WHO-based program seems to be making more progress.  As some readers may remember from a post I did in the summer (“Bottleneckrophobia”), the Prequalification of Medicines Programme (PQP) evaluates generic drugs for the “big three” global diseases for purchase by international agencies like UNICEF, and it also inspects manufacturers and clinical trial companies and certifies national quality control laboratories (PQP Fact Sheet).  In 2011, in addition to approving 35 products, the PQP conducted 90 inspections in 18 countries, ran 32 training courses, and certified six labs, all with a budget of about $10 million per year provided by UNITAID, the global health drug purchase financing group (UNITAID Programs).  In my post I suggested strengthening the PQP approval process with donated expertise from wealthy nations’ regulatory agencies, like the FDA, and the multi-national pharma companies, and generating revenue through “user fees,” like the FDA does, to paid by companies seeking to avoid the expense of country-by-country registration in that with the PQP-approved products would be eligible for purchase by PQP-approved buyers, which would be any government or group able to commit to negotiated volumes and prices.  Clearly my scheme could be extended to include the PQP’s efforts to improve quality assurance in companies and in the marketplace which for honest manufacturers is in their best interest.  As I noted in my previous post, substantial funding and political will are needed to strengthen the PQP and that the WHO has been successful in setting up a similar system for the pre-approval of vaccines for UN supply (WHO vaccine program).  Of course, some backing from the US government and specifically the FDA (Preston et al.?) would likely help.

I’d be remiss if I didn’t mention a neat technological lever that is being applied to the problem.  As I mentioned in my post, “Counter Counterfeiting”, the UK-based non-profit, the Global Pharma Health Fund (GPHF), has designed and is distributing for free “mini-labs,” each of which is a complete set of equipment and reagents for testing 1000 samples of 58 drugs for potency, all packed into two large suitcase-type carriers (GPHF Minilab).  The GPHF reports that it has sent more than 500 mini-labs to customers in 80 countries, but, as far as I can tell, is not collecting data on their use.  In exchange for the free mini-lab, the GPHF should require users to report data.  It could be done through smart phones or web-based programs and would be useful in validating and documenting their utility.  Such data will be helpful should the GPHF decide to market the kits as the worldwide standard approach to verifying drug quality.  Just an idea.

See Change

The 15,000-plus presenters, exhibitors, politicos, scientists, execs, salespeople, and hangers-on who attended last week’s Bio Industry Organization’s (BIO) 2012 International Convention here in Boston have all returned to their regular jobs and I am back to scribbling this week’s post at the last minute.  The BIO convention (as is the nature of conventions) is all about selling products, making the connections that will lead to sales, and learning where the next sales may be made, so most BIO 2012 attendees were focused on the serving the health needs of those with high incomes, but this year I noted some change in the sea of selling.  By my casual survey of session descriptions and attendance and conversations with attendees and exhibitors, more interest was shown in opportunities outside the major markets than in the half-dozen conventions I have attended before.  Moreover, I noted investment analysts, execs, venture capitalists, reporters, and scientists (who invent and make products), not only non-profit types, participating the out-of-the-main-channel sessions.

Here’s a recap of the sessions I noted, seven of which I was able to attend:

  • Driving Innovation in Global Health:  Why Biotechnology is Key-  I did not attend this press briefing by BIO Ventures for Global Health (BVGH), the advocacy organization partly backed by BIO itself, at which the group brought attention to its finding that 40% of small-medium biotech companies are conducting some type of global health product development (I reviewed this report in my post, “BD Needy”).  I hope they got good attendance.
  • A Practical Guide to Global Health:  Shared Experiences from Biotech Companies on Making Global Health Work for You-  I commented on this session, also organized by BVGH, in last week’s post and add that the “shared experiences” were fine but a “practical guide” it was not (but I hope one is in the works).
  • Global Biotechnology Forum:  The BRICS and Beyond-  another session I missed but its theme was how governments in emerging market countries are supporting biotech companies (including funding) to address pressing health needs, and attendance list was more than 50 persons.
  • Exploring Innovative Models for Investment in Global Health:  A Discussion about Unique Partnerships in Working Towards Solutions for Global Health-  I’m sorry I missed this session since it explored “the various models available for engagement with these funding groups [venture capitalists, governments, non-governmental organizations, and companies] in the development of vaccines, therapeutics, and diagnostics and how companies are working across these funders to develop new models for investment in global health.”  About 50 people had signaled an interest in attending.
  • Vaccines Beyond 2012:  Sustainable Business Solutions to Accelerate Global Access- as I noted in my comments in last week’s post (“BIO Bits”), Sanofi’s commitment to global health and pediatric vaccines was evident at this session which had about 40 attendees including those from major (e.g., Merck) and biotech companies (e.g., Novadigm).
  • Increasing Cancer Drug Availability in Resource-Limited Settings:  Models for the Future-   as I noted last week, the situation is dire and requires innovation in funding and distribution, not so much new drugs (which compose the major of drugs being developed by the US pharma/biotech industry).
  • Leveraging New Development Paradigms to Address Infectious Diseases in the 21st Century-  this session (another I missed) addressed the need for new vaccines that can be made quickly (and cheaply) against agents with multiple variants.
  • Traditional Manufacturers Beware: How Disposable Technology is Changing the Biomanufacturing World-  this session spoke to the shift of the biomanufacturing industry (makers of vaccines and biological drugs) away from large volume, high capital factories to small volume, regional, and flexible (able to make many products) plants.  As I have written in several earlier posts (e.g., “More Grease on the COGs”), this trend is important in lowering the cost of products as well as addressing the public health needs of developing countries.  In a side conversation with a rep from Xcellerex, a disposable technology company recently purchased by GE Health, I learned their sales team has made and is making sales calls all over the world.
  • Innovative Approaches to Financing R&D for Global Health-  as noted last week, I had hoped to learn more about the Gates Foundation’s program-related investment program, now funded to more than $1 billion (to used for all the Foundation’s interests including global health), but was disappointed.  The program could be structured like an investment firm, doing due diligence, making significant inputs, gaining board seats, and in general being more proactive in starting up global health companies.  Perhaps the other 30 or so attendees learned more than I.
  • Biologics and Biosimilars in Latin America:  Are New Regulations and Guidelines in Brazil, Mexico and Argentina a New Model for Drug Regulation?:  biosimilars is a hot button issue for the industry since the established players want to limit competition (e.g., Amgen has a Director of Brand Protection) and the emerging biotech industry wants a piece of the action (and governments want cheaper drugs).  I assume (wasn’t there) the new regulatory policies spell out what level of proof is needed for establishing “similarity,” likely including some number of trials and manufacturing process approval, but not as high a barrier as that recently set by the USFDA.
  • Emerging Markets Become Strategic Markets:  Biotechs Looking Internationally for R&D, Manufacturing, and Market Opportunities-  another session I missed and based on my review of the almost 100 prospective attendees, there was a lot of interest among reps from companies in the mid-income emerging market countries like Russia and Brazil as well as US and EU companies looking to sell into these markets.
  • Building the Global Pathway for Product Safety and Quality Manufacturing of Biologics and Drugs- I attended this session because of the importance to companies that want to sell products outside their home country.  The session turned out to be quite technical but I came away with an appreciation of the complexity of the global supply chain for drug manufacture (80% of the drug ingredients for US drugs come from outside the US) and the need for better and more universal standards and inspections.  FDA, multinational pharma companies, and a logistics trade group (Bio Supply Management Alliance) are working on this but have a long way to go.
  • Thinking Outside the Box:  A New IP-Sharing Model Brings Biopharma, Government Agencies, and Non-Profits Together to Accelerate R&D Collaborations for Neglected Tropical Diseases-   the new sharing model was the BVGH-managed Re:Search database and partnering “hub” on which I have written previously (“Window Dressing”).  I garnered some new information on Re:Search, e.g., no announced partnerships have yet resulted but 15 are in discussion.  I also learned that a relatively new product development program (PDP), the Center for World Health and Medicine at St. Louis University, was making progress in new therapies for neglected diseases (and rare diseases) but is approaching a funding crunch.

Do fourteen sessions (including mine) on neglected diseases, emerging and public markets, and low-margin products out of 125 offered at BIO 2012 and several hundred attendees out of 15,000 indicate a sea change in the biotech/pharma industry?  No.  But the trend is in the right direction.

Discount Drugs

I liked the headline of a story in FierceBiotech in early April:  “Samsung Plans Ambitious Rollout of Biosims at Deep Discounts” (FB story).  Samsung is best known in the US for its attractively-priced consumer electronics (like my TV) but is an industrial conglomerate ala the Japanese keiretsu so adding making “discount” generic biological pharmaceuticals to nuclear reactors and rice cookers is logical for a company playing the long game (also see Fujifilm which bought Merck’s biomanufacturing group last year to form Fujifilm Diosynth Biotechnologies). The FB story recapped an interview in the Financial Times (Financial Times article) with the president of the newco which is called Samsung BioLogics (SB).  Here are some salient points on SB; the company will:

  • start with a $2 billion capitalization;
  • have as first products monoclonal antibody (mab) drugs (e.g., Rituxin);
  • be on the market in 2015; and
  • aim to sell products at prices 50% lower than those of similar current products currently (although the Times author notes that analysts are skeptical of achieving more than a 10% lower price).

Interestingly, SB got off on the right foot with a partnership to manufacture mab drugs with BiogenIdec which was announced at the end of 2011 and valued at $300 million (15% put in by BiogenIdec) ( Joint press release).  The tie-up makes sense since BiogenIdec has several biologics coming off patent in the next few years (including Rituxin which is marketed by Roche) and its CEO, George Scangos, has said good things about the biosimilar/”follow-on” biologics market.  Of course, even if SB sold its biologics at a 50% discount, they still would be not affordable for most of the world (an annual course of Rituxin is priced at about $20K), so if Samsung intends to sell at a price affordable in developing world markets it will need to bring its manufacturing costs down.  My guess is that this is part of the plan and SB has a strong process improvement group that will invent cost-saving know-how or acquire it from smaller companies, following the path trod by companies making vaccines (another biologic) that are priced in the dollars per dose (see my post, More Grease on the COGs, 12/29/11).  After all, when Samsung entered the consumer electronics business in 1970, few could imagine 40-inch LCD TVs selling for $800.

One way to accelerate manufacturing improvements and cost-efficiencies is through public-private consortia that address fundamental problems and find solutions that the industrial members of the consortia can take in-house and adapt for their own benefit and cost-competitiveness.  I did not find any examples of fully-fledged biomanufacturing consortia but note that Massachusetts has the necessary elements:  substantial biomanufacturing companies (and lots of small ones), academic research programs, and public intermediate-scale manufacturing facilities.  For big companies, I know of three in Massachusetts:  Abbott (Abbott Bioresearch Center in Worcester), Pfizer (the Andover facility acquired through Wyeth), and Bristol-Myers Squibb (in Fort Devens); and one nearby:  Lonza (in Portsmouth, NH).  As for academic centers, there are two that are still in a growth phase:   MIT’s Center for Biomedical Innovation has a Biomanufacturing Research Program (MIT CBI); and  UMass Lowell’s Biomanufacturing Center (UMass BC).  To transition a process from lab-scale to full-scale, its inventors test it in pilot facility, and a consortium could use the equipment and personnel at the state’s former Massachusetts Biologics Laboratories and now UMass Biologics (UMass Biologics) or at UMass Dartmouth’s “biomanufacturing accelerator” that is under construction now in Fall River (UMass Accelerator).  What is lacking is a programmatic infrastructure and some politico to push the idea of making Massachusetts the world center for low-cost biologics manufacture (I’ll add it to my project list).

A historical footnote on the importance of patents and the perception of their contribution to the economy:  while at an exhibit of patent models at the American Art Museum in Washington, DC, recently (AAM exhibit), I concluded that patents were considered a very important grant of the Federal government when I saw that a 1794 patent to a chap (from Massachusetts, of course) for a alkalinization process used in soap making was signed by the President (George Washington), the Secretary of State, and the US Attorney General.