NEW YORK/LONDON (Reuters) - The rise of combination treatments and tailored therapies is giving drugmakers even more incentive to team up, beyond seeking ways to limit the risks and costs of drug development.
Roche, Bristol-Myers Squibb and Merck & Co are among the largest global companies that have recently struck collaborations to conduct early clinical trials or to jointly market rival drugs.
The partnerships may seem counterintuitive in an industry dependent on owning its inventions — and fending off would-be competitors — in order to profit from them. Drugmakers used to being in control now must split decision-making with their partners and may end up sacrificing some potential gains.
What is spurring them to overlook these risks and expand their tie-ups is the promise of improving the development of new products and increasing their chances of selling them at a time when governments, health insurers and consumers are loathe to pay for high-priced medicines.
“Collaborations make sense,” Moody’s analyst Marie Fischer-Sabatie said. “Partnering is a trend that has accelerated recently and will continue to grow.”
Large pharmaceutical companies for years have sought each other out as they look to share both the enormous expenses of drug research and the risks in developing new medicines.
Those needs are even more acute now. The industry faces billions in lost revenue as their top drugs lose patent protection, as well as cost pressures from government and private health systems, and inconsistent returns on research spending.
Some of the new appetite for collaboration stems from medical advances in diseases from cancer to hepatitis C. A new crop of drugs either work only in tandem with other medicines or are expected to perform better in combinations.
The implications go beyond the potential for improved clinical results. If it becomes standard to treat conditions such as cancer with multiple medicines from different sources, it is in the drugmakers’ interest to join forces to negotiate pricing with healthcare systems, industry experts said.
Take Bristol-Myers and Roche. Earlier this month, they released plans to combine their two promising drugs — Bristol’s recently approved Yervoy and Roche’s experimental medicine vemurafenib — in a potential combination therapy for metastatic melanoma, the deadliest form of skin cancer.
Yervoy alone has been priced at about $120,000 for a four-infusion course.
But should such combinations prove fruitful, companies can package therapies together and approach health insurers to negotiate coverage, said Pfizer Inc’s former research chief John LaMattina.
“If you convert cancer to a chronic disease, and you’ve got now people living 10, 20, 30 years with cancer but they’re on a polypharmacy, there’s no way you can have them with three drugs that each cost $80,000 a year,” said LaMattina, now senior partner at PureTech Ventures, a healthcare venture capital firm.
“The companies that will win will be companies that are able to bundle a variety of treatments,” he said.
Other companies are linking up still earlier. AstraZeneca and Merck agreed on a pioneering early-stage cancer research deal in 2009 and since then other companies, including GlaxoSmithKline, Novartis, Sanofi and Germany’s Merck KGaA, have followed suit.
Roche also struck an agreement with Merck recently to co-market their medicines for hepatitis C — an area where multiple treatments have long been standard — in a pact expected to help fend off a new treatment from Vertex Pharmaceuticals.
Patients with hypertension, diabetes and HIV are also regularly treated with a combination of medicines.
In the case of HIV, GSK and Pfizer have even set up a joint venture company to research and market treatments, called ViiV Healthcare, which could end up being floated as a separate business.
Drug companies are also increasingly developing medicines that are tailored to a patient’s genetic make-up. The effectiveness of these drugs can be improved with tests, known as companion diagnostics, that determine if the patients are a genetic fit with the therapies.
Pfizer’s experimental drug crizotinib, for example, is designed to target a specific genetic mutation prevalent in nonsmokers with non-small cell lung cancer. Crizotinib, which is being reviewed on a priority basis by U.S. regulators, has a companion test developed by Abbott Laboratories, which partnered with Pfizer about two years ago.
Roche, another major player in the diagnostics field, earlier this month also agreed to help develop tests for Merck’s portfolio of experimental cancer medicines.
Such partnerships are examples of “reaching across the aisle for firms that have specialties that you don’t want to develop,” Morningstar analyst Damien Conover said.
As the large companies become enmeshed with each other, complications can ensue.
Eli Lilly ran into trouble earlier this year after it announced a diabetes partnership with privately held Boehringer Ingelheim.
Another longtime partner of Lilly’s, Amylin Pharmaceuticals, took umbrage that the Indianapolis drugmaker was planning to help market a Boehringer drug that stands to be a rival to a medicine Lilly and Amylin sell together. Amylin sued, claiming Lilly violated their diabetes agreement.
Yet such lawsuits may just be the cost of doing business.
“Almost everybody we are working with is either suing us or we are suing them,” Glaxo CEO Andrew Witty told the drugmaker’s annual meeting in May. “However, if we refused to work with people who sued us, we would not have any friends at all.”
Editing by Michele Gershberg, Dave Zimmerman