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Smaller companies driving innovation in pharma

The rise of specialty medicines means smaller companies are emerging as the leading source of innovation in the pharma industry, according to new data from IMS Health.

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Presenting at the market research firm’s London offices last week, Sarah Rickwood, director of the IMS Europe Thought Leadership team, explained that companies with revenues of less than $500m were the original patent holders for 57 per cent of new drugs approved by the US FDA in 2013.

This compared with a figure of 39 per cent for the same group of companies in 2003, showing a marked rise in the impact smaller firms have had on new medicines in the past ten years.

By contrast the collected top 25 pharma companies were the source of innovation for 26 per cent of FDA approvals in 2003, but this fell to just 13 per cent in 2013.

For Rickwood the reason for this change was the growing precedence of specialty medicines for specific, non-primary healthcare disease.

“The drugs that smaller companies are developing are often specialist drugs, such as orphan products. This is about companies like Celgene, which is no longer a small company, but it was when it first developed [the myeloma treatment] Revlimid (lenalidomide).”

For medium companies, as a source of the innovation behind FDA-approved drugs, the rate stayed relatively flat over the 10-year period, rising from 14 per cent to 17 per cent, while the ‘other’ category, including universities, fell from 21 per cent to 13 per cent.

The figures reflect a decline in ‘blockbuster’-type products and a move towards targeted treatments due to improvements in science and existing successful treatment options in more general areas.

Rickwood explained how such changes in R&D have impacted traditional sales models, allowing smaller companies to compete with larger rivals.

“I think what has happened is that companies have realised if you have a specialist product you don’t need huge sales forces, which is the traditional advantage of a large pharma company,” she said.

“You also don’t necessarily need global reach,” she added. “If you have a highly specialised, very expensive product for small patient population that needs specialist prescribers and sophisticated faculties, you just need to focus on developed markets.”

She concluded: “The playing field is much more level between smaller companies and larger companies.”

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