The good folks at Pharmaprojects just published their Pharma R&D Annual Review.
A summary of the report, plus a link to the full report, is available here.
The report is well written, with little to no promotional fluff that dampens our enthusiasm for documents like this.
So if you are interested in a 50,000 foot view of our industry’s pipeline, it is a very good place to start.
Here are a few comments on the data presented.
Pipeline Size & Shape
The industry pipeline stands at 15,267, up from ~10-11,000 five years previously. While drug count continues to grow, eyeballing the chart in the report suggests that the growth is slowing.
But it is always difficult to look at a pipeline (or even an individual candidate) and determine if it is truly in an active state of development, or if it is being shelved.
The authors note this challenge. So the actual number (15,000) is less important than the trend…and that trend is generally positive.
If you look at the pipeline by stage of development, there is growth in Preclinical candidates, but the other stages of development are relatively flat. The number of products launched in 2018 is actually less than the number of launches in 2017.
So we have a situation where the overall pipeline is growing, the number of Preclinical candidates is growing, yet the number of launches is declining.
More interesting are the data showing Phase I candidates increasing, Phase II relatively flat, and Phase III candidates decreasing.
In other words, the industry is pumping more candidates into Preclinical and Phase I testing, but the industry is also dropping candidates at Phase II and III even faster.
Is this a sign of more innovation and faster failures? Perhaps.
Big Pharma…And Small
The report lists companies by pipeline size (Novartis, J&J, AZ, etc., etc.). A scan of the top 10 shows that every single company, except one, has a smaller pipeline in 2018 versus 2017. The lone exception? Takeda. But we cannot tell if the 2018 Takeda number includes their receipt acquisitions (Shire, TiGenix, etc.).
Of greater interest is the number of companies actively developing drug candidates. According to the report, we currently have 4,134 companies with active development programs.
That’s up from 2,745 in 2013…an enormous increase to be sure. The number of companies with one or two candidates in their pipeline is 2,235.
In other words, roughly half of the pipeline resides in companies with one or two drug candidates.
So there are a lot of small companies out there trying to raise capital and advance programs to the point where they are licensable or ready for a very large round to complete development.
Also, nearly half of these companies are domiciled in the US, with another ~15% in non-UK EU.
What effect will Brexit have on the 6% of companies in the UK? Be our guest.
Where Are We Investing?
It’s not surprising that Oncology has the largest pipeline, by far (>5,000 candidates). Indeed, since 2013, 30% or more of the industry’s pipeline has targeted oncology.
The Anti-infectives pipeline has seen the sharpest decline, which is rather unfortunate.
These data are not as clear as we would like. For example, there is a category called “Biotechnology” which can mean nearly anything.
There is also a category called “Alimentary/Metabolic” which can include Crohn’s Disease and Type II diabetes. Or does Crohn’s go in the “Immunological” bucket?
Regardless, what is clear is that the industry will continue to follow unmet medical need if it makes sense economically to do so. In a related note, drugs with orphan drug status are also on the rise.
Roughly half of the pipeline consists of small molecules, which is generally a good thing. They are simpler and cheaper to manufacture, can be delivered via multiple routes of administration, and tend to travel well.
But the industry loves it biologics (and their higher margins and longer effective patent lives).
Note that small molecule does not necessarily mean oral delivery. Over 50% of all of the candidates in the database are delivered parenterally.
Mechanisms of Action
More than any other category, MOA gives us a very good idea on where the industry’s interests lie. Immunostimulants, Anticancer Immunotherapies, and Immune checkpoint inhibitors are the top three MOAs in the pipeline.
Checkpoint inhibitors were not even a category in 2017, demonstrating how our collective understanding of the immune system has dramatically shifted the entire industry pipeline over the past few years.
Conclusions
The pipeline data support a few ideas which are well-known and accepted in our industry:
Big Pharma companies continue to narrow their focus to a handful of therapeutic areas, with oncology being an area of commonality.
Our collective understanding of the immune system has shifted the pipeline other the past few years…
…But small molecules continue to be of interest to many companies.
Small companies with 1-2 candidates are a surprisingly large contributor to our industry’s pipeline. We would be interested to see if this slice of the pipeline is overly weighted towards oncology; it likely is.
We still have a number of therapeutic areas and indications which are not being served well by our industry. Some of these are led by preventable, diet and life-style related diseases, but some are not.
The lack of activity in infectious disease remains troublesome, but understandable from an industry perspective.
~*~*~*~*~*~*~*~
Fundraising in Boston in September? Consider attending RESI, a unique conference where companies raising venture capital can meet investors. It’s especially good for companies looking to raise Seed and Series A rounds.
Use code LACERTABIO100 and get a discount off the registration price.
~*~*~*~*~*~*~*~
Attending BIO-Europe in November? Join us for a Pre-BIO-Europe gathering on Sunday, November 4, from 5 pm to 7 pm.
We will meet at the Mikkeller Bar, which is world-famous for its hand-crafted brews. And it’s only 1 km away from the official Opening Reception at City Hall.
Space is very limited, so grab a ticket (it’s free to attend) and have a few beverages and laughs with us before the conference.