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discuss the key points you learned (maximum 260 words)
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Dec.22, 2023
Technology Management (Prof. Miyazaki)
R&D management in the
pharmaceutical industry
Ryo Okuyama (APM)
1
Global Drug Market
Market size (2021) 1.42 trillion $
EU(Germany, France,
Italia, Spain + UK)
2097M$ (15%)
China
1694M$ (12%)
US
5804M$ (41%)
Japan
854M$ (6%)
2
Weak international competitiveness of
Japanese pharma industry
0
1.00
-5,000
-10,000
0.80
-15,000
0.60
-20,000
0.40
-25,000
0.20
-30,000
0.00
-35,000
Year
Trade balance (million $) (line graph)
1.20
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Ratio of trade balance (bar graph)
Annual changes in pharmaceutical trade balance
3
Type of selling drugs
• Prescription drug
Original drug
A new drug that is protected by patent (20+ years)
Generic drug
A drug that contains the same chemical substance as original drug
• Over-the-counter drug
Sold directly to customers without prescriptions
4
Pharmaceutical industry is a regulated industry
New drug development and commercialization are regulated by authorities to
protect public interests.
Efficacy & Safety
Public insurance
Regulatory authorities
US : Food and Drug Administration (FDA)
EU : European Medicines Agency (EMA)
Japan : Pharmaceuticals and Medical Devices Agency (PMDA)
Ex.) Applications required for new drug development/marketing
Investigational New Drug (IND) : Must be approved before clinical trial initiation in the U.S.
New Drug Application (NDA) : Must be approved before marketed in the U.S.
5
Drug price
Drug price is decided by
• Government in Japan
• Pharmaceutical company in the U.S.
• Government & pharmaceutical company together in France
Reuters, Dec.21, 2021
Generic drug price
About 70% of original drug in Japan
Dropped down to a tenth in the U.S. after patent expiration of original drug
6
New drug R&D process (overall)
Research
Basic/Applied
Research
Duration
(years)
3-5
Success rate
0.1%?
to launch
Clinical Development
Preclin
ical
Phase
1
Phase
2
Phase
3
1
1-2
2-3
2-4
10%
Approval
Marketing
50%
7
R&D expenditure in new drug R&D
R&D cost to develop one new drug is from $161 million to $4.54 billion
(2019 US$) Pharmacoeconomics 2021,39,1243-1269
R&D expenditure of big pharma in 2020
• Johnson & Johnson: $12.2 billion (14.8% of revenue)
• Roche: $6.5 billion (24.1% of revenue)
• Novartis: $9 billion (18.5% of revenue)
• Merck: $13.6 billion (28.3% of revenue)
• Pfizer: $9.4 billion (22.4% of revenue)
• Takeda: 456 billion yen (~$4B) (14.3% of revenue)
• DaiichiSankyo: $2.1 billion (23.6% of revenue)
• Otsuka: $1.9 billion (21.6% of revenue)
8
Challenge for Japanese pharma 1
Top 30 sales pharmaceutical companies in 2022
https://www.pharmexec.com/view/2022-pharm-exec-top-50-companies
• Clinical development of new drugs requires large costs, but
Japanese pharma are relatively small in the globe.
9
Drug discovery research process
Basic research (3-5 years)
Target discovery : Find proteins/genes that a new drug should inhibit/activate
Applied research
Lead generation : Find initial small molecule/antibody/peptide that properly modulates target
Lead optimization : Fine-tune lead compound for drug candidate
Target validation : Confirm if modulation of target shows suitable efficacy & safety in
disease animal model
10
Clinical development process
Preclinical (1 year) : Obtain pharmacology, safety & pharmacokinetics data of drug
candidate in animals following regulation to initiate clinical trials
Phase 1 (1-2 years) : Test safety & pharmacokinetics in healthy volunteers
Phase 2 (2-3 years) : Test efficacy, safety & pharmacokinetics in targeted disease
patients
Phase 3 (2-4 years) : Confirm efficacy, safety & pharmacokinetics in larger population of
targeted disease patients
11
New drug R&D is highly “science-based”
• Academic biomedical research discover new drug targets.
• New drug modality technologies are initially developed by academic institutions.
Modality: type of technology that forms drugs e.g. small molecule, antibody medicine, gene therapy
• Academic structural biology reveals 3D structure of drug target proteins and
supports optimal design of drug compounds.
etc.
Academic research and industrial drug discovery are highly connected.
University start-ups / university-industry collaborations play key roles in drug
discovery.
12
Challenge for Japanese pharma 2
Distributions of the establishment periods of originator companies of FDAapproved new drugs from 2017 to 2021, in the United States, Europe, and Japan
• Young biotech companies (mostly university start-ups), which play
important roles to bridge academic science & technology to drug application,
have not been grown in Japan compared to in the U.S. and Europe.
13
Drug modality
Small molecule
Molecular size
Small
Biologics
Large
Molecular weight 10,000 (peptide medicine)
>100,000 (antibody medicine)
Chemical
synthesis
Living
cells
Molecular
image
Manufacturing
method
14
Emergence of biologics
Increased share of biologics
Biologics in top10 sales drugs
Biologics
Biologics
Vaccine (mRNA)
Biologics
Biologics
Biologics
US drug sales in 2021
https://www.statista.com/statistics/258010/top-branded-drugs-based-on-retail-sales-in-the-us/
15
CDMO
CDMO : contract development and manufacturing organization
Provide process development and manufacturing of biologics
Market growing due to increased demand for biologics manufacturing that
requires large facility and cost
https://www.researchandmarkets.com/reports/5415449/healthcare-contract-development-and
16
Novel drug technologies
mRNA therapeutics
Gene therapy
https://www.extremetech.com/extreme/212956-what-is-gene-therapy
Initially commercialized in
COVID-19 vaccines
Recently commercialized in
oncology & genetic rare diseases
17
Challenge for Japanese pharma 3
Country of originators of new drugs under clinical development (2020)
Antibody medicine (906 drugs)
Gene/cell therapy (210 drugs)
https://www.jpma.or.jp/opir/news/061/07.html
• Japanese pharma have lagged in the development of biologics
and novel modalities (cell/gene therapy) in the globe.
18
Opportunities for Japanese pharma
Market growth of pharmerging
countries (BRICKS etc.)
https://www.iqvia.com/insights/the-iqviainstitute/reports/the-global-use-of-medicines-2022
Increase of university startups in Japan
https://www.meti.go.jp/press/2022/05/20220517001/20220517001.html
19
Take-home message
• U.S. has the biggest drug market
• Pharmaceutical industry is regulated industry (development, sales, price)
• New drug R&D process is science-based, lengthy, costly and risky
• Biologics has increased share and changed market landscape
• Novel modalities are emerging as pharmaceutical technologies
• Japan’s competitiveness in global pharma industry is weak due to
relatively small size of companies, lack of venture ecosystem, and lagging
in new modality technologies
20
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