The global market for biosimilar drugs has been forecasted to be worth $2.445 billion this year, according to a new report by British market research specialist Visiongain. The growth represents a 20% increase from last year and accounts for approximately 2% of the overall biologics market. Moreover, the global biosimilars market is expected to experience a steady growth over the next 10 years, driven by worldwide launches of such products, particularly in the EU and US.
The report predicts that the biosimilar monoclonal antibodies (mAbs) and insulin submarkets will see the fastest growth, with these products making up 57% of the global biosimilars market by 2023. Last year itself, South Korean biotech firm Celltrion and Hospira, a US-based pharmaceutical company, submitted regulatory filings to the European Medicines Agency (EMA) seeking for approval of their biosimilar version of the mAb infliximab. Visiongain anticipates that these products will be launched in the EU in 2014.

The mAbs have the strongest R&D pipeline in the biologics market according to the report. In fact, we can expect to see a range of next-generation technologies pushing mAb therapeutics into newer areas such as solid tumours, cardiovascular and neurological disorders.

There is also major growth opportunity for biologics in the treatment of diabetes. New fusion proteins are set to join Novo Nordisk’s insulin degludec (Tresiba), which is a new-generation basal insulin with ultra-long duration of action of more than 42 hours, as well as other novel insulins on the market in the near future.
However, mAbs and insulins are not the only biosimilar submarkets projected to experience growth. Biosimilar erythropoietins and filgrastim products are already available in several developed markets, including the EU and Japan. Despite the limited revenues achieved with biosimilar erythropoietins and filgrastim products compared to their reference biologics, Visiongain believes that the launches of these biosimilar products in the US will drive further growth from 2014 onwards, as will the worldwide introduction of second-generation filgrastim (pegfilgrastim) and epoetin alpha (darbepoetin alpha) biosimilars.

Pharmaceutical industry analyst James Evans commented in a press statement, “Biologics were one, two and three in the top ten drugs of 2012. People talk about the biotech revolution, but biotech is now one of the dominant, established powers in the pharmaceutical industry.” He noted that all the main biotechs have either been acquired by Big Pharma or become major players in their own right.

Evans added that the next big shift would be when biosimilars begin to penetrate the market. “Once the EU’s new regulatory pathway for biosimilars has been established, we can expect the major markets to be inundated with biosimilars and biobetters. The entry barriers for bio-manufacturing and bio-processing have been greatly reduced, and even the suite of technologies that built the mAb market, from phage display to transgenic mice, are now off-patent and accessible to any company that’s interested. And biologics are going to become so prevalent that every major company will be interested in having a stake in that expanding market.”

Richard Lang, a pharmaceutical market analyst at Visiongain, said in another press release that many companies are interested in entering the biosimilars market and have invested in this field, given the simpler route of launching such drugs compared to developing novel biologics. Lang however pointed out that not all biosimilar development programs will be successful. “Biologics and biosimilars are large, complex molecules requiring long and expensive development and manufacturing. The recent release of development guidelines by regulatory agencies in markets worldwide will increase the success rate of biosimilar development.

However, commercializing biosimilars is as challenging as developing them. Companies will need to brand and market their biosimilars in a similar way to novel drugs, engaging key stakeholders such as doctors, health care payers and patients, to achieve high market penetration.”

Emerging markets, particularly China and India, have been leaders in biosimilars, accounting for the majority of global revenues for biosimilars in 2012, whereas the EU, US and Japan made up 20% of the market last year. But for the next 10 years, Visiongain predicts that the developed markets will see faster growth than the emerging markets, driven by patent expiries on blockbuster biologics during 2013 to 2017.

On a panel titled “Activist FDA: Transformation Agent,” Prevision Policy founder and former Pink Sheet editorial head Cole Werble relayed the tale of Acadia Pharmaceuticals, a San Diego-based company with a stage three compound (pimavanserin) targeting Parkinson’s disease-related psychosis.

A month ago, Acadia met with FDA to discuss the proper design of a new phase III trial intended to confirm the results of a previous, 17-month study that met its primary endpoints. A confirmation trial was needed, Acadia presumed, since the first phase III trial of pimavanserin, conducted in 2009 at half the dose of the successful trial, had failed. Acadia had already begun to enroll patients in the confirmation trial – which represented an $18 million commitment – when it met with FDA in April to get the agency’s blessing.

To Acadia’s surprise, FDA responded that the additional confirmation trial wouldn’t be necessary, based on the pivotal phase III trial already on the books, combined with supportive data from other studies on pimavanserin. As a result, Acadia scrapped plans to do another trial, and began preparing its NDA posthaste. But the company wasn’t hasty enough, and investors dialing in to a call about the FDA meeting balked at the company’s projected filing date – near the end of 2014. Why not file immediately, they wanted to know? Acadia executives’ refrain in response, was, “these things take time.” FDA had reversed the waiting game, making Acadia itself responsible for the delay in review and commercialization of a new product.

This is just one example, of course; it isn’t likely that a big pharma looking to introduce another DPP4 into the market for type 2 diabetes, for example, would be told not to worry about additional trials studying cardiovascular or pancreatic side effects. But the fact remains that FDA approved 39 NDAs in 2012 – the most since 1997 – and the agency launched yet another expedited regulatory pathway – breakthrough therapies – at the beginning of 2013. The breakthrough therapies designation is likely to shorten the timeline from discovery to commercial approval – for those drugs receiving the designation – to between three and five years, according to IMS estimates.

Rachel Sherman, associate director of medical policy and director of the Office of Medical Policy, CDER, FDA

The timeline from discovery to approval could be as short as 26 months, said Rachel Sherman, FDA’s associate director of medical policy at the Center for Drug Evaluation and Research (CDER). Sherman said her office had received – to date – 39 requests for breakthrough therapy status, of which 12 have been granted and 14 denied, with 11 pending and two withdrawn. She said the breakthrough therapies program is already “an enormous success.”

Joseph Herring, CEO at Covance, noted that pharmaceutical companies are often difficult to work with, from his perspective as the head of a CRO. “[Investigators] want a perfect trial that can’t be enrolled.” He wondered about the interplay companies have with FDA regarding trial design discussions. In response, Sherman advised more communication. “If what we say doesn’t make sense, ask us. Argue with us. We’re receptive to it.”

How does a company know whether it’s sufficiently engaged with FDA? “If your lead clinical person is on a first name basis with the [respective] lead reviewer at FDA, you’re in good shape,” said Sherman. “If you’re not, you’re not.” Sherman cited the Clinical Trials Transformation Initiative as another program aimed at “identifying and promoting practices that will increase the quality and efficiency of clinical trials.”

“The point of all our programs is better evidence generation…we lack evidence,” said Sherman. “The most expensive drug is the one given to the wrong patient, or given incorrectly.”

On the subject of biosimilar approvals, Sherman said FDA hasn’t received a single application yet, adding that the phrase “follow-on biologics” is dead. The requirements for biosimilars, according to Sherman, are that a biosimilar be “highly similar” to the original product, with “no clinically meaningful differences.” Sherman said that does not mean “interchangeability,” though, suggesting that a biosimilar could not be substituted for a brand biologic at the pharmacy, without specific doctor’s orders.

Comparing the current activist FDA with the activism the agency demonstrated during the HIV epidemic, Werble said that in addition to the breakthrough therapies designation, FDA has also launched the GAIN ACT, and its anti-infective exclusivity provision; has opened up FDA meetings to rare disease outside consultants, who advise companies on efficient FDA regulatory navigation; and has implemented PDUFA 5’s “patient-focused drug development meetings,” which solicit patient opinions around specific diseases.

Speaking on the “agency-wide impact of management attention and staff commitment” mustered during the HIV crisis 20 years ago, Werble said the pendulum has once again swung back toward FDA activism. “That commitment [to HIV] was infectious 20 years ago, and it’s occurring again,” said Werble. He also noted that a solid one-third of all drug applications submitted to FDA now come from small companies, a rejection of the thesis that only big pharma is properly equipped to navigate FDA’s regulatory structure.

The Rutgers Business School Annual Healthcare Symposium, convened on April 30, was presided over by Mahmud Hassan, director of the Blanche and Irwin Lerner Center of the Study of Pharmaceutical Management Issues, at Rutgers. John Castellani, president and CEO of PhRMA, and Seyed Mortazavi, president of IMS Health US operations, also gave presentations.

Alderley Park, home to 2,900 jobs and 40 years of history in drug discovery, is known for its status as AZ’s central R&D hub, but not any longer, with more than 1,000 of the facility’s jobs shifted to a new, purpose-built facility in Cambridge. The closure is a blow to the parliamentary constituency represented by finance minister George Osborne, an area hit hard by the loss of the UK base in manufacturing.

AstraZeneca's Alderley Park facility

The company is also moving 300 of its R&D employees in the US from facilities in Wilmington, Delaware to a more updated Gaithesburg, Maryland location, where AZ can build on the biologics footprint of its 2007 acquisition of MedImmune.  In the process, the company will axe another 650 positions. In total, the net worldwide job cuts amount to ten percent of its 51,700 workforce, with 2,300 of the cuts in sales and admin positions, most of which are within the EU.

The cuts align with CEO Soriot’s push for more deal-making in an effort to replenish the company’s depleted drug portfolio. Analysts estimate AZ stands to lose six billion dollars in the next five years due to loss of patent protection for many of its branded drugs. Soriot also notes the company will spend less money on research for anti-infectives and neuroscience in favor of cancer, cardiovascular and metabolism disorders, respiratory and inflammatory diseases. To ensure that research remains close to the business AZ will also keep its business development function embedded in the R&D operation—a position at odds with the org charts in the other big pharma firms.

The recent shifts in R&D taking place across the industry show its growing desire to build a more symbiotic relationship with academic research institutions. Return on R&D investment has become less about simply producing new medicines but creating products that can me documented as addressing the standard of care. Companies are finding they have to spend more on early stage discovery to stay relevant. Dr. Ken Kaitin, Director of The Tufts University Center for the Study of Drug Development points out, “It’s tough to justify because this type of research occurs very upstream, and it’s a long time before companies see the fruits of that effort.” He continued, “By partnering or collaborating with academic institutions, teaching hospitals, and government agencies where this is already going on, big pharma companies can divest their efforts in that area and take advantage of some of the (hopefully) exciting and innovative research going on in the academic centers.” These coalitions ultimately benefit both the companies and institutions that partner with them, but as in AstraZeneca’s case and others, such shifts take a toll on workforce morale—a red flag in an industry that depends almost entirely on productive human capital.

Soriot discussed his strategic plan for the company during AZ’s Capital Markets Day on March 21 in NYC.

What’s your opinion? Will the cooperative relations forming between pharma and academia ultimately reap rewards?

On the way into the main entrance, attendees of BIO 2012 last summer in Boston walked past Lorraine Heidke-McCartin and a gang of pink and black-bedecked picketers assembled to protest what they believe to be FDA’s bureaucratic foot-dragging in the approval of Genentech/Roche’s breast cancer drug known as TDM-1.

Heidke-McCartin, who was diagnosed with breast cancer (HER2-positive) in 2006, was denied entry into an expanded access program at Boston’s Dana-Farber Cancer Institute, after Genentech pulled the plug on its expanded access program as a result of FDA’s refusal to grant the drug expedited review in 2010.

However, Heidke-McCartin was granted access to the drug at a hospital in Fairfax, Virginia – a 950-mile round-trip she made 16 times, at her own expense, according to a Boston Globe report – and her husband, Phil McCartin, told PharmExec from the picket line at BIO that TDM-1 saved his wife’s life by shrinking several tumors, and putting her cancer into remission. FDA must “give stage four [breast cancer] patients a chance to take this drug,” said McCartin.

Less than a month after the BIO convention, President Obama signed PDUFA V into law, which included a “breakthrough therapy” clause, stating that the HHS Secretary – currently Kathleen Sebelius – shall, “at the request of the sponsor of a drug, expedite the development and review of such drug if the drug is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.”

The clause also requires Secretary Sebelius to issue draft guidance, by February 2014, on the requirements and procedures involved in reviewing breakthrough products. Frank Burroughs, founder of the Abigail Alliance and father of Abigail Burroughs, a 21 year-old woman who died of cancer in June of 2001, after unsuccessfully seeking access to then unapproved therapies Erbitux and Iressa, says BIO “came to bat” for the breakthrough therapy provision in PDUFA V, and has met with the Abigail Alliance to discuss the ethics of expanding access programs for patients with life-threatening conditions.

Burroughs tells PharmExec that one potential problem related to the PDUFA V breakthrough clause is that it “has no teeth…it doesn’t enforce FDA action.” But FDA is nevertheless “moving forward with the concept,” and Burroughs says he’s scheduled to meet with the “breakthrough team” at FDA on February 15 to discuss plans, a timeline, and how to implement the new designation. A week later, he’s scheduled to discuss the meeting’s outcome with FDA Commissioner Margaret Hamburg.

While the breakthrough provision doesn’t address the issue of accessing drugs prior to approval, the intent of the law is “to get promising, investigational drugs to patients sooner,” says Burroughs. On the issue of compassionate use, managed access or expanded access programs, which do give patients access to drugs prior to approval, Burroughs points to the FDA Subcommittee on Science and Technology report from 2007, titled FDA Science and Mission at Risk, which called for an “expedited, provisional approval mechanism coupled with extensive safety monitoring,” beyond what’s available currently under accelerated or expedited review. A new, provisional approval mechanism “could provide CDER with a nearterm opportunity to progress the transition from reactive to proactive regulatory science, which is where the Center needs to be for the future,” the report’s authors conclude (Appendix E-5).

Burroughs says government isn’t the only bureaucracy preventing access to investigational drugs for dying patients; PhRMA has opposed the mission of the Abigail Alliance, but in late 2005, when then Senator Sam Brownback (R-KS) and four co-sponsors first introduced the Access, Compassion, Care, and Ethics for Seriously Ill Patients (ACCESS) Act, “PhRMA got involved, talked it over, and then said they wouldn’t take a side either way,” which Burroughs says he counts as progress. One reason pharma restricts early access is out of fear that an adverse event, or a patient death, could occur, jeopardizing a drug’s regulatory status. This fear is unfounded, says Burroughs. During a meeting with Richard Pazdur, Patricia Keegan, and other FDA bigwigs in August 2001, Burroughs says he asked if any drug going through the clinical process had failed to be approved based on data from an expanded use program, outside of the clinic. “They said, ‘we’re not aware of any case of this happening,’” says Burroughs.

Despite being reintroduced several times, the ACCESS bill never made it out of committee. But Burroughs says Rep. Brian Bilbray (R-CA) will reintroduce his Patient Choice Act 2012 into the new Congress this year, adding that “women’s suffrage [legislation] was introduced into Congress 43 times” before it was passed. Science can’t be rushed, but then, the Abigail Alliance, since its inception, has advocated for early access to a total of 21 drugs, not one of which has failed in clinical trials, says Burroughs. How does the Abigail Alliance assess whether an investigational drug is worth the risk to patients? “We just look at the available data,” he says. As for TDM-1, FDA accepted the BLA and granted the drug priority review last November, and a regulatory decision is expected by the end of this month.

PMPY = Per Member, Per Year. Source: Artemetrx

By 2018, the amount health insurers spend per person on specialty, or biologic drugs, will equal or surpass the amount spent on traditional products, according to a new report. With the emergence of newer, self-administered injectables and oral dosages, many specialty products are and will be reimbursed through a pharmacy benefit, in contrast to a medical benefit, which covers products administered in a hospital or clinic.

The Artemetrx report, titled Specialty Drug Trend Across the Pharmacy and Medical Benefit, found that commercial health plans would do well to integrate management strategies across the pharmacy and medical benefit, the latter being “richest in savings opportunities,” from a payer perspective. Indeed, the “identification of lower cost sites of care under the medical benefit is often the most significant area of opportunity [for savings] in terms of total dollars,” according to the report.

Since a premium is commanded for drugs (and services) provided in a hospital or clinic, should pharma target the medical benefit as the reimbursement channel of choice for specialty drugs? Not necessarily, says Mason Tenaglia, managing director at the Amundsen Group. Drug companies “have a lot more control” over reimbursement when it happens “through the pharmacy channel, because [drug makers] have the opportunity to go directly to the patient and physician, as opposed to being controlled by an institutional setting and a purchasing department.”

Medicare, for example, might pay more for a cancer treatment administered at a hospital, than it would for an oral drug that offers the same health outcome, says Tenaglia. In this scenario, the cost of an oral drug, processed through a pharmacy benefit, would be shouldered to a larger extent by the patient.

With ongoing discussions around the cost of healthcare, at the state and federal level, it’s likely that public and private plans alike will continue to squeeze cost savings from the system whenever possible. Given the costs associated with specialty drugs, and the increasing number of biologic drug approvals, pharma will need to anticipate the squeeze, and figure out, on a case by case (and drug by drug) basis, which reimbursement channel provides the most favorably contoured corset.

Yet, the data also reveals that most of these therapies are in early stages of development:  less than 1000 of the 5400 products in clinical development have reached stage III, and only 82 are headed for market following approval by the Food and Drug Administration. The attrition from phase II to phase III remains very high despite a range of scientific advances and regulatory improvements. Of nearly 3000 new molecular entities (NMEs) to treat cancer, only 288 have reached stage III clinical trials, and only  a handful make it to market. Therapies for infectious diseases seem to have a higher success rate, with about 700 investigational projects yielding 22 recent approvals. Certainly a higher “early kill” rate may be a sign of progress in the  risky world of pharma R&D, where a key goal is to avoid costly phase III studies that won’t pass muster with FDA. The current study doesn’t provide the historical data that could tell more about whether pharma R&D is becoming more productive, but there doesn’t seem to much evidence of progress.

A more telling sign is the recent rise in FDA’s approval numbers for NMEs, reaching almost 40 in 2012 and still providing steady good news for sponsors. The promise is that more INDs eventually will yield more new approved medicines. “There are no guarantees” from a stronger and more diverse pipeline, but the study reveals the “depth of possibilities,” observed Genia  Long of the Analysis Group in a PhRMA webinar. However, it also is important for pharma to reduce the overall cost of developing new drugs, and that will require more informative early stage research strategies that efficiently separate potential winners from likely losers. Researchers are making progress in developing treatments for Alzheimer’s disease, pointed out Eli Lilly CEO John Lechleiter, acknowledging that success “will require longer, more expensive studies to show benefit for patients.”

The PhRMA report aims to demonstrate to the public and policymakers the high value of biopharmaceutical R&D and the importance of continuing government support for FDA programs and research funded by the National Institutes of Health. It also highlights the value – and the need to pay for – new therapies to treat rare diseases and conditions that currently lack effective treatment. Ultimately, these new, costly research endeavors could lead to cures and preventives for cancer, Alzheimer’s and other devastating illnesses that affect millions. But the costs for individual patients may be enormous, and it remains to be seen if public and private health programs will pay for them.

It has come to be expected that the successive Grand Ballroom PowerPoints – limited to twenty-five minutes apiece and kept tightly on schedule, almost uncannily so – given at J.P. Morgan each year by the largest healthcare companies in the world, don’t sparkle with revelation. The majority of presentations highlight the positives of the preceding year, gloss the negatives or omit them entirely, and project new positives – to be detailed in upcoming earnings reports or analyst meetings – on the years to come.

As everyone knows, the action at J.P. Morgan happens behind closed hotel room doors, or in San Francisco’s near limitless supply of coffee shops, restaurants and taverns. Absent a meeting beyond the bounds of the conference’s relentless schedule, attendees would do well to skip the formal presentations and plant themselves in one of the several breakout rooms, which often feature top management and an open microphone for questions. It was in this context that Vertex – still radiant from last year’s approval of Kalydeco, a drug targeting a small fraction of the cystic fibrosis patient population (and costing almost $300,000 a year) – that president and CEO Jeff Leiden told attendees that payers in mature markets have shown a willingness, so far, to pay a premium for the value Kalydeco provides to patients.

The company recently achieved a favorable reimbursement in England, one of the more frugal and skeptical nations in Europe with respect to drug pricing, which bodes well for reimbursement in Ireland and Wales, said Leiden. In France, the company is currently selling Kalydeco through a patient access program, but Leiden spoke optimistically about that country, as well as Australia, Canada and Germany. New Kalydeco trials for younger patients, aged two to five years, are set to commence this quarter.

There was plenty of talk about genetics, but outside of the success stories mostly in cancer, the enthusiasm of recent years seemed tempered by investors and others who feel that most of the current sequencing activity adds a layer of complexity but often doesn’t lead to actionable insights for drug development, or the treatment of patients in most settings. However, Life Technologies’ CEO, Gregory Lucier, said his goal is to “be the only company in the world that can read, write, and edit DNA,” which is difficult to fully explain in a twenty-five minute presentation (or in a blog post, for that matter). Like Illumina and other device and non-traditional pharma companies, Life Technologies drew capacity crowds, and Lucier described fascinating, almost sci-fi seeming technologies, such as the company’s Pervenio lung cancer molecular test, launched in September, which could dramatically affect survival rates for patients by making it much easier for physicians to determine the best course of therapy for an individual patient based on clear prognostic data in the early stages of the disease.

Although most medicines are still impersonal instead of personalized, catering to patient needs as a way to create value and differentiate products came up again and again in discussions with biopharma executives. Biogen Idec CEO George Scangos talked up his company’s intramuscular injectable form of Avonex, approved last February, describing it as “remarkably popular with patients.” Kermit Crawford, president, pharmacy, health and wellness, at Wallgreens, gave the company’s inaugural PowerPoint at J.P. Morgan, in no less than the Grand Ballroom – the largest of the presentation halls – telling attendees during the breakout session that the retail pharmacy administered five million flu shots in 2012. Flu shots, by the way, are a lot less expensive at Walgreens than they are at most doctors’ offices, said Crawford. The company is building out new capabilities in the form of clinics and home care for patients with chronic diseases, and expanded its global footprint last summer with the purchase of a $6.7 billion, 45% stake in Alliance Boots, a European pharmacy retailer.

Anne Whitaker, Sanofi’s president of pharmaceuticals, North America, said in an interview with PharmExec that supporting patients in areas like diabetes, for example – not just providing medications, but focusing on services that help patients meet their goals – can help to differentiate the company and its products from competitors. “We don’t want to just be the Lantus company,” said Whitaker. Helping diabetic patients successfully control their glucose levels, which means keeping HbA1c levels below 7%, means fewer complications (and less cost to the healthcare system), and since only half of the eight million basil insulin users are hitting those numbers, according to Sanofi’s global R&D president Elias Zerhouni, success in this area would be good for other stakeholders as well. Whitaker alluded to risk-sharing pilot programs Sanofi is conducting with payers that might reward the company with favorable reimbursement based on patient adherence and outcomes.

It should be mentioned that both Abbott and AbbVie gave presentations, neither of which were terribly exciting, although Thomas Freyman, Abbott’s EVP, Finance and CFO, said the nutritionals (one of four core business areas within the new Abbott, the others being established products, diagnostics, and medical devices) market is expected to top $50 billion by 2016, up from $36 billion in 2011, an area in which the company continues to invest; Freyman said Abbott has recently opened the doors to a new nutrition research center in Singapore.

It’s literally impossible to see more than about a seventh of the presentations live on any given day, since they happen concurrently and successively, without breaks in between, and the hallways of the Westin St. Francis get notoriously bottlenecked in between sessions, but the PCSK9 target seemed present in many pipeline overviews, in addition to the use of product combinations to treat larger sub-populations within a given disease or therapeutic area. Outside of the lunchtime keynotes on Monday and Tuesday, given by journalist Bob Woodward and J.P. Morgan head honcho Jamie Dimon, respectively, politics was conspicuously absent from company presentations compared with last year, although Ken Frazier, Merck’s CEO, said at a breakout session that he “told Obama” not to use mandatory drug price cuts to achieve healthcare savings, but to instead create policies that better incentivize the commercialization of innovative new products, which control costs by preventing severe (and expensive) health complications and related hospital visits. Amgen CEO and president Bob Bradway said unspecified provisions of the fiscal cliff bill, signed into law by President Obama on January 3, would generate incremental gains for the company’s Sensipar product, indicated for patients with hyperparathyroidism who are on long-term dialysis for kidney disease, and also to lower calcium levels in people with cancer of the parathyroid gland.

The first two days of the conference offered an increasingly diverse group of companies, including a room and track dedicated exclusively to non-profits, and a lively group of suited attendees who pressed executives for answers in the breakout sessions. More than one CEO expressed relief to find himself in calmer waters, having finally navigated through treacherous patent expiries and R&D failures in recent years, and the mood from the stage was generally upbeat, which might be expected for an audience largely comprised of potential investors. Even so, lots of companies detailed lots of mid and late-stage pipeline candidates, offering new hope for patients and new bets for Wall Street.

Weighing in on the question of buying back stocks versus giving money back to investors in the form of higher dividends, J.P. Morgan’s Dimon said he tended to prefer higher dividends, unless a company can be sure it’s buying back stock at a very low price. But then again, “you know more about healthcare than I do,” Dimon told attendees. Asked what he had learned from J.P. Morgan’s billion dollar trading loss fiasco last spring, Dimon said: “Don’t screw up.”

Signed into law by President Ronald Reagan on January 4^th, 1983, the ODA gave orphan status to drugs for diseases affecting less than 200,000 American citizens. The law granted seven-year patent exclusivity, tax credits equivalent to one half of the development cost (later modified to a fifteen-year carry-forward provision and a three-year carry-back that can be applied in any profitable year), direct grants, FDA fast-track approvals, and expanded access to patients under the Agency’s Investigational New Drug Program. The law was also later amended to waive FDA user fees established under PDUFA.

Prior to passage of the ODA, only 38 drugs had been approved for rare diseases. Since then, 420 orphan drugs have been approved to treat 2,730 orphan designations. Nine percent of the drugs approved for orphan diseases have subsequently gained blockbuster status, including top-selling drugs such as Abilify, Provigil, and Cialis.

While the act failed to immediately entice big pharma into the orphan space, “the real explosion started about four years ago, and the pace seems to be accelerating,” says Mary Dunkle, VP of Communications for the National Organization for Rare Disorders, or NORD. Of utmost importance to the industry, as time has proved is the seven-year exclusivity provision granted to orphan drugs.

Applications for orphan drugs have indeed shot up in the past few years. Jim Ajer, Senior Vice President and Chief Commercial Officer at BioMarin Pharmaceutical Inc., notes that “The industry has gotten better at not only developing drugs for orphan disorders but also commercializing and making them available to treat patients.” Ajer expects this upward trend to continue, citing one third of FDA approvals in 2012 were for orphan designations, including Kalydeco for cystic fibrosis, Elelyso for Gaucher’s disease, Bosulif for chronic myelogenous leukemia, and Signifor for Cushing’s disease.

Since the ODA, the FDA Safety and Innovation Act (FDASIA) has been hailed as another score for orphan drugs. Signed in July 2012 by President Obama, FDASIA expanded the accelerated approval pathway and increased FDA’s communication with rare disease medical experts as well as giving patients a real seat at the registration table. “This gives patients the opportunity to have direct, on the spot input on things like risk benefit, which people with rare diseases see in a very different way than people with more common diseases and more available treatment pathways,” Dunkle adds.

In 2013, NORD will be working to ensure that FDASIA is implemented on schedule particularly in light of possible sequestration challenges and related budgetary uncertainties. NORD also plans to focus on medical foods (specifically, authorizing patient reimbursement for these, currently withheld for many rare disease patients), implementation of the insurance reforms in the Affordable Care Act, and reauthorization of the Newborn Screening Act.

Going forward, Ajer suggests, “It’s worth considering policy discussions to see if there are additional provisions that should be applied for drugs that treat ultra-orphan disorders.” As drug companies go after smaller patient populations to develop new drugs for this category (which BioMarin defines as 1-3,000 people worldwide), legislation to push incentives further down the development chain against most complex and smallest base diseases, is the next step.

It’s no secret that the pharmaceutical industry faces significant challenges. In his opening remarks as emcee of this year’s NYPF General Assembly, BIO president and CEO James Greenwood didn’t shy away from some of the starker realities, like the fact that annual venture capital funding for biotech hit an all time low this year, at $2.9 billion as of early November, compared with nearly double that amount in 2007.

The dream of “going public” as a start-up biotech is more or less a pipedream for most organizations these days; while capital raised from an IPO has slowly crept back up from almost nothing in 2008 to around $13 billion in 2011, the number of deals done hasn’t kept pace. Roughly 10 deals were done in 2011, according to Greenwood’s slides, compared with nearly 30 deals and $28 billion in capital raised through IPOs in 2004. FDA approvals are up, relatively speaking, but VCs once active in the biopharmaceutical space are now taking their dollars elsewhere, to industries with clear exits on investment and shorter periods to payoff.

In what appears to be a show of solidarity, however, companies are combating external market forces by working together. Greenwood cited a collaboration between Pfizer, Lilly and Merck to create a not-for-profit cancer research partnership, which pools resources to bring down the costs of developing new treatments.

Part of this collaboration, the Asian Cancer Research Group, is tasked with creating “one of the most extensive pharmacogenomics cancer databases known to date…composed of data from approximately 2,000 tissue samples from patients with lung and gastric cancer,” that will be made publically available to researchers.

But emerging markets represent more than an opportunity for growth, balanced against stagnant Western markets. People living in these geographies are “facing problems we don’t fully comprehend,” noted Tadataka Yamada, EVP, board member, and chief medical and scientific officer at Takeda Pharmaceuticals. “Eight million children” – three billion in India alone – “under the age of five die every year from diseases that could be treated,” said Yamada. “We must become a partner in finding solutions to these countries’ biggest problems.” Yamada said innovation comes in two forms: evolutionary innovation and revolutionary innovation. The latter is most desirable, as it represents fundamental change and progress.

But what kind of environment is needed to facilitate this kind of innovation? One that doesn’t rely on peer review, for starters, said Yamada. “Innovators have no peers.” In addition, companies need to facilitate an environment that’s willing to “challenge dogma, to fail and to fail often…success is built on the backs of failure.” Reflecting on his time with the Bill & Melinda Gates Foundation, and emphasizing the importance of collaboration among industry and other groups, Yamada offered an African proverb: “If you want to walk fast, walk alone. If you want to walk far, walk together.”

Alan Paau, vice provost, president of the Cornell Research Foundation and executive director at the Cornell Center for Technology Enterprise and Commercialization, acknowledged the importance of working with industry to translate academic research into new treatments, but said companies should keep things simple. “Universities are not your competitors…you don’t need a six-figure salaried lawyer to write a contract with a university,” said Paau. Companies interested in partnering with academic institutions need to understand the two basic tenets of the university with respect to IP: “If we create it or invent it, we own it,” and secondly, “use it or lose it.”

Bringing things back to a local context, Ann Li, EVP, business development for the New York City Economic Development Corporation, underscored the importance of the biopharmaceutical industry as an engine for economic growth in New York, adding that New York City is second only to Boston in the amount of grant money received from NIH. Li provided several examples of municipal investment – including the Alexandria Center, on the East River, which, when completed, will house 1.1 million square feet of laboratory and office space; BioBAT, a commercial life science research park in Brooklyn’s Sunset Park neighborhood, which will provide over 500,000 square feet of lab and office space when completed; the New York Genome Center, an organization designed to facilitate resource sharing in genomics and bioinformatics, of which nine academic medical centers in New York have already joined; and a series of Small Business Innovative Research (SBIR) workshops aimed at helping NYC-based biotechs get access to over $2 billion in federal SBIR funding each year.

Greg Wiederrecht, VP and head of external scientific affairs, worldwide licensing and acquisitions at Merck, wrapped up the speakers portion of the General Assembly, noting that 55% of Merck’s $49 billion in human health revenue for 2011 came from licensed products and patents. While Merck continues to invest in internal research – to the tune of $8.5 billion a year – the company still relies on partnerships to bring new drugs to market. “More than one third of our current pipeline is licensed in,” said Widerrecht. In addition to direct partnerships and licensing deals, Merck also funds the California Institute for Biomedical Research, or Calibr, a non-profit led by Peter Schultz, formerly the director of the Genomics Institute of the Novartis Research Foundation. Calibr is funded “mostly by Merck,” which has earmarked $92 million for the cause, over the next few years, said Widerrecht.

Despite the fact that VCs “aren’t so venturesome anymore,” as Widerrecht put it, when it comes to biotech and pharmaceutical drug development, there is reason to believe that collaboration is on the rise, as industry takes stock of its predicament and concludes that together we stand, divided we fall.