A Revolution in R&D

Realizing this value is a matter not only of market
dynamics, but also of various more speculative factors:
how acceptable pharmacogenetics will prove
to payers, patients, physicians, and regulatory agencies;
how readily physicians and patients will
embrace the screening tests to generate share shift;
and so on. So the different types of pharmacogenetics
will probably come into effect at different
times. Detection of rare side effects will probably be
introduced first, as pharmaceutical companies are
highly motivated to save drugs from failure. Efficacy
pharmacogenetics will probably progress on a
slower timetable, owing to concerns about market
fragmentation. It might even take FDA action to
turn efficacy testing into a routine procedure.
When contemplating their pharmacogenetics policy,
companies will need to scrupulously analyze
specific drugs and markets. Deciding shrewdly just
where and when to apply pharmacogenetics, for
instance, will mean assessing market dynamics earlier
than ever before in the clinical trials phase. And
that in turn will demand new decision-making
processes and communication channels, including
stronger ties between research and development,
and between R&D and commercial activities. It is
on operational and organizational issues of this
kind that the spotlight will fall in the next chapter
of this report.
A Final Word
If the new genetics can realize its full potential, the
economics of pharmaceutical R&D will undergo a
metamorphosis. Efficiency will improve handsomely
and success rates will surge. The sums saved
could exceed a half billion dollars per drug, more
than halving the current cost.
That prospect is far from assured. There are
enough risks and uncertainties to temper excite-
ment. The range of possible outcomes is wide, and
companies will have to examine minutely and apply
selectively the various genetics opportunities.
Contrast genomics technology: the productivity
improvements promised by its implementation may
be more modest, but they are clearly achievable,
despite the operational challenges. With genetics,
the operational challenges are formidable too, but
they are compounded by less distinct and possibly
more intractable challenges: technological limitations,
scientific unknowns, and (in the case of pharmacogenetics)
the vagaries of the marketplace.
So, companies determined to acquire and exploit
genetic information need to know what they are letting
themselves in for. They need to consider how
applicable genetics is to their current research
strategy. They need to spell out the level of risk they
are prepared to take on, and then plan how to manage
that risk. In short, they need a genetics strategy.
In the case of disease genetics, risk management
would best begin by contemplating the sheer magnitude
of the undertaking. Companies will be
prompted to ask themselves questions such as these:
How feasible is it for us to establish an extensive
disease genetics program in-house? On which diseases
should our program focus? Are there opportunities
to share the risk, perhaps by joining a “precompetitive”
industry consortium, along the lines
of the SNP Consortium? Or, should we adopt a waitand-see
stance, and then hope to license in the
fruits of others’ labor?
In the case of pharmacogenetics, risk management
begins by reevaluating the pipeline. On that basis,
companies will try to determine the drugs to which
pharmacogenetics applications would add most
value. Companies will also want to study intently the
market context and competitor landscape, thinking
through potential competitor moves and counter-
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