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Tuesday, 21 November, 2000, 21:14 GMT
Drugs - a high-risk business
A successful medicine can make billions for a drugs company
Prozac for depression, Zantac for ulcers, Tamoxifen, prescribed for breast-cancer... just some of the big-selling drugs whose names many will be familiar with.

They make billions for the big pharmaceutical companies.

The industry is the UK's third biggest earner in terms of balance of trade, creating more than 2bn last year alone.

Now Glaxo Wellcome's controversial anti-flu drug Relenza has got approval for prescription on the NHS to certain high-risk groups.

It's a very high-risk, most expensive business to be in

Steve Brown, spokesperson, AstraZeneca

But the process, from initial research at the laboratory, to producing a product that has been passed by the regulatory authorities for prescription, is a long-drawn-out one and can take years.

Trialing a drug

It takes on average 10-12 years to develop a new medicine to the quality and safety standards laid down by law.

Thousands of drugs developed by pharmaceutical firms never make it to the market.

Only one or two compounds for every 10,000 evaluated ever gets as far as being granted a licence for use.

Top pharmaceutical products worldwide
Losec (ulcer drug)
Zocor (cholesterol)
Prozac (depression)
Istin (hypertension)
Lipitor (cholesterol)

It's a high-risk business, according to Steve Brown, a spokesperson for the pharmaceuticals giant, AstraZeneca.

He says it is also very expensive, costing from $600m-$1bn to get a medicine onto the market, taking into account the losses from other compounds that are tested and fall by the wayside.

AstraZeneca spends more than $2.5bn annually in pharmaceutical research and development, employing thousands of staff at sites in North America, Sweden and the UK.

But compare that to sales of the world's best-selling pharmaceutical Losec, an ulcer treatment drug, which AstraZeneca also produces.

Last year Losec had sales of $5.9bn, so there is plenty of profit to be made for the drugs companies with a successful medicine.

Although AstraZeneca recently revised down its figures for sales of the drug, it is still forecast to grow by 8%.

But that is well below last year's 17% growth rate, as rival products and price competition hit Losec's performance.

From lab to licencing

Initial research on all new medicines is carried out in the laboratory, where hundreds of thousands of different compounds can be studied by scientists.

The research and testing stage often takes years

If there is a compound that they think could be a winner, it is then tested on animals, as required by the regulatory authorities worldwide.

Three phases of clinical trials on humans then follows. The third phase will be a large study with many, say 1,000-3,000 patients, taking the medicine under supervision for an appropriate period.

If the results then prove satisfactory, the data is presented to the relevant regulatory authority - the Medicines Control Agency (MCA) in the UK, the European Agency for the Evaluation of Medicinal Products, or the Food and Drug Administration (FDA) in the States.

In the UK, the MCA then refers the data to the Committee on Safety of Medicines which, if satisfied by the evidence, will recommend the MCA issue a licence. Doctors can then prescribe it.

The decision on whether a treatment should be paid for by the National Health Service in the UK is taken by the National Institute of Clinical Excellence (NICE).

This was the organisation that backtracked on an earlier decision in the case of the flu drug Relenza.


So are the pharmaceuticals companies unfairly targeting the drugs they know will make them money?

Not according to Richard Ley, spokesperson for the Association of the British Pharmaceutical industry (ABPI), which represents the companies who research and develop prescription-only medicines.

He told BBC News Online: "They don't necessarily know what will be a big seller; every company dreams that about its medicines.

"Most advances are made in small steps rather than giant leaps."

British Biotech

One company that might feel it could do with a dose of luck is the UK drugs group British Biotech.

Its shares tumbled earlier this year after the company admitted that the latest trial of its cancer treatment drug marimastat produced no benefits to patient survival rates for an aggressive form of brain cancer.

The firm, which is trialing several drugs at varying phases of development, has seen its share price plummet, from a peak set four years ago of 326.5p to its low point of 16p recorded in April 1999.

Now its share price is still struggling: in trading Tuesday it was still only at 26.5p.

Recouping the investment

It is the big blockbuster drugs of course that steal the headlines and make the drugs companies their profits.

But, as Richard Ley of the ABPI points out, even if a drug has overcome all the hurdles at research and trial stage, has been passed by the relevant agencies, and doctors can prescribe it, the companies have a relatively short time to recoup their investment.

Medicines can only be patented for 20 years. After that time other companies are free to make copies.

If the research and development phase takes on average 10-12 years, then there is only 8/10 years of so-called "patent life" for the drug.

Zantac, the ulcer drug, is a classic case in point.

Not so long ago if a patient was suffering from an ulcer, it used to mean surgery. Then Zantac came along and jumped to the world number one spot.

Then its patent ran out. And now the market is crowded with drugs that have a similar effect.

"That's why the blockbusters are so popular," Richard Ley says, "they're subsidising the less-well-known drugs".

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See also:

21 Nov 00 | Health
Flu drug available on NHS
23 Jun 00 | Business
Drug firm slumps again
25 Oct 00 | Business
AstraZeneca growth warning
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