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The Micro Pharma

Pre-clinical drug discovery has traditionally been the preserve of large fully integrated pharmaceutical companies (FIPCO’s) in established geographical centres in the UK, US and Europe. It relied on tight integration of laboratory facilities and drug design expertise within monolithic mega-research facilities. As laboratory science has become more industrialised and experimental data resources become more widely available through the internet, drug discovery is moving out from the mega-Pharma into thousands of small mid-size Biotech or Pharma research businesses. These new “mini-Pharma” entrants usually focus on developing some biological insight emerging from academic research into potential drug development candidates and then license those to the mega-Pharmas that have the financial muscle to carry the costs of clinical development.

Although the mini-Pharma companies are smaller and operate more cost-effectively, they often operate as smaller versions of their larger role models. Their productivity may sometimes be higher, but they are not radically different. They remain expensive to set up, fixed costs are high and the majority fail commercially. Nevertheless, driven by unmet medical needs, growing populations and increasing wealth, there is a very large market for new clinical development candidates to fill the empty pipelines of the large FIPCO’s.

The revolution in information technology and emerging developments such as the semantic web, cloud computing as well as community data and software resources is now creating the right circumstances for a second wave of change. This change will be driven by solutions for managing information, extracting knowledge and making decisions in virtual organisations which will create opportunities for new entrants to this very valuable market, especially those with strong IT expertise. The new entrants will be “micro-Pharmas” that minimise fixed costs through accessing on demand, pay-as-you-go laboratory and computing services and exploit Web 2.0 technologies to access globally available services and expertise “on demand”. Driven by their expertise in Information systems, they will deliver new medicines at low unit cost and lower risk. These new micro-drug discovery companies will stimulate local markets for services and grow expertise core in biotechnology activities that create wealth for their investors and communities.

In this emerging landscape for Pharmaceutical research, the mega-Pharmas will increasingly focus on clinical development and commercialisation, in-licensing their products from high productivity mini- and micro-Pharmas. Services will be acquired from the best providers that operate globally and offer services on demand.

This emerging landscape creates new businesses opportunities in the provision of on demand services and in the formation of micro-Pharmas which may operate as businesses, charitable foundations or potentially as participants in open source drug discovery.


The Winner’s Curse

Most of us mix up the meaning of Biotech and Pharma since both do pretty much the same thing, invent new drugs. We tend to use Pharma to describe the FIDDCO, i.e. a fully integrated Drug Discovery and Development Company, whereas Biotech companies are more likely to be emergent and on some pathway towards full integration, driven by their own research. But as I remember it, Biotech was originally used to describe the new “big molecule” companies inspired by the early success of Amgen and Genentech from inventing protein drugs. However, when this early success was hard to reproduce, most biotechs stuck to the small classical organic molecules which still dominate clinical practice. This is now changing, as the majors move to acquire or develop a protein drug component for their pipelines. Some argue that we are likely to see protein drugs as 50% of Pharma pipelines, indeed with the acquisitions of CAT and Medimmune, AstraZeneca now has 27% of its current pipeline as proteins and that’s a big change for a company that grew out of manufacturing paints and dyestuffs.

Why is this happening now? No doubt the science has improved and people have gained much more experience in the technologies required to develop and manufacture proteins to the demanding standards required of a new drug, but there are also significant commercial drivers, proteins are expensive and the technology barrier to cloning by generics is higher.

If this continues there will be big changes coming …


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