DISRUPTIVE INNOVATIONS AND GLOBAL NETWORKS: THE CASE OF GENOMICS AND PHARMACEUTICAL INDUSTRY

MARÍA A . POZAS CENTER FOR SOCIOLOGICAL STUDIES EL COLEGIO DE MEXICO APRIL 2014

The sequencing of the entire human genome - mapping and location of all human genes - achieved in 2001 is considered a radical innovation with potential to change in the coming years the paradigm of medicine and health systems worldwide.

We hypothesize that genomics, as a disruptive innovation, tends to produce global reorganization of several industries. Its global production networks become the fastest channel for genomics diffusion and dissemination.

To illustrate this hypothesis, the case of global pharmaceutical industry is analyzed as well as the form in which the new paradigm for drugs production modifies the domestic pharmaceutical industry in Mexico

DRUGS PRODUCTION CHANGING PARADIGM

MOLECULAR PATHWAY

NEW METHOD OF

DRUGS DISCOVERY

PATENT EXPIRATION DATES OF MAJOR PRODUCTS FOR R&D-BASED PHARMACEUTICAL TRANSNATIONAL CORPORATIONS

Patent owner Drug name Indicated use Patent expiry

Abbott Kaletra HIV/AIDS 2016

Norvir HIV/AIDS 2014

Astellas Prograf Transplant rejection 2008

Protopic Dermatitis 2014

VEScare Overactive bladder 2015

Astra Zeneca Crestor Cholesterol 2016

Seroquel Schizophrenia 2012

Boehringer Ingelheim Flomax Prostatic hypertrophy 2009

Bristol-Myers Squibb Efavirenz HIV/AIDS 2012

Daiichi Sankyo Cravit Infectious disease 2010

Mevalotin Cholesterol 2006

Olmetec High blood pressure 2016

Eisai Aricept Alzheimer’s 2010

AcipHex Gastroesophageal reflux 2013

Eli Lilly Zyprexa Schizophrenia 2011

Glaxo Smith Kline Epivir HIV/AIDS 2014

Relenza Influenza 2014

Seretide/Advair Asthma 2010

Hycamtin Cancer 2010

Johnson & Johnson Cozaar High blood pressure 2010

Merck Diovan High blood pressure 2010

Singulair Asthma 2012

Novartis Zometa Cancer 2013

Pfizer Lipitor Cholesterol 2011

Viagra Erectile dysfunction 2012

Xalatan Glaucoma 2011

Sanofi-Aventis/Bristol-Myers Squibb Plavix Anticoagulant/heart disease 2012

Sanofi-Aventis Taxotere Breast cancer 2013

Takeda Actos Diabetes 2011

Blopress High blood pressure 2012

Leuprorelin Prostate cancer 2014

Prevacid Ulcer 2009

Source: United Nations Conference on Trade and Development (UNCTAD), Investment in Pharmaceutical Production in the Least Developed Countries (UNCTAD/DIAE/PCB/2011/5), Geneva, United Nations, 2011.

[1] Note: Trademark registrations compiled by UNCTAD from United States Patent and Trademark Office, Trademark Electronic Search System; patent expiry dates compiled by UNCTAD from various sources, including investors reports and Internet searches (2011).

NEW GLOBAL STRATEGY

MERGERS BETWEEN LARGE PHARMACEUTICAL COMPANIES TO BALANCE

LOSSES DIVERSIFING THERAPEUTIC CATEGORIES AND EXPANDING THE

MARKET

MERGERS OR ACQUISITIONS OF GENERIC PHARMA COMPANIES IN EMERGING

COUNTIRES TO KEEP MARKET SHARE IN EXPIRED PATENT DRUGS

NEW RESEARCH MODELS IN ORDER TO ADAPT DRUGS TO SPECIFIC NEEDS IN

DEVELOPING COUNTRIES

SALE AS COMBOS, COMBINATIONS OF DRUGS ALREADY IN THE IN ORDER TO

KEEP THE RATE OF NEW PRODUCTS

PHARMACEUTICAL M&A DEALS

Date Company M&A target

1995 Glaxo B.Wellcome

1999 Astra Zeneca

2000 Pfizer Warner-Lambert

2004 Sanofi Aventis

2006 Bayer Schering-Plough

2006 Merck & Co. Serono

2007 Astra Zeneca MedImmune

2008 Novartis Alcon

2008 Teva (generics) Barr Pharma

2008 Roche Genetech

2009 Pfizer Whyeth

2009 Merck & Co. Schering-Plough

2009 Sanofi-Aventis Zentiva (generics)

2009 GlaxoSmithKline Stiefel Laboratories

2009 Sanofi-Aventis Merial (animal health)

2009 Abbott Laboratories/Solvy (pharmaceutical division) Solvy (pharmaceutical division)

2010 Merck-German Millipore

2010 Teva Ratiopharm

2010 Astellas Pharma OSI Pharmaceutical

2011 Sanofi Genzyme

2011 Bristol-Myers-Squibb Amira Pharma

2011 Johnson y Johnson Synthes

2012 Bristol-Myers-Squibb/Astra Zenca Amylin Pharma

2012 Glaxo Smith Kline Human Genome Sciences

2012 Bristol-Myers-Squibb Inhibitex

2012 Novartis Fouguera Pharma

2012 Astra Zeneca Ardea Biosciences

2013 Astra Zeneca Omthera

Source: Compiled by the author from various sources, including companies’ websites and Internet searches (2012).

In 2003 less than 100 trials per year were performed (AMIIF 2009).

In 2005 the figure had risen to 2,025 research, grouped into 425 protocols and 22 therapeutic areas (AMIIF 2009).

Investing in this type of study grew at a rate close to 15% annually (AMIIF 2009)

In these research projects were involved over two thousand researchers coming from research institutions in the whole country, 80% of which are public institutions (AMIIF 2009)

In 2011 the marketing of the 186 companies in the sector established in the country, of which 47 are subsidiaries of large multinationals, increased by 6.4 percent compared to 2010. (CANIFARMA, 2012).

On average industry sales grew 12% in the last five years (2007-2012). (CANIFARMA, 2012).

Finally, between 1993 and 2002 manufacturing of chemicals and pharmaceutical products in the country increased at a real rate of 4.85 % annually (Ministry of Health, 2005)

Diagram 1: Development process for new drugs and treatments

I

Activities performed in public research centers in Mexico

ABSORPTIVE CAPACITIES

A country’s absorptive capacity is measured by the existence of qualified human resources, scientific experience, accumulated technical abilities, infrastructure, and models of cooperation among universities, research centres and health institutions (hospitals and clinics). When combined with an efficient regulatory system, these capacities shape the structure of a host country’s health sector.

CHART 4 SCIENTIFIC AND TECHNICAL SERVICES RENDERED BY FOUR MEXICAN PUBLIC RESEARCH CENTERS TO THE

PHARMACEUTICAL AND FOOD INDUSTRIES, 1999-2012

Public Sector Research Centers Foreign pharmaceutical and food companies Domestic pharmaceutical companies and health centers GREEN: Services 1999-2004 BLUE: Services 2005-2008 RED: Services 2009-2012

EXAMPLE OF SCIENTFIC KNOWLEDGE OUTSOURCED BY PROJECTS NAME Analysis of endometrial genetic expression

Development of a new method to control cervical-uterine cancer

Proteomic analysis and techniques of assisted reproduction Proteomic analysis of spermatozoon

Development of a serological testing system for the early detection of human papillomavirus (HPV) antibodies Evaluation of automated polymerase chain reaction (PCR) tests for the detection of HPV

Evaluation of penetration effectiveness of pesticides for vector control

Clinical trial for diabetes mellitus control Home perimeter infection as a determinant of dengue transmission

Clinical trial phase II to evaluate vaccine immunogenicity and security Evaluation of inhibitory activity of antiseptics and disinfectants in clinical bacterial insulation in hospitals

Sensitivity to broad-spectrum antibiotics in clinic insulation of entire bacterium responsible for nosocomial infections; sensitivity to broad-spectrum in vitro antibiotics in clinic insulation; effect of supplementation with polyunsaturated fatty acids in neurologic development Identification of individuals with high probability of HCV infections

Randomized clinical study of a complementary diet programme in adult Mexican women Food intake of urban Mexican population

Evaluation of fatty acids intake by the Mexican population

Evaluation of the impact of fortified milk on the nutritional condition of beneficiary children Viability of school programs in the National Strategy against obesity and excess weight

Evaluation of the efficacy of incrementing milk in the in children with severe malnutrition; effects of vitamin D on the health of pre-school children

Efficacy of consuming iron-enhanced beans for humans Intake of a diet high in vitamins and minerals in Mexican women