Frost & Sullivan: Orphan Drugs to Create Paradigm Shift in the Pharmaceutical Industry!

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Apr 06, 2010, 06:00 ET

LONDON, April 6 /PRNewswire/ -- The economic recovery process has proved difficult for the pharmaceutical industry. Factors like patent expiry, dry pipeline, and strict approval guidelines have slowed down the attractive drug discovery and industry growth. Coupled with an investment risk in new therapy or molecules, this creates a challenge for the industry to overcome. However, in the midst of the current status, there seems to be a bend in the road - marked by the evolution of a paradigm shift in the industry: Orphan drugs.

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"While the pharmaceutical industries have been focusing on 'blockbuster' small molecules (chemical drugs) for high revenue generation in the past, it is expected that in 5 years, around $90.0 billion worth of branded drugs will lose their exclusivity," finds Frost & Sullivan Healthcare consultant Shabeer Hussain. "The current economic situation plus the huge generic competition shifted the focus of pharmaceutical companies and they are moving to a new business model - 'Niche busters,' also called Orphan drugs."

This new business model will provide an approach to an integrated healthcare solution, thereby enabling pharmaceutical companies to develop newer areas of therapeutics, diagnosis, treatment, monitoring and patient support. Orphan drugs provide attractive opportunities to reduce the impact of revenue loss due to the patent expiry for blockbuster drugs. Clinical trials for orphan drugs are run efficiently with smaller patient groups, thereby reducing costs significantly. Incentives for drug development provided by governments, the FDA and the EU commission support in special protocols are a further boost for companies developing orphan drugs.

Pharmaceutical and biopharmaceutical companies are also joining in partnerships by licensing products to maintain revenue. Such collaborations reduce the cost of developing and marketing orphan drugs. In numerous ways, a balanced, strong alliance will achieve mutual benefit to both pharma and biotech companies.

While the focus on "niche busters" grows, the safety regulations and approval processes will become stricter, putting larger companies in a better position to cope with the increasing demands. However, though smaller pharma-biotech companies will struggle to compete with the more powerful competitors in the industry, Hussain believes there will still be assurance for niche players with specialist therapies, technologies, unique capabilities and expertise. Acquisitions at a global level, aimed at specific niche capabilities with technologies, are likely to be the most effective way of achieving a better partnership and collaboration, as well as a more diverse client space. This will add the necessary stability smaller collaborations need to survive and thrive.

Though there may still be challenges ahead for the pharmaceutical industry, orphan drugs seem to offer the key to recovery and stability within the market. The crucial focus is maintaining unique desirability within smaller collaborations, while emphasizing competitive strategy and vigor. Hussain believes orphan drugs to be highly competitive market drivers: "The global pharmaceutical industry is beginning to grow and expand, but part of the reason is because this year has been the year of biopharmaceuticals. Biopharmaceuticals are likely to continue to take the major share of the pharmaceutical industry and be in direct competition to the small molecule drugs. These effects will create new consolidated companies, and this evolution will change the landscape of the pharmaceutical industry," he concludes.

If you are interested in more information on Frost & Sullivan's research on Orphan Drugs, please send an e-mail to Katja Feick, Corporate Communications, at [email protected], with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country.

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