Innovation a future trend in the pharma sector, IMS predicts

An increasing number of pharmaceutical companies are set to adopt innovative business approaches that position them closer to patients and in direct discussion with drug approval agencies, in a bid to bolster market growth.

The activities of such companies as Novartis and Johnson & Johnson, both of which are engaging directly with the UK's National Institute for Health and Clinical Excellence (NICE) and the National Health Service (NHS) respectively, were noted by business consultant company IMS as models that could be adopted by other companies more readily in the future.

Factors including the increased global share growth of emerging pharma markets as developed markets decline, increased scrutiny on the value of medicines and pricing levels, and a drop in new chemical entities (NCEs) coming to market, continue to impact on the growth of the sector.

Global pharmaceutical sales represent $712bn with worldwide growth rates reported to have slowed down to 6.4% in 2007. Whilst the US market holds the biggest share at $287bn, its growth rate has fallen by 8%. Comparatively, emerging markets in Asia and South America have experienced a 15% and 12% growth respectively.

A notable shifting of sources of growth in the market place has been identified by IMS. Since 2001, the seven main markets of the US, the five top European markets (the UK, Germany, France, Italy and Spain) and Japan were shown to contribute 74% of growth. In 2006, this dropped to 46%, whilst the share of growth from "pharmerging markets", including China, Mexico and Turkey, rose from 8% in 2001 to 25% in 2005.

Similarly, NCE launches reached a new low point in 2007 at just 27, compared to its highest level of 49 in 1997. And there is greater conservatism from doctors, particularly in the US, to using newly approved drugs.

The pharma industry, however, can transform these challenges from threats into opportunities through what the IMS call its 10 harbingers of change. These predictions cover areas of innovation, supply chain distribution, regulatory safety, consumer influence, pharmaco restructuring and payer agenda.

"The pharmaceutical industry is going through some difficult times," said Adel Al-Saleh, president of Europe, Middle East and Asia for IMS. "We see these challenges as threats and opportunities. If manufacturers act ahead of the change, there can be a significant positive effect. The issue is the pharmaceutical industry is pretty slow to act to these things. In such a case, it can be a missed opportunity, in which case, people will have to face the threats."

Novartis is one company to have pre-empted the potential threat by partnering with NICE in the design of a Phase III clinical trial. In the process, NICE is set to provide the company with advice on evidence requirements in the areas of clinical and cost effectiveness, prior to Phase 111 clinical development. IMS, the authors of the IMS 360 report on the future of the pharmaceutical industry, believes that this type of model is one they expect to be replicated by other companies globally.

According to IMS figures, 40% of NICE appraisals face appeal either by pharmaceutical corporations or patient groups. Chris Huckle, vice president of sales and consulting at IMS UK, believes "early engagement" between manufacturers and the Health Technology Agency can provide companies with a useful step forward and can lead to a broad consensus around clinical trial targets and reimbursement decisions.

"We're all watching closely to see if other companies will follow Novartis" lead and adopt similar approach to early engagement and discussion with NICE in Phase III clinical development trials," he said. NICE is believed to be in dialogue with other companies on a similar approach but these are not at the advanced stage of Novartis, says Al-Saleh.

Similarly, Johnson &Johnson has developed a performance-based guarantee for drug treatment, which has been presented to the NHS. Under this conditional reimbursement scheme, the majority of the risk rests on the shoulders of the pharmaceutical company.

The IMS Intelligence.360 report will be available from next month.