WTD,
I was typing the parts that I found interesting, when I read your post about the pharma industry survey of The Economist. It was very favourable on biotechnology and was heralding a new age for biotech in general. LGND was not mentioned by name, among the few companies mentioned.
I hope Henry can provide some comments, especially on the first two paragraphs below. (To me it sounds a lot like what LGND's exactly trying to do.)
' Of the 3,000 or so human-metabolic drugs on the market, 15% act on a target molecule that is still unknown. The rest interact with a total of only 417 different target molecules. To develop drugs for currently untreatable diseases will require the identification of new targets. And even diseases that are currently tractable might be better treated via targets that are as yet undiscovered.
...... Some gene families are particularly rich sources of potential target molecules. The most celebrated are the 7-transmembrane receptor molecules, which pass messages from the outside world into a cell. Mimic the chemical messenger to which a particular receptor is attuned, or jam the receptor, and you affect the cell's biochemistry and hence possibly, its role in a disease.
About 45% of all known drug targets are 7-transmembrane receptors, so newly discovered receptors are always worth investigating.'
Also, the below was interesting in terms of big pharma pipelines :
'That big pharma needs to improve the flow of new drugs is indisputable. According to Andersen Consulting, the top ten drug companies between 1990 and 1994 launched an average of only 0.45 truly new drugs (ie, novel molecules) a year each. To maintain their current annual revenue growth rate of 10% without resorting to yet more mergers (whose principal benefits are often one-off cost cuts), Andersen estimates that these companies will have to increase their productivity tenfold, launching five new compounds a year, each with an annual sales potential of $350m.'
'Big pharma could in principle contract out or buy in almost all of its R&D. Big pharmas are already heading in that direction.' Share of R&D outsourced doubled from 8% in 1990 to 16% in 1996.
On the plethora of biotech companies the survey was saying this :
'In the short term, at least, the plethora of eager drug-discovery companies is a bonus for big pharma. Small concerns with only one or two promising compounds are frequently reluctant to take the risks, and bear the costs, of clinical trials by themselves. Big pharma companies can often pick up joint development rights to these substances fairly cheaply.
In the longer run, however, the big companies may inadvertently be nurturing powerful rivals. Many firms, following in the footsteps of Amgen, Genzyme and the other trail-blazers of the 1980s, have set their sights on becoming fully fledged pharmaceutical companies - if on a smaller scale -by not merely discovering, but also developing and marketing, their own drugs.
.......
As R&D becomes cheaper and quicker, small firms can more rapidly build up the cash flow they need to finance future products. Once a small company has a successful drug, it no longer needs to go cap-in-hand to the big boys.'
In terms of the forces shaping the market, it was said that :
'The buyers, governments and in America, HMOs are now putting pressure on prices, particularly where patented blockbusters are subjected to competition from out-of patent generic drugs. The industry therefore needs to come up with new drugs that either treat what was previously untreatable, or treat what was previously treatable so much better than before that no patient will willingly be fobbed off with a substitute.
On the new technologies :
'The days when pharmaceutical companies employed armies of the chemical equivalent of handloom weavers to make their libraries will soon be over. The buzz-phrase now is combinatorial chemistry. This allows new organic molecules to be turned out by the yard, revolutionising the discovery process. Some think it may prove to be the leveller that will allow the biotechnology companies to challenge big pharma on its own turf - producing not only therapeutic proteins, but also small-molecule drugs that may in time become true blockbusters.
Besides speeding up the process and bringing down the cost of drug discovery and development, the new pharmaceutical technology promises three things : first, an increase in the range of diseases that are treatable with drugs; second, an increase in the precision and effectiveness of those drugs; and third, an increase in the ability to anticipate disease, rather than just to react to it.
The first change should cause a shift in the way that money is spent by health-care providers - be they governments, HMOs or insurance companies. Being ill, particularly being chronically ill, is expensive. Drugs are usually the cheapest way of dealing with it - certainly cheaper than surgery and prolonged stays in hospital.
.....
At present, according to Barrie James, only about 12% of the world's health-care budget is spent on drugs. How much that fraction will increase over the next few years depends on what pops out of the pipelines.'
The conclusion was :
'Yet, when the dust has settled in a decade or so, those who are left will look back and realise that even in the late 1990s they had been living in a state of near-medieval ignorance.'
Regards
Alper |
