Factory is provided product specification:Content, price, brand

proposition, etc

Research & development

Demand, Research through Chef,

customers

Market Research

Kitchen Samples are developed

Tasted by panel

Creation of sample & product

testing

Trial production(1 tonne) before full scale.Advertising Promotion

Product Launch

Result given to factory & necessary changes

incorporated

Feedback & observation

Phases in FMCG NPD

Maggi: A Natural Choice

Pre-clinical1. Drug Developed2. Animals Tested3. IND Application

ClinicalPhase 1: Safety: Trails on Healthy Volunteers (20-80)

Phase 2: Effectiveness; Trails on Patients (100’s)Phase 3: Safety & Efficacy; (1000’s)

NDA ReviewDrug Labeling,

Application Review, NDA Application, Review Meeting,

Facility Inspection

Post-Marketing

FMCG1. Market Demand or Product Expansion is initial step2. Low Risk : Panel & customer Feedback is indicator of Success of

product3. Comparatively Low Regulation4. Pull Strategy5. Short Time Span required for NPD 6. Low Expenditure on R&D: 1.7% R&D (as % of sale)

Pharmaceuticals1. Drug Development is initial Step 2. High Risk: Clinical Trails are done on Healthy volunteers &

patients To find Safety & Efficiency. High Risk3. High Regulation4. Push Strategy5. Long Time span for NPD (around 10-15 Years)6. High Expenditure on R&D: 14.9% R&D (as % of sale)

NPD of pharmaceuticals

Cont…

The right to a patent term extension is based upon regulatory review is the result of the Drug Price Competition and Patent Term

Restoration Act of 1984, Public Law 98-417, 98 Stat.

• Patent law that confers a monopoly on the innovator for a specified period of time.• Time period is 20 years from the time the sponsor files for the patent.• Intellectual property protection is important, because the cost of innovation is high, whereas the cost of imitation is low.• This is an especially important issue in pharmaceutical research because of the long lag time from discovery of a novel compound to marketing.

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%14.90%

10.40%

8.20%7.00%

4.80% 4.60% 4.20%3.20% 2.70%

1.70%

R&D Expenditure as % of Sales

Source: www.innovation.gov.uk/rd_scoreboard

Drug discovery & development

48%$ 1.4 billionForgone Return to

investors41%

$ 1.2 billion

R&D after drug get approved

11%$ 312 million

Capital Expenditure Reguired for NPD in pharma

• Patent Extension period limited to 5 years• Patent extension strategies:1. Drugs can be reformulated to be administered in new ways2. Demonstrating safety and efficacy in new indications (called “new

method of use”)Example: finasteride (Proscar), which was originally launched byMerck for the treatment of BPH. Finasteride was found to be effectivein treating male pattern baldness and was rebranded as Propecia.

Cont…

3. Combination of existing approved drugs is often employed bycompaniesExample: Gilead’s quad drug, Stribild, was approved by the FDA.The manufacturer maintains marketing exclusivity on the drugabout to expire by combining it with other drugs. Themanufacturer will report either greater efficacy and/or improvedcompliance as well as ease of administration with thesecombination medications to extend patent life.

.

Risk

Huge Capital requirement for scientific research & Clinical Trails. Cost of getting a drug approved: $2.6 billion in 2014according to Tufts Centre for the Study of Drug Development

Examples: Pfizer’s multimillion-dollar gamble on a replacement for the cholesterol-lowering drug Lipitor, which

failed miserably in clinical trials.

Clinical trails in Phase I has to be conducted on healthy volunteers If trials goes wrong life of volunteer

get affected

Cost increased. As compensation has

to be paid.

Long Time horizon: Average time to develop a drug = 10 to 20

years

Approvals, Therapeutic & Generic

competition, Public policy Issue

Cont…

whether innovative drugs provide value for money? Need to prove not only drug is not harmful but also significantly better than others available drugs

Patent life no longer grant a monopoly to make revenue, because more than one company may be emerging compounds with similar end result, even though the chemical compounds differs and can each thus be patented.

An overwhelming number of drugs that enter clinical trials don't actually get approved by the FDAPercentage of drugs entering clinical trials resulting in an approved medicine = less than 12%

Unless a company can routinely and frequently develop a “blockbuster”drug, the funds to support additional research will diminish

Regulatory uncertainty occurs because the time required for newdrug approval further delays product marketing, and becausemarketing approval is not assured.

The permutation of long lead-times from finding to NDA approval, the high probability of failure for compounds entering clinical testing, and theunpredictability of sales once a product is marketed creates a risky business environment. Decisions to fund clinical trials are critical to economicsuccess. Cont…

Ethical Dilemma in Clinical Trials

• While most of the major drug companies are based in America andEurope, clinical trials are conducted across the globe.

• Specialized companies called Contract Research Organizations (CROs) runthese trails & maintain the protocols around informed consent.

• Distrust and skepticism in the people due to past experience ofmistreatment, acts as a de-motivator.

Identifying need to cure

health problem

Laboratory-based

research.

Animal research

Human testing (3 levels)

(controlled conditions, with small numbers of people,)

Out of the LAB and into the HUMAN GUINEA PIGS

Clinical trials "are the gold standard for understanding the effect and effectiveness of medical interventions, understanding what works and what doesn't work.”

• Altruistic benefit to entire society

• CRA and Ethical Review Committees help in reducing the risks .

• Ethical Review Committees (watchdog for conducting trails withoutprejudice).

• But, conducting trials is a must even though it might be harmful.

Cont…

High dependent on Patent

protection For example, U.S. Patent Application No. 20140194345 relates to a novel depsipeptide that can be used to treat antibiotic resistant bacterial infections. Unfortunately, the compound claims of the ‘345 application have been rejected by the patent examiner and within the few days

have been cancelled by the applicant. Did the Supreme Court really mean to say that certain life saving antibiotics are no longer patent eligible? Well that is how Supreme Court rulings are being interpreted.

Pfizer stands to lose a $10-billion-a-year revenue stream when the patent on its blockbuster cholesterol drug Lipitor expires and cheaper

generics begin to cut into the company’s huge sales.

Cont…

• Question of informed consent

• No Professional volunteers

• Strategy for earning more income.(for volunteers)

• Vulnerability of poor and marginalised people

recruited in clinical trials.

• Taking risks and hoping for rewards:The

volunteers used in phase 2 & 3 trials are people who

have the medical condition, the new drug is trying

to help. Often they are not in it for the money, but

are rather looking for a cure.

Drugs come out, they don't know where they come from, they're happy they are there, and they just exist. But everything has to be tested, sometimes repeatedly, in multiple and very far-flung studies

• Participants rights should be respected.

• Govt. bodies, rather than investigatingdoctors hired by pharmaceuticalcompanies, should decide whetherexperimental treatments have harmedpatients.

• Compensation provided only in case ofharm to patients due to the trail.

Fuchs examined inflation-adjusted Medicare expenditure and found that it increased at 4-5% per recipient per year at the same time that GDP was increasing at1.2% annually (Fuchs, 1999). He attributed the increase to the use of new medical technologies (including drugs) and suggested that there was a positive effecton life expectancy and the health status of the elderly. Other investigators have made similar observations and noted that improvements in life expectancy rarelytranslate into a lower cost of care over a person’s lifetime. For example, use of antibiotics to prevent deaths from infections can cause people to live longer andhence to die from heart disease and cancer, which typically entail even greater costs. This is the dilemma and the lesson; the value of pharmaceutical innovationsoften cannot be captured in conventional accounting calculations.

Cont…

Motivation for clinical trials for ElephantMen: Subject tended to be a bitidealistic - being a human guinea pigwas not only a quick way of making acouple of grand, there was every chancethat it would do some good.

Role of CRA:Co-ordinate Trials of new Drug

Is risks with developing new medicines and DEATHS in trials inevitable?

• Risk is result of regulatory, scientific and economic uncertainty.lengthy development time leads to economic risk.

• The longer the scientific development time, the greater the riskthat a competitor will discover before and thus reducing thechances for a return on the R&D investment.

• Overall success rate for all investigational drugs tested inhumans 63%

• Unsuccessful clinical trails have disastrous consequence on Lifeof volunteer

• As NPD process is Capital intensive it may leads to massive Loss.

• Risk on defaulting on regulation

• Nature of disease of Investigating

Requirements for developing new drug: major investment of capital, human resources, and technological expertise, strict adherence to regulations on testing and manufacturing standards before a new drug can be used in the general population.

• The increased role of government as a financier for innovativenew drug will reduce the expense of new product development

• Drug benefited is subsidized by government will be hugerelaxation of fund requirement to pharmaceuticals companies

• Pharmaceutical companies are make an effort to reduce risk bydeciding to discontinue work on less promising drugs. Due toscientific or economic reasons drug can be less promising.

• Regulation followed strictly• A part of this rationale is that more fund supplier are demanding

evidence of cost effectiveness before agreeing to fund the drug,thus leveling high the economic success bar for all drugs enteringR&D before they ever reach the market

• At every stage in new product development FDA watch dog ispresent so the risk to volunteers in minimized by validatingresearch on animals and scientific check by government bodies.

• The volunteers should do detail study of there are into for theresafety will further reduce the risk

Certainly not inevitableRisky Business? Yes.

Source: Clinical Development Success Rte 2006-2015-BIO,Biomedtracker,Amplion2016