NEW YORK (GBI Research), 13 June 2012 - Co-operation will be key to the development of pharmaceuticals in coming years in order to avoid further struggles caused by isolated paths of discovery within the biotech industry, according to a new report by pharmaceutical experts GBI Research.

The new report discusses how industry leaders have blamed the lack of improvements in pharma productivity on the industry’s closed innovation systems, which rely primarily on utilizing in-house expertise to address the challenges faced by product research and development (R&D). However, during the last decade, the pharmaceutical sector has begun to embrace an open innovation R&D model, establishing cooperative alliances, partnerships and joint ventures with R&D specialists to make use of diverse expertise and technologies in order to help develop proactive solutions and expand their potential markets.

In 2008, Czerepak and Ryser investigated the sources of drugs approved by the FDA as well as those failing in Phase III during the period January 2006 to December 2007, from small, medium and large pharmaceutical companies. Of the 103 FDA approvals, 46% were from biotech, 16% from pharma-biotech relationships, and 39% from pharmaceutical companies. Interestingly, only 30% of products were new chemical entities/novel drugs, while 30% were line extensions and 40% were “me-toos”. According to the investigation, more than 50% of novel drug approvals were originally generated by the biotech industry, and 95% of the Phase III failures were products originating from biotech companies.

The pharmaceutical industry was therefore proven to have a much better success rate than biotech companies in getting drugs approved in the US during this investigation. However, 40% of all pharmaceutical companies' approved products were sourced from the biotech industry, either through collaborations or acquisitions. Since 2000, most major pharmaceutical companies have undergone a major re-evaluation of their product pipelines, refining their therapeutic focus, expanding the contribution of biologics, repositioning products in emerging markets, managing their product lines through the migration of some prescription products to over-the-counter (OTC) drugs, and promoting the launch of branded generics and biosimilars.

Over the next ten years, the pharmaceutical industry will seek new ways to improve patient access to cost-effective, innovative medicines. Companies have adopted diverse tactics in order to refine their pipelines.

Companies have begun including the redirection of their R&D budgets and investments into new scientific hubs in China and India, strategically shifting funds out of research and into product development. Meanwhile, leading academic institutions have been actively patenting their research discoveries in reaction to knocks on their door from big pharma looking for alternative routes for innovation. These developments are expected to promote future growth and shareholder value alongside internal improvement on R&D efficiency.