A Revolution in R&D
A Revolution in R&D
A Revolution in R&D
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24<br />
Chapter 2: The Impact of Genetics<br />
Preface<br />
Hav<strong>in</strong>g discussed the genomics wave <strong>in</strong> the previous<br />
chapter, and the way that it promises to enhance<br />
R&D productivity, we now turn to the genetics wave.<br />
Several broad differences suggest themselves immediately.<br />
Where the genomics wave is technologydriven,<br />
the genetics wave is better viewed as datadriven,<br />
exploit<strong>in</strong>g the known details of the human<br />
genome and <strong>in</strong>dividual variations with<strong>in</strong> it. Where<br />
the genomics wave br<strong>in</strong>gs benefits ma<strong>in</strong>ly at the<br />
drug-discovery and precl<strong>in</strong>ical phases, the genetics<br />
wave will prove its worth <strong>in</strong> both the earliest phase<br />
and the later phases of the value cha<strong>in</strong>—target discovery<br />
and the cl<strong>in</strong>ic. Where the genomics wave<br />
enhances R&D productivity ma<strong>in</strong>ly by secur<strong>in</strong>g<br />
great improvements <strong>in</strong> efficiency (with only modest<br />
improvements, if any, <strong>in</strong> success rates), the genetics<br />
wave could boost success rates dramatically as well.<br />
One further difference should be mentioned:<br />
where our model for the genomics wave was put forward<br />
with considerable confidence, our model for<br />
the genetics wave is more tentative. At this early<br />
stage, any assessment of genetics’ impact on the economics<br />
of R&D is bound to be provisional. Certa<strong>in</strong>ly<br />
genetics has huge potential: if all goes accord<strong>in</strong>g to<br />
plan, it will change R&D productivity beyond recognition.<br />
But between that potential and its full realization<br />
lie several years and many obstacles.<br />
The potential consists <strong>in</strong> tremendous sav<strong>in</strong>gs. First,<br />
genetics can br<strong>in</strong>g about great efficiency ga<strong>in</strong>s by<br />
mak<strong>in</strong>g it possible to shorten or even bypass various<br />
steps <strong>in</strong> the value cha<strong>in</strong>. Second, genetics holds the<br />
prospect of transform<strong>in</strong>g success rates: failures <strong>in</strong><br />
the R&D pipel<strong>in</strong>e currently account for 75 percent<br />
of the total cost to drug. But offsett<strong>in</strong>g such opportunities,<br />
dangers loom large. Rid<strong>in</strong>g the genetics<br />
wave <strong>in</strong>volves a greater risk than rid<strong>in</strong>g the<br />
genomics wave alone—though it is more exhilarat<strong>in</strong>g<br />
and, if the risks are successfully negotiated, ultimately<br />
more reward<strong>in</strong>g. How to choose between discretion<br />
and valor is a crucial strategic decision that<br />
companies will have to make.<br />
In analyz<strong>in</strong>g the economic implications of genetics,<br />
this chapter of our report considers the effect only<br />
on pharmaceutical R&D. But genetics is likely to<br />
affect health care far beyond R&D, <strong>in</strong> both the<br />
short and the long term. In the short term, new<br />
market opportunities should arise <strong>in</strong> the formerly<br />
sleepy diagnostics sector. (Drug companies may or<br />
may not be able to exploit these opportunities: see<br />
sidebar, “Diagnostics—an Opportunity Too Good to<br />
Miss…and Perhaps Too Good to Grasp.”) In the<br />
longer term, genetics is likely to transform the<br />
delivery of health care. Increas<strong>in</strong>gly, diseases will be<br />
redef<strong>in</strong>ed <strong>in</strong>to various subtypes—a ref<strong>in</strong>ement that<br />
should facilitate more appropriate care and more<br />
“rational” drug design. The comb<strong>in</strong>ation of new<br />
diagnostics, new disease def<strong>in</strong>itions, and new tailored<br />
drugs should prove a w<strong>in</strong>n<strong>in</strong>g one, and may<br />
well usher <strong>in</strong> an era of <strong>in</strong>dividualized medic<strong>in</strong>e.<br />
R&D rema<strong>in</strong>s the focus of our analysis here, however:<br />
specifically, the wide range of economic reactions<br />
that R&D might show under the impact of the<br />
new genetics <strong>in</strong>formation. We discuss the tremendous<br />
opportunities as well as the accompany<strong>in</strong>g