Healthcare Technology Featured Article

November 21, 2012

The Market Responds to Biologics

The recent growth in biologics in the global market of active pharmaceutical ingredients signifies the turn of Big Pharma to the development of biologics.

Biologics represent the future of medicine. It’s a hefty claim unless you consider what they are. Biologics are medical products used to treat certain conditions, but unlike the traditional drugs that line your pill cabinet, they are biologically created, which involves the synthesis of complex sugars, nucleic acids, proteins, etc. through biotechnological means. Simply put, they are biological treatments derived from living organisms.

Many of us are familiar with vaccines or anti-toxins, but recent medical advances have broadened the scope of biologics. They often represent the only practical treatment for persistent conditions such as measles, mumps, Hepatitis B,and rheumatoid arthritis among others. The proliferation of research in genetics and stem-cells has led to promising innovations in viral gene therapy and cellular reprogramming techniques. These aren’t mere novelties— they represent the future of medicine as much as the Internet once represented the future of communication.

So it comes as no surprise that Big Pharma is embracing biologics. Obviously, the development of such is more expensive than the already-costly development of synthetic drugs. To manage costs, pharmaceutical companies outsource services to specialized businesses. Their research costs are sometimes subsidized by governmental sources from around the globe.

Clearly, pharmaceutical companies are responding to what they rightly perceive as a growing public need, giving rise to innovative solutions to manage costs. Whatever arises, however, can produce only nominal savings relative to the biggest cost contributor: clinical trials.

A major factor that contributes to the management of synthetic drug costs in the U.S. is the application Hatch-Waxman Act to so-called “biosimilars” that allows manufacturers of generic drugs to enter an otherwise cost-prohibitive market by bypassing costs associated with lengthly clinical trials.

The manufacturing processes and storage requirements of biologics has thus far entailed regulatory conditions specific to them leading to hesitation amongst politicians and regulators alike to apply the Hatch-Waxman act to biologics.

As biologics become more relevant though, political pressure will also increase, and it is reasonable to anticipate the inclusion of biologics into the legal interpretation of the Hatch-Waxman Act in the near future. Though Big Pharma will no doubt argue that this will hamper innovation in its field, no one can argue against the fact that the field will remain lucrative.

Edited by Stefanie Mosca

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