In the US the expansion of partnerships was a natural outgrowth of the historical trends of biotech spinoffs arising from university labs and researchers at academic medical centers already being engaged in industrysponsored drug and device clinical trials The origins of universityindustry collaboration in Asia were more varied in terms of when and why they came about as reflected in the subsequent diversity of their roles in shaping the regions evolving biomedical RD landscape
Despite decades of success in bringing new medicines to market, the industry, comprised of Multinational Companies (MNCs) producing brand name biopharmaceuticals, has been increasingly challenged since the turn of this century to maintain that level of success. The challenges occur at every stage of R&D and continue throughout a product’s life cycle. At the discovery stage, there has been an explosion of knowledge in the basic biological sciences that has outpaced the capacity in the applied sciences leading to escalating difficulty in bringing promising investigational compounds from the discovery and preclinical stages into exploratory clinical development. This in turn has led to high attrition rates for molecules in development and low success rates for product approvals. This has occurred while R&D spending has approximately doubled every 8.5 years since 1970. With better and more rapid means for identifying safety risks, there are increasing regulatory requirements for quantifying these risks pre-approval and for managing them during the post-approval period. A growing emphasis on maximising the medical utility of products has resulted in heightened reimbursement thresholds and increasing demands from payers to demonstrate cost and comparative effectiveness both pre- and post-approval. Shrinking revenues as a result of patent losses of top-selling products and the shift toward increased utilisation of generic medicines has exacerbated an already challenging business environment, in which the top 10 per cent of new drugs account for more than 50 per cent of the value of all new drugs launched in the same period, and only two out of ten medicines cover the average costs of new drug R&D. With the increasing focus on addressing complex, and challenging diseases the need to pursue novel strategies has never been greater.
Strategies adopted by industry to improve productivity are both extrinsic and intrinsic in nature. Among the extrinsic strategies that industry pursues are Mergers and Acquisitions (M&A), joint ventures and licensing to increase access to promising markets, technology platforms, and products. On the intrinsic side, they are implementing such measures as portfolio optimisation (i.e., balancing research projects to minimise risk while maximising potential for return on investment), integration of new technologies and development tools, and selection of appropriate milestones for assessing success of projects in progress. All this in the pursuit of better decision-making – about which targets to pursue, when and how to terminate specific development programmes, how to efficiently allocate resources, and what type of development portfolio to build.
While the litany of challenges faced by innovative biopharmaceutical companies continued to increase over the last decade, academic institutions in the US have faced their own fiscal challenges from reductions in state and federal funding. Among the approaches taken by industry and academia to adapt to the new R&D environment is to increasingly engage in academic-industry partnerships. To examine this rapidly changing facet of the evolving R&D paradigm, the Center for the Study of Drug Development at Tufts University School of Medicine in Boston (Tufts CSDD) conducted a study of grants provided by industry to Academic Medical Centers (AMCs) in the US. The two primary goals of the Tufts CSDD study were: 1) to examine a sample of primary data and typify the kinds of research projects that academic-industry partnerships actually entail—‘the what’; and 2) to review secondary data from the trade and professional literature as well as public and private sector websites to describe and categorise the organisational nature of these partnerships—‘the how.’
In terms of ‘the what,’ CSDD reviewed primary data from 3,278 grants (2008-2010) involving close to 450 industry sponsors and 22 medical schools in 15 states and determined that they fell into three major classifications: conventional clinical trials focused on new drugs / indications (75 per cent ); studies targeting public health priorities (14 per cent); and, health research and education projects (11 per cent), as shown in Figure 1.
The majority of grants (75 per cent) were termed joint clinical trials that were by-and-large conventional clinical studies or trials conducted by AMCs with industry support for a particular investigational compound or device. Of those grants, over 90 per cent pertained to drug, device or biologics as shown in Figure 2.
Approximately one-sixth (14 per cent ) of grants were comprised of four categories of clinical studies that Tufts CSDD researchers recognised as public health priorities in the US:
Comparative clinical studies in which two or more treatments are compared with one another
Oversight studies (long-term, registry, and pre-clinical) in which privacy, patient care and open science concerns dictate that AMCs are the most appropriate venue in which to conduct such efforts
Vulnerable population studies for which AMCs can provide the optimum environment for patient care (compassionate access, elderly, neonatal, and minority patients)
Breakthrough investigations (nanotechnology, translational, and pharmacogenomics) in which AMCs can provide an environment for precompetitive collaboration and cross-disciplinary fertilisation.
HR&E projects (11 per cent) were collaborations that were not clinical trials or studies focusing on a particular product, but involved a range of activities listed below:
Basic Medicine: Foundational studies of disease or drug impacts on patients)
Education (full spectrum of teaching and learning opportunities beyond basic medical school curriculum
Patient-Centered: Focuses especially on vulnerable or underrepresented patient populations utilising direct measures of patient response, e.g., patient preferences, patient-reported-outcomes, quality-of-life, etc.
Translational: Translation of basic to applied research, especially involving biomarkers, bioimaging and bioinformatics projects
New Technology: In particular pharmacogenomics, novel diagnostic tools and nanotechnology
Training and Services: Broad-based or specific programs for utilisation and / or training related to specialised equipment, laboratory and/or medical services.
Secondary data from a variety of sources including company websites, newspaper articles, academic articles, investor analyses, and consultant reports were employed to describe ‘the how,’ i.e., the actual ways and means of the working relationships between of Academic Medical Centers (AMCs) and their industry partners. The landscape of partnerships and alliances funded through grants is highly diverse, with partnerships varying greatly in size and scope, depending on the nature of the agreement as well as the individual biopharmaceutical company or university involved. As Figure 3 indicates, there has also been an evolution in the scope and nature of these partnerships over time. Anecdotal reports suggest that the ‘old model’ of unrestricted grants and fee-for-service, which generally constituted the mainstay of academic-industry partnerships historically, are actually on the wane in the US. While it is generally accepted that these partnerships have become an increasingly favoured approach both to promote public health objectives and to produce healthcare innovations, many also believe that their full potential have yet to be realised, and there must be wider adoption of newer risk-sharing, resource-sparing partnership models. Currently, popular trends involve Corporate Venture Capital (CVC) funds, which are established by but organisationally distinct from the MNC, as well as academic drug discovery centers, in which the prime mover is the academic institution itself. Competition grants are an emerging format for
partnering that encourages universities to allow a company to assess the potential of their investigational compound for further development and have the right of first refusal for ones selected. Similarly on the upswing are risk-sharing arrangements in which companies and academic institutions share the control of a research project and split the contribution of resources and assets.
Despite coming at it from different perspectives and variable speeds, there is a general awareness in the region of the value and necessity of UIC. Over the past 20 years, Asian governments have paid increasing attention to the effectiveness of their national innovation systems, in particular, UIC, regardless of their per capita income that ranges from $35k in Japan to as little as 1/10 of that for other countries in the region. Three macro level drivers of this imperative are: globalisation; increasing global competitiveness; and the need to take full advantage of the advent of the knowledge-based economy. At a more micro level, industry motivation is similar to the US: access to academic labs, equipment and fresh talent with new perspectives without having to spend their own funds on capital investment and training, and without competing with their core area of business. Universities are motivated by the need for funding, to keep abreast of practical problems and latest trends in industry, and to help attract quality students because of the nexus to industry.
There is still a long way to go as a McKinsey survey notes that even in the BRIC countries such as China and India indigenous private sector R&D comes from the following sources: 59 per cent in-house; 18 per cent collaboration with service suppliers; 13 per cent UIC; and 10 per cent other / outsourced. Moreover, an index of so-called PPC intensity which corresponds significantly with the extent to which universities and industry collaborate on R&D show a wide variability among Asian countries (using the US figure of 6.4 per cent for comparison): Japan – 8.8 per cent; South Korea – 6.8 per cent ; Singapore – 3.4 per cent ; Taiwan – 2.6 per cent ; China & India – 1.8 per cent. Also as expected, the forms of UIC in countries more recently embarked on the path like India have a tendency to mimic earlier, perhaps less efficient forms, experienced in the US such as co-publication of research results, informal exchanges between scientists, consultancies or sponsored research. At the other extreme, those further along on the path to UIC like Singapore evidence more sophisticated UIC relationships in the form of seminars and cross-specialist training, industrial attachment programs, technology licensing and commercialisation, formation of spin-off companies, venture development, and material transfer agreements.
Yet, a brief litany of UICs from the 2011-2012 issues of The Burrill Report indicate the geographic breadth of partners and the topical depth of recent collaborations (see Table 1). Also, the emerging economies sometimes benefit from ironic ‘skipping’ phenomena while rushing to embrace the brave new world of technology. For example, China is the largest user of the latest generation of mobile phones even though just a half-generation ago most people in China didn’t even have landlines, while South Korea is the most advanced user of broadband technology even though it never produced mainframe computers.
Maintaining productivity in medical research is critical for the health of the economy as well as competitiveness in the global marketplace. There was already a long-standing relationship between AMCs and biopharmaceutical companies in the US that made the development of UICs naturally complementary. In fact, about half of all biotechnology firms were founded by university scientists, most of whom have maintained their academic affiliations, and over half of AMC researchers already conduct drug and device clinical trials in the US. Today, the value of the UIC model is well-appreciated by the emerging economies as well. Countries in the Asia-Pacific region such as India and China are mixing their burgeoning investment in R&D, increasing by 10 per cent a year, with their vast intellectual capital through the auspices of UICs to formulate a potent brew for innovation.
References are available at www.pharmafocusasia.com
While the US is still the global leader in terms of R&D investment, the economic contribution of biomedical innovation, particularly biopharmaceutical R&D, is increasingly seen as an area of opportunity for other countries. China and India, in particular, are investing billions to build an R&D infrastructure modeled after the US system. In similar vein, the academic-industry partnership model in the US is increasingly being viewed as a necessary correlate in the calculus of global competitiveness. The major industrial countries of Asia have a variable history when it comes to what are typically termed University-Industry Collaborations (UIC) in the region, as exemplified by the course of UIC development in the following countries.
Although Japan never really developed a biotech sector and utilised academia as its source for certain areas of biopharmaceutical innovation, it did not become serious about UIC until the 1990s when it began to lose competitiveness with the US in Information Technology (IT) and biotechnology. It also felt that South Korea and China were beginning to threaten its global competitiveness. On the part of the university sector, they felt that they were falling behind foreign academia because they were not interacting with industry, but still exhibited caution regarding any compromise of their educational and scholarship mission for the sake of commercial enterprise. In 2004, however, public universities experienced a change of legal status in which they became independent administrative agencies. While this resulted in greater control to manage their own affairs, it also necessitated greater accountability for ensuring efficient operations and contributing to the social good and hence to participate in UIC.
From the beginning of the communist regime in the 1950s universities were required to freely transfer their knowledge for the benefit of the struggling economy without much regard for ‘ownership.’ Once a certain plateau had been achieved, however, and the state of shortage abated, China enacted a reform law in 1985. This was a turning point for their policy on science and technology. Universities would be allowed to make their own decisions based on market conditions regarding organising R&D programs and transferring technologies, while the government shifted its role away from command-and-control to one of guidance and oversight.
Korea took yet another path by jumping quickly from a labor-intensive economy to one based on high-tech and IT, implementing laws to foster UIC as a means to more efficiently playing catch-up in addition to focusing its own resources on basic R&D and opening its innovation system to foreign R&D.
Singapore was competitive in the international marketplace early on, and by the 1990s had already reached a high level of industrial development. However, it soon found that its strategy of utilising cheap manufacturing labor was becoming unsustainable long-term. To facilitate the transition to a more knowledge-based economy it used its existing academic powerhouses, the National University of Singapore and Nanyang Technological University, to expand and exploit UIC.
Over the past ten years, India has moved from a planned and closed economy to a more open and deregulated one. In the area of science and technology, the vehicle for this transition was the implementation of the S&T policy of 2003, which resulted in gradual development of UIC, but overall there were few of them, and most were consultancies, not involving large-scale projects. India R&D is still mostly skewed towards basic research and the majority of quality application-oriented R&D is being done by big MNCs in-house for their own benefit. Yet, the number of R&D centers and R&D talent pool have experienced a CAGR of 30 per cent and 16 per cent respectively from 2004 to 2010, and though the total R&D spending in India is about 0.95 of the national GDP ($1.73B), ¾ of it comes from the public sector.
Thailand has experienced a high level of economic development in recent years, especially owing to foreign direct investment in manufacturing. However, its indigenous private sector does not invest greatly in R&D, so UIC has a limited history and there is no overarching policy framework for how UIC should work.
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