WASHINGTON, DC--(Marketwire - January 27, 2010) - Traditional models for predicting
marketplace potential for "one-size-fits-all" drugs are inadequate for the
new world of personalized medicine in which developers of targeted
therapies hope to follow in the footsteps of successful drugs, such as
Genentech's Herceptin® or Tarceva®, according to the authors of a special
report in the current issue of Personalized Medicine (Vol. 7, Issue 1,
2010, pp.103-114).
The report describes why conventional financial models for predicting net
present value (NPV) and return on investment (ROI) for traditional drugs
don't work for development of targeted therapies. Currently, pharmaceutical
development teams lack financial benchmarks needed to understand how
targeted therapies and related diagnostics will perform in the emerging
personalized medicine marketplace -- with a potential value of $245
billion, by some estimates.
Personalized medicine involves diagnostic testing to identify a patient's
or a disease's specific genetic makeup and the use of this information to
identify the most appropriate therapy for that patient.
"Typically, executives fail to understand that targeted therapies and
associated tests are fundamentally different products from
one-size-fits-all drugs," said Peter Keeling, chief executive officer of
Diaceutics and a co-author of the report. "Targeted drugs and stand-alone
tests do not behave in the market in the same way as one-size-fits-all
drugs or diagnostic tests."
According to Keeling, pharmaceutical development teams have yet to
establish a financial model that enables them to maximize NPV and ROI for
targeted drug therapies that rely on a companion diagnostic test. In fact,
the authors estimate that Herceptin, as successful as it was, lost an
additional $3 billion in revenue as a result of a poorly executed companion
diagnostic strategy.
"Assuming that the economics of a targeted therapy are the same as other
drugs is a dangerous premise that has not proven itself in actual
development," said Keeling. "Better market models are essential as
estimates indicate that 25% to 50% of future drug launches will be based on
personalized medicine."
The report describes Diaceutics' Case-Based Reasoning Financial
Benchmarking Model™ an interactive, evidence-based benchmarking and
financial tool that identifies what drivers will be most effective for
ensuring successful development and marketing of a unique targeted therapy.
The Model is based on an examination of over 200 cases in which a drug
therapy and a diagnostic test have interacted (negatively or positively) in
the marketplace. (Case-based reasoning uses real-world cases from which
reasonable analogies may be drawn to identify factors similar to a study
problem, such as introducing a targeted therapy.) It has uncovered 10
critical drivers likely to impact targeted drug therapy's market success
and revenue stream:
-- Optimized R&D investment
-- Value-based pricing
-- Early revenue capture
-- Rate of prescription (Rx) adoption
-- Marketplace differentiation
-- Rate of and propensity to prescribe
-- Patient compliance
-- Ability to extend life-cycle
-- Rx-risk associated cost avoidance
-- Rate of diagnostic adoption
In the process of validating these drivers against targeted therapies
already on the market for infectious diseases and oncology, the authors
found it likely that only three to four of the 10 drivers will be critical
for any single development project.
"Our financial modeling shows that when a drug-maker allocates appropriate
resources to the key drivers, they can capture market share earlier in the
adoption process and increase overall ROI," said Keeling.
The Model was first developed in 2005 through a study analyzing how a
companion diagnostic for a rheumatoid arthritis drug could be used to
reshape that drug's existing one-size-fits-all therapeutic market.
Initially, 53 cases or "analogs" were used in the study.
When these initial findings were applied to five rheumatoid arthritis drugs
available at the time of the study, it was determined that a companion
diagnostic -- if used effectively to shape the therapeutic market -- could
produce an additional 17.5% in NPV.
"It's already difficult for the pharma and diagnostic industries to bridge
their cultural, strategic and scientific differences," said Keeling, "but
an effective financial modeling tool enables both sides to recognize
potential ROI and the value of collaboration."
Co-authors of the Personalized Medicine special report were Mollie Roth,
Diaceutics' corporate counsel and vice president of business development,
and Dave Smart, PhD, senior advisor to Diaceutics. The full text of the
article can be purchased at
http://www.futuremedicine.com/toc/pme/7/1.
Diaceutics (
www.diaceutics.com) provides pharmaceutical industry leaders
with the foundation and operational structure needed to effectively develop
and commercialize targeted therapies to better meet patients' needs and to
improve overall return on investment. Diaceutics is an international
change management and consulting firm specializing in personalized medicine
with a mission to build bridges between pharmaceutical and diagnostic
players.
Contact Information: Contact:
Mollie Roth, Esq.
Corporate Counsel, VP of Business Development
202-280-5887