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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

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« Epigenetics: The Code Isn't The Object | Main | An Outsourcing Blast »

November 9, 2010

Where Drugs Come From: By Country

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Posted by Derek

The same paper I was summarizing the other day has some interesting data on the 1998-2007 drug approvals, broken down by country and region of origin. The first thing to note is that the distribution by country tracks, quite closely, the corresponding share of the worldwide drug market. The US discovered nearly half the drugs approved during that period, and accounts for roughly that amount of the market, for example. But there are two big exceptions: the UK and Switzerland, which both outperform for their size.

In case you're wondering, the league tables look like this: the US leads in the discovery of approved drugs, by a wide margin (118 out of the 252 drugs). Then Japan, the UK and Germany are about equal, in the low 20s each. Switzerland is in next at 13, France at 12, and then the rest of Europe put together adds up to 29. Canada and Australia put together add up to nearly 7, and the entire rest of the world (including China and India) is about 6.5, with most of that being Israel.

But while the US may be producing the number of drugs you'd expect, a closer look shows that it's still a real outlier in several respects. The biggest one, to my mind, comes when you use that criterion for innovative structures or mechanisms versus extensions of what's already been worked on, as mentioned in the last post. Looking at it that way, almost all the major drug-discovering countries in the world were tilted towards less innovative medicines. The only exceptions are Switzerland, Canada and Australia, and (very much so) the US. The UK comes close, running nearly 50/50. Germany and Japan, though, especially stand out as the kings of follow-ons and me-toos, and the combined rest-of-Europe category is nearly as unbalanced.

What about that unmet-medical-need categorization? Looking at which drugs were submitted here in the US for priority review by the FDA (the proxy used across this whole analysis), again, the US-based drugs are outliers, with more priority reviews than not. Only in the smaller contributions from Australia and Canada do you see that, although Switzerland is nearly even. But in both these breakdowns (structure/mechanism and medical need) it's the biotech companies that appear to have taken the lead.

And here's the last outlier that appears to tie all these together: in almost every country that discovered new drugs during that ten-year period, the great majority came from pharma companies. The only exception is the US: 60% of our drugs have the fingerprints of biotech companies on them, either alone or from university-derived drug candidates. In very few other countries do biotech-derived drugs make much of a showing at all.

These trends show up in sales as well. Only in the US, UK, Switzerland, and Australia did the per-year-sales of novel therapies exceed the sales of the follow-ons. Germany and Japan tend to discover drugs with higher sales than average, but (as mentioned above) these are almost entirely followers of some sort.

Taken together, it appears that the US biotech industry has been the main driver of innovative drugs over the past ten years. I don't want to belittle the follow-on compounds, because they are useful. (As pointed out here before, it's hard for one of those compounds to be successful unless it really represents some sort of improvement over what's already available). At the same time, though, we can't run the whole industry by making better and better versions of what we already know.

And the contributions of universities - especially those in the US - has been strong, too. While university-derived drugs are a minority, they tend to be more innovative, probably because of their origins in basic research. There's no academic magic involved: very few, if any, universities try deliberately to run a profitable drug-discovery business - and if any start to, I confidently predict that we'll see more follow-on drugs from them as well.

Discussing the reasons for all this is another post in itself. But whatever you might think about the idea of American exceptionalism, it's alive in drug discovery.

Comments (33) + TrackBacks (0) | Category: Academia (vs. Industry) | Business and Markets | Drug Development | Drug Industry History | Who Discovers and Why


COMMENTS

1. g on November 9, 2010 10:05 AM writes...

What is the distinction between pharma and biotech companies? Many traditional pharma companies are trying to make biologics, and many biotech companies have small molecules in their pipelines.

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2. processchemist on November 9, 2010 10:23 AM writes...

Good to see written down what most people already know. Some questions:
1) How much of the US leadership in the field depends on combination of scientific culture AND wealth of funds (both in the academic and industrial side)?
2) How credible is the assertion coming from some analysts and upper managers that, in the post great recession age, China and India will takeover the current US leadership?

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3. HelicalZz on November 9, 2010 10:28 AM writes...

I believe what you are seeing here is a capital markets phenomenon. The US has the most robust risk capital (venture capital and angel) framework, an often necessary driver for entrepreneurial innovation.

Zz

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4. MedChem on November 9, 2010 10:45 AM writes...

#1 (g):

"Biotech" simply means smaller drug companies, and NOT a biologics-focused company that its name implies. There're exceptions of course.

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5. A Nonny Mouse on November 9, 2010 12:12 PM writes...

There is a terrible problem getting funding for smaller "biotechs" in the UK; you have to give away huge amounts of equity for very small amounts of investment.

It's always better if you are able to pitch to a US investor as they tend to be a lot more open to the risk and the amount of funds that will be required.

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6. A Nonny Mouse on November 9, 2010 12:17 PM writes...

There is a terrible problem getting funding for smaller "biotechs" in the UK; you have to give away huge amounts of equity for very small amounts of investment.

It's always better if you are able to pitch to a US investor as they tend to be a lot more open to the risk and the amount of funds that will be required.

This was an interesting program on the radio comparing the different attitudes between the US and UK (hope you can all listen).

http://www.bbc.co.uk/radio4/news/inbusiness/inbusiness_20080828.shtml

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7. ex-Pfizerite on November 9, 2010 12:41 PM writes...

It is easy to distinguish between a small, early stage, biotech, a large biotech and pharma. A small biotech operates out of a building that looks like a converted warehouse on epoxy sealed cement floors and old (last tenant) industrial carpeting. A large biotech has a campus with gleaming Taj Mahal style buildings and architectural water features. Pharma has the campus but more importantly exective jets for the CEO and a plan to fire the scientists whose efforts led to the drugs that paid for the campus and jets. The scientist would prefer job security, an office with a window, and a good cafeteria.

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8. ronathan richardson on November 9, 2010 12:59 PM writes...

I think it's kind of interesting that US and Switzerland are such positive outliers given that they are also the top 2 in healthcare spending per capita, and also have a worse-performing healthcare system than would be expected for their GDP per capita.

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9. Dylan on November 9, 2010 1:49 PM writes...

I think it is important to note that this is only looking at drugs approved in the U.S. during this time period. Japan in particular is known for creating many drugs for local markets only. I know we like to talk about it being a global world now, but in many ways we're still not truly there yet. It would be interesting to see how much these statistics change if we looked at the worldwide markets (removing drugs that are approved in multiple markets obviously).

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10. pete on November 9, 2010 1:56 PM writes...

@ 3 HelicalZz
"I believe what you are seeing here is a capital markets phenomenon. The US has the most robust risk capital (venture capital and angel) framework, an often necessary driver for entrepreneurial innovation."

Yes, to a point, but this thinking suggests that innovative US bioscience just sprung up like so many mushrooms in the wake of the risk capital cash cow. Risk capital certainly helped the rise of US biotech, but it was the PE-EXISTENT culture of scientific risk-taking/inquiry that made those risk investors plunk down their bucks in the first place.

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11. Nick K on November 9, 2010 2:01 PM writes...

Are drugs discovered in India and China for US-based firms considered to be American or Indian/Chinese?

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12. nitrosonium on November 9, 2010 2:19 PM writes...

how do you get about 6.5 drugs?

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13. processchemist on November 9, 2010 3:06 PM writes...

@11

What drugs, approved or undergoing clinical trials, come from chinese universities or private research centers?

Permalink to Comment

14. HelicalZz on November 9, 2010 4:13 PM writes...

@10 Pete

No argument. Scientific culture ... and Bayh-Dole.

Zz

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15. MedChem on November 9, 2010 4:14 PM writes...

#13,

Fair question for now, although I'd bet 10-15 years from now you'll start to see the rise of chinese pharma companies, with a 80-20 mix of follow-up and novel drugs. Just watch.

Permalink to Comment

16. Anonymous on November 9, 2010 8:20 PM writes...

I hear that Cuba has a spectacular health care system. Why is Cuba not near the top of the list?

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17. Anonymous on November 9, 2010 8:52 PM writes...

@16:
Ignoring any possible irony in your question, it's because their approach puts the emphasis on providing care instead of pills (grossly oversimplified and somewhat misplaced on this kind of blog, i know ;)).

Permalink to Comment

18. Jose on November 9, 2010 11:49 PM writes...

"Are drugs discovered in India and China for US-based firms considered to be American or Indian/Chinese?"

Pretty sure this hasn't been an issue yet. HTS campaigns, lead optimization, yes, but discovery? Not so much.

Permalink to Comment

19. Nick K on November 10, 2010 4:22 AM writes...

@18: Sorry, I'm not at all clear on this. I thought HTS and lead optimisation were part of the discovery process.

Permalink to Comment

20. sgcox on November 10, 2010 5:06 AM writes...

US is also a very big country.
If we scale up for the population,
UK will come up with 310/61*23=117 - the same number as US
while Swiss will amount to 310/7.8*13= 520 !!!!

Permalink to Comment

21. Jose on November 10, 2010 7:27 AM writes...

My impression is that 99% of the intellectual input and decision making (the pure brain capital part) are kept "in-country" and the exported work is more support functions.

Permalink to Comment

22. partial agonist on November 10, 2010 9:10 AM writes...

#19: "I thought HTS and lead optimisation were part of the discovery process."

Semantics I guess, but say you are a project manager in the US you have a group of foreign chemists and provide them a list of 100 compounds to make, later you give them a list of what 50 follow-up compounds to make, and later still you give them a list what 10 analogs of those to make.

Was the discovery yours or theirs? By contract in all of these situations it is yours.

Some day the Indian and Chinese scientists will not be happy only with the CRO piece of the pie, and that day seems to be approaching rapidly.

Permalink to Comment

23. TW Andrews on November 10, 2010 10:20 AM writes...

How is ownership of a drug assigned? If a team at NIBR here in Cambridge develops a molecule as part of a project that was kicked off in Basel, is the drug counted as Swiss or American?

Permalink to Comment

24. MedChem on November 10, 2010 10:51 AM writes...

#19:

"Some day the Indian and Chinese scientists will not be happy only with the CRO piece of the pie, and that day seems to be approaching rapidly."

I have a feeling that day may come sooner than we had thought. I think here in the west we tend to hugely overvalue our medchem experience. Medchem being more an art form than science, its principles (and those of drug discovery for that matter) are not that hard to grasp. It's how to turn the knowledge into actual good molecules that is the hard part. Very few med chemists have that magic touch and are able to practise the art. Just look around in your own organization--aren't most chemists making mindless libraries?

Couple the innovation stifling culture of western big pharma (in so many ways) to the influx of mature talent into Chindia from the west, the said gap in medchem/drug discovery experience is disappearing FAST.

Permalink to Comment

25. fred on November 10, 2010 1:38 PM writes...

The US has had a vibrant drug discovery culture because it hasn't, until recently, had a government run health care system. Private control ensured that patients wanted drugs that might help them and that those who discovered drugs that benefited patients would get paid for their efforts.

The UK had active research pharma until it instituted profits control. When expenditure minimizing bureaucrats can control profits and arbitrarily rule that a new drug is "too expensive" to be given to patients, drug discovery stops.

Permalink to Comment

26. Mike G on November 10, 2010 2:18 PM writes...

#23 raises an important question. Does "country of origin" refer to where the company's HQ'd or where the particular R&D site that discovered the drug is located? Most of Novartis's R&D is based in the US, but it's technically a Swiss company. If HQ is the determinant of origin, then I imagine that Switzerland (Novartis, Roche) should at least be on a par with UK and Germany re discovery of approved drugs.

Outsourcing further complicates the picture: if Glaxo R&D in the US licenses in an early stage drug from a Danish University, optimizes the target and lead, then outsources preclinical and human trials to Chindia, what's the country of origin?

And is a company (e.g., Genentech, Medimmune) counted a biotech if it's been acquired and subsumed by a big pharma?

And what does "origin" mean -- IND, first publication of target ID/validation, etc?

Just wondering . . .

Permalink to Comment

27. Hap on November 10, 2010 3:28 PM writes...

#25: Except, depending on how you count it, the US has either not had gov't-run health care (because the recently-passed healthcare laws haven't (mostly) been implemented yet) or has had it for quite some time (> 50 years - via Medicaid and Medicare). I don't think that fits the theory. The renewed emphasis on market development in India and China, both of which have (I think) gov't-run health care also doesn't fit (though, the market size increase and thus increases in money are likely to outweigh any potential restrictions in those markets).

Permalink to Comment

28. Advantium on November 11, 2010 7:32 PM writes...

As a senior manager in a CRO in India the day will come where we will be making more and better drugs than the west. Why do you think we really do CRO work. So that our people can learn the art of Medchem on Pharmas dime and use it to make our own drugs in the next 2-3 years. In fact we have already stated doing so.

Permalink to Comment

29. Tokamak on November 13, 2010 8:46 PM writes...

#28 Advantium -
Awesome. When that happens, the US can invalidate the Indian patents and make cheap generics too. Everybody wins!

Permalink to Comment

30. Kaleberg on November 14, 2010 7:52 PM writes...

#25 is partly right, but it's not who pays for the drugs, but how much. Back in the 1980s, when Japan owned the consumer electronics industry, Japanese would come to the US to buy Japanese electronics which were much cheaper than at home even after any import duty. The high prices drove the industry. Americans pay high prices for drugs, but we have a powerful drug industry to show for it.

Permalink to Comment

31. Tyrosine on November 22, 2010 7:23 PM writes...

@20.... exactly right.
The point of this paper for me was summed up in the first sentence: "Understanding the factors that promote drug innovation is important both for improvements in health care and for the future of organizations engaged in drug discovery research and development." Unfortunately Derek and others have latched onto the raw data to pat the US on the back somewhat (which I don't begrudge - credit where credit is due) rather than use the data to look for best practice. Raw numbers are not useful for this purpose. That's like counting gold medals at the Olympics -- it makes the TV public in the USA happy but the number is simply a measure of population and money. Important insights can only be gained by analysing the data further.

If the 251 new drugs are normalised for population, or for GDP, the clear stand out is Switzerland (have a look at the data here: http://tinyurl.com/2cxwtbd population and GDP figures taken from Google). The US and UK are about equal second, a long way behind, followed by Germany, France, Japan, then Canada and Australia. The rest of the world rounds to zero.

The point is, if drug discovery companies are looking to understand "best practice" it might pay to understand what Switzerland is doing right.

Permalink to Comment

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