SMEs in Pharma and Biotech - Size Matters


As Big Pharma struggles to discover new drugs under the dual pressures of faster speed and lower cost, small and medium-sized entities (SMEs) are stepping up with entrepreneurial flexibility. A report last year from the European Medicines Agency (EMA) found that 27 percent of new drugs introduced to European markets during the period of 2010 to 2012 were originated by SMEs. That compares to the 49 percent that were attributable to big pharma’s internal efforts.

SMEs – classified in Europe as micro-entities of up to 10 employees, small companies of fewer than 50, or midsized enterprises up to 250, or those organizations with annual turnover under EUR 50 million – are contributing to pharmaceutical innovation at a time when discovery is getting harder and harder to come by.

Drug Development Technology, in its article “Small players, big drugs” credited SMEs with being more flexible, creative, lean, adroit and efficient, as well as willing to take on risk and explore unproven opportunities, all while being less encumbered by bureaucracy.

They are the virtual David to big pharma’s Goliath. The virtual pharma and SME business model is lean and nimble, with the goal of achieving clinical proof of concept for drug candidates as efficiently, costeffectively, and quickly as possible. According to Bernard Munos, founder of a pharmaceutical innovation consultancy, “Big pharma companies spend $4 billion to $10 billion in R&D for each drug they bring to market. Small pharma, on the other hand, does the same thing for a few hundred million to a couple of billion – that is 50% to 90% cheaper.” 

But don’t count on David slaying Goliath. Despite support from EMA’s office for SMEs and the FDA’s Center for Drug Evaluation and Research’s Small Business and Industry Assistance program, virtual pharmaceutical companies and SMEs face their own challenges.

Science|Business reported on the difficulty of “small biotechs to raise the funding necessary to take drugs through the later stages of clinical development and onto the market,” as well as “how hard it is to grow a large, independent company.” In addition, other sources say SMEs can benefit from more guidance in running effective clinical trials. 

Therefore, it’s more likely virtual pharma and SMEs and big pharma will strike up partnerships, leveraging the advantages of each to increase drug discovery and development productivity and speed safe and effective products to the global marketplace.

Munos described “networked innovation” and “precompetitive collaboration” in his Forbes Q&A, citing JLABS - part of Johnson & Johnson’s external R&D engine - which provides a “capital efficient, resource-rich environment where emerging companies can transform the scientific discoveries of today into the breakthrough healthcare products of tomorrow.” And Deloitte is advising corporate life sciences R&D IT executives to build collaborative associations with smaller startups.

Data: A Focus of Collaboration

An obvious area on which to focus collaboration is data – how to collect, store, manage, and share data to draw faster insights and gain knowledge. McKinsey, in the article “How big data can revolutionize pharmaceutical R&D,” suggests expanding the “circle of trust” to select partners in order to break silos and extend knowledge and data networks.

IT-enabled portfolio management allows for quick data-driven decision making. Solutions for clinical development enable SMEs to perform the analyses they need to get better insights faster, as well as collaborate with external partners. McKinsey finds that smart visual dashboards can help with analysis of current projects, business development opportunities, forecasting, and competitive information.

Are CROs the Right SME for the Job?

Contract Research Organizations (CROs) know the power of using the right tools for data analysis. In fact, an important driver for increased outsourcing is the pharmaceutical sponsor’s preference for service providers who offer advanced informatics technologies that can reduce development time and costs. These systems must provide real-time data access and predictive analytics, as well as gather and visualize data more quickly.

Quintiles - the world’s largest provider of biopharmaceutical development and commercial outsourcing services - created an integrated suite of software modules named Infosario which handles all phases of drug research, development, and trials. Its visualization component is TIBCO Spotfire.

“The Quintiles Infosario system allows researchers to revisit decisions made earlier within the same drug trial. That's a big benefit,” Quintiles CIO Richard Thomas told ComputerWorld, because "clinical trials take six, seven years, so feedback loops collect a lot of data along the way.”

Could this mean that progressive CROs might become the next clinical informatics software vendors? They do have unique capabilities for designing and building such systems. They possess a deep understanding of the software needs for clinical trials, and can leverage their experience testing technologies to better design and customize clinical informatics systems. They also have the domain expertise compared to some generalist software companies without scientific backgrounds. These CROs even have databases built from years of experience to help determine who can run the most effective trials.

For our answer to that question – whether CROs could become the new clinical informatics software vendorsread our new white paper by our market strategist, Ben McGraw.