Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - (Page 6)

Zero Sum Game The economics of pharmaceutical oncology have never been better, but changes are looming. A confluence of market forces is adjusting the commercial equation for pharmaceutical manufacturers, rendering them potential victims of their own success. Pamela Santoni and Thomas Foster of IMS Health consider the unintended consequences of progress. oday, thanks to advances in diagnostic technology, pharmaceutical and radio therapy, we are making many advances in the treatment of major cancers. Indeed, the ‘business’ has never been better. Cancer, with its battery of tests, drugs and procedures, is among the richest in revenue opportunities of all illnesses to treat. Historically, almost every new product with any incremental benefit could expect a handsome return in the long run — which is why in the past five years alone the worldwide pharmaceutical oncology market has more than doubled, reaching $35 billion in 2006. This represents a growth rate that is three times larger than that of the total pharmaceutical market. The continuation of this trend would make oncology the dominant pharmaceutical therapy area by 2010. As a result of these attractive market dynamics, over 40% of the pharmaceutical research and development pipeline of new drugs is dedicated to oncology. But the current ‘hot’ economic environment for the business of cancer is beginning to threaten its future. The very headway we are making today may be significantly slowing our progress tomorrow. The forces driving this phenomenon are perhaps best explained through the lens of the standard economic equation: (volume price) cost profit. When we consider its components, what this simple equation T reveals is that just as we are beginning to win the cancer war on the scientific front, we are in danger of losing it on the commercial one. Volume Unlike diabetes or heart disease, cancer is not an epidemic. Cancer patient populations, as measured by both incidence and prevalence, are currently growing only slightly faster than the overall population in the developed world; this is because of the ageing of the population. But better diagnostics and earlier, more aggressive treatments are expected to drive down the rate of growth of late-stage disease in many major cancers. Since late-stage disease is where most new therapies enter the market, these trends have the potential to change pharmaceutical company launch economics by limiting the supply of patients available for treatment. Moreover, in order to satisfy market place demands for greater and more predictable efficacy, subpopulation analyses and biomarkers are becoming more commonplace. However, such data reduces the potential patient population for a given therapy and rarely results in a commensurate price premium. At the same time, whereas previously new products were able to grow the market since they were added to standard of care chemotherapy cocktails, going SEPTEMBER 2007 ONCOLOGY 6

Table of Contents for the Digital Edition of Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007

Riding the Wave
Zero Sum Game

Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007