Points of View Pipeline Analysis of Major Japanese Pharmaceutical Companies ～Comparison of In-house Origin and External In-licensing

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Yosuke Takahashi, Senior Researcher, National Institute of Biomedical Innovation Policy

1. Introduction

The pharmaceutical industry is strongly committed to "contributing to people's health by delivering medicines. However, it is not easy to create breakthrough new drugs. Not only does it take a very long R&D period, usually more than 10 years, and a large amount of long-term R&D investment is required to create a new drug, but the probability of success is also very ^low1). Under these circumstances, in order to achieve the aforementioned commitment, it is essential not only to promote various initiatives to increase R&D productivity, but also to have a strong financial position that will enable significant R&D investment.

In many cases, drug discovery ventures are involved in the development of one of the most important products in the pipeline, and once they fail in R&D, they may not be able to recoup their R&D investment, and their business operations may become untenable. As a risk hedge against such cases, large and medium-sized pharmaceutical companies are developing multiple drug candidates in parallel, and using the profits from successful drug development to cover the investment in failed projects. These management efforts are helping to fulfill the company's commitment to "contribute to people's health by bringing medicines to patients," while at the same time contributing to economic growth by creating stable employment for employees through corporate growth derived from the creation of new medicines.

In this report, we focus on the R&D activities of Japan's major pharmaceutical companies and investigate and analyze their pipelines from 2010 onward to obtain approval for new drugs, comparing in-house developed products and externally acquired products (in-licensed products). Specifically, the study will ask questions such as "How many development products have been in the pipeline? and "How many of them are currently on the market? How many have been discontinued? Is there any difference in the modality (synthetic vs. biotech) of the products under development? and "Are there any changes depending on the development period? and "Are there any differences in the modality of the developed product (i.e., synthetic vs. biopharmaceutical)?

Survey Methodology

The analysis was based on information from Pharmaprojects, a pharmaceutical database. The ^pipelines3) of nine major Japanese pharmaceutical ^companies2) were analyzed by targeting ^products4) in development that have been active at least once since 2010, and examining the changes in development stages from year to year.

Due to the nature of the database, information on the development stage of each year is extracted as of May. Therefore, the "current development stage" shown in the following analysis results is the development stage as of May 2022. It should be noted that the database is constructed based on publicly available information from each company, so the information on items in early development stages, such as the preclinical stage, is likely to lack completeness. In addition, in this survey, even if there was no clear source of information that development was discontinued, all items for which development information was lost, etc., were counted as discontinued (Discontinued).

The development stages were categorized in order from the earliest to the latest as Preclinical, Phase 1, Phase 2, Phase 3, and Approved. Items in preparation for submission or under submission after completion of Phase 3 clinical trials were counted as being in Phase 3.

The origin of the developed product was classified by referring to the Originator/Licensee section in the database, and whether it was an in-house origin or an in-licensed product (i.e., an individual product introduced from an external source or a product acquired through corporate acquisition) ^{.5) For the} modality classification, the database classified the product as Phase 3 or Approved, and the product was counted as being in Phase 3.

Modalities were classified into Chemical (synthetic chemical products), Biological (biopharmaceuticals), and Others (other, such as diagnostics and natural products) by referring to the Origin section in the database.

Results

3-1. Results of Survey on Development Stages of In-house Origin Products

First, we examined the current development stages of all in-house originated products in the pipeline since 2010 (Figure 1). 1,134 in-house originated products existed as of May 2022, of which 91 have been approved. In addition, there were 19 products in Phase 3, 51 in Phase 2, 52 in Phase 1, 64 in Preclinical, and 857 in Discontinued. As a percentage of the total, 8.0% were Approved, 1.7% were in Phase 3, 4.5% in Phase 2, 4.6% in Phase 1, 5.6% in Preclinical, and 75.6% in Discontinued (Figure 1).

Since items in Phase 3 to Preclinical are currently under development, it is not possible to determine at this time whether they will be approved or discontinued in the future. The percentage of "Approved" was 9.6% and "Discontinued" was 90.4%.

However, since all products in the pipeline since 2010 include products in late-stage development as of 2010 (e.g., products under submission or in Phase 3 trials), it is not appropriate to consider the percentage of products that have been approved as calculated above to be synonymous with the probability of success in drug discovery. Therefore, it is not appropriate to equate the percentage of approval calculated as described above with the probability of successful drug discovery. The details of how the percentage of drugs that reach approval should be considered are discussed in the discussion section.

3-2. Results of Survey on Development Stages of In-licensed Products

Next, we examined the current development stage of all in-licensed products (including both individual in-licensed products and products acquired through acquisitions) among all products that have been in the pipeline since 2010. There were a total of 915 in-licensed products, of which 192 had been approved, exceeding the number of in-house originated products (91) in terms of the number of approved products. There were 28 items in Phase 3, 34 items in Phase 2, 22 items in Phase 1, 131 items in Preclinical, and 508 items in Discontinued. The ratio of Approved to Total was 21.0%.

However, it is not appropriate to lump all in-licensed products together and calculate the percentage that lead to approval, since some in-licensed products are acquired from drugs that have already been approved overseas, while others are acquired from seeds in an earlier stage, such as the preclinical stage, and are developed. Therefore, we surveyed the current development stages of the products by classifying them according to the stage of development at the time of introduction (Figure 2).

Of the 410 products introduced at the preclinical stage, 9 products were approved, 262 were discontinued, and 139 were currently under development. There were 262 items that were discontinued and 139 items that are currently under development.

Cases in which an approved drug is introduced include those in which the marketing rights are taken over and those in which development rights for a drug approved in a specific country are acquired in another country and development is pursued (e.g., acquiring development rights in Japan for a drug approved overseas and pursuing development and approval in Japan). In any of the above cases, there are cases where development of an approved drug is discontinued (i.e., withdrawn from the market) due to changes in the market environment or other reasons. For this reason, of the 186 approved drugs introduced, only 121 drugs were approved by the company that acquired the item.

The in-licensed items are categorized as individual item in-licensing and item acquisition through corporate acquisition, and the current development stage by development stage at the time of in-licensing is shown in Figure 3. A total of 652 items were in-licensed and 263 items were acquired through corporate acquisitions. Of those in-licensed at the preclinical stage, 7 in-licensed items and 2 acquired through acquisitions have already been approved.

The current development stage by development stage at the time of introduction, shown in Figure 2, is shown in Figure 4 as the percentage of the current development stage with the total as 100% for each development stage of introduction. As a result, it was confirmed that the earlier the development stage at the time of introduction, the lower the percentage that led to approval. The percentage of approval at each development stage at the time of introduction was 65.1% for Approved, 38.6% for Phase 3, 11.7% for Phase 2, 5.0% for Phase 1, and 2.2% for Preclinical. Excluding items that are still under development, the percentages of approval by development stage at the time of introduction were 68.0% for Approved, 44.9% for Phase 3, 15.4% for Phase 2, 6.9% for Phase 1, and 3.3% for Preclinical.

As shown in Figure 1, 8.0% of in-house origin drugs (9.6% excluding those in the development stage) were approved, while only 5.0% (6.9% excluding those in the development stage) were approved when in-licensed at the Phase 1 stage. It appears that the in-house originator products are more efficient in reaching approval, but this interpretation needs to be kept in mind. Although the details will be discussed in the discussion section, it is not desirable to make a direct comparison because some of the in-house originated products were in the late-stage development phase as of 2010, which may have pushed up the percentage, and the criteria for deciding whether to continue or abandon development may differ between in-house originated products and in-licensed ^products6). 6), it would be undesirable to compare them directly.

3-3. development stage survey results by modality

We analyzed the current development stages of the products that have been in the pipeline since 2010, broken down by modality. The modalities were divided into three groups: Chemical, Biological, and Others. Others include natural products and diagnostics. Figure 5 shows the results for in-house origin products, and Figures 6 and 7 show the results for in-licensed products.

There were a total of 1,134 in-house origin products, of which 923 were Chemicals, 194 were Biologicals, and 17 were Others. Of these, 72 were Chemicals, 16 were Biologicals, and 3 were Others, and the percentages of approval for each modality were 7.8%, 8.2%, and 17.6%, respectively. Excluding those still in the development stage, the percentages were 9.0%, 12.1%, and 17.6%, respectively.

There were a total of 915 in-licensed products, of which 524 were chemical, 370 were biological, and 21 were others. Of these, 133 were Chemicals, 49 were Biologicals, and 10 were Others. The difference between the two was significant, with biologicals accounting for about 17% (194/1,134) of the total for in-house origin products and about 40% (370/915) for in-licensed products.

Comparing the percentages of in-licensed products by current development stage between Chemical and Biological shown in Figure 7, 63.7% and 66.0% are in the Approved stage, 39.7% and 38.2% in Phase 3, 17.6% and 2.2% in Phase 2, 7.7% and 0% in Phase 1, The results were 3.1% and 0.9% in Preclinical, 17.6% and 2.2% in Phase 2, 7.7% and 0% in Phase 1, and 3.1% and 0.9% in Preclinical, respectively.

Excluding items currently under development, 65.8% and 71.7% in Approved, 45.6% and 46.4% in Phase 3, 21.0% and 3.4% in Phase 2, 10.8% and 0% in Phase 1, and 4.1% and 1.7% in Preclinical were in the Approved stage. The results for Phase 1 were 10.8% and 0%, and 4.1% and 1.7% for Preclinical.

3-4. survey results of development stage by starting year of Phase 1

We have focused on all pipelines since 2010 and analyzed the number of products that have been approved and the percentage of those that have been approved, comparing in-house originators and in-licensed products. Next, in order to analyze the dynamic changes in the pipeline year by year, rather than lumping all the pipelines after 2010 together, the current development stages of the products that started Phase 1 are shown for each year of the start of Phase 1 (Figure 8). In order to allow comparison of in-house origin products and in-licensed products on an equal footing, only in-licensed products introduced before Phase 1 were included in the survey. The results showed that there were several products that were approved for both in-house origin and in-licensed products from those that started Phase 1 in 2010 or later, although there was only one product that was approved for both in-house origin and in-licensed products from those that started Phase 1 in 2017 or later. The number of approved products of in-house origin that started Phase 1 in 2010 or later was 9, and the number of approved products of in-house origin shown in Fig. 1 was 91. This discrepancy is due to the fact that there are 25 products for which Phase 1 was initiated before 2010, some products were initiated in the late development phase, such as in the development of combination drugs, and other products for which the timing of Phase 1 initiation was not clear or which were acquired through corporate acquisition before 2010. There are also some products for which the start of Phase 1 is not clear, and some products that were acquired through corporate acquisitions before ²⁰¹⁰⁵⁾.

4. summary and discussion

This report provides an overview of the pipelines of nine major Japanese pharmaceutical companies since 2010 and analyzes the total number of products in development, the current development ^stage7) of products in development, and the modalities of products in development, comparing in-house originated products and in-licensed products.

There are 1,134 in-house origin products, of which 91 have been approved, while there are 915 in-licensed products, of which 192 have been approved. In terms of the number of products approved, the ratio of in-licensed to approved products was approximately 1:2. For in-house originators, 8.0% of all products in the pipeline were currently approved, and 9.6% of all products in the pipeline were approved, excluding those currently under development.

The number of approved in-licensed products was higher than that of in-house origin products. Among these, there are 121 products that were in the Approved stage of development at the time of introduction and are currently in the Approved stage of development. These include cases where the marketing rights of an already approved drug are taken over, and cases where the domestic development rights of a drug already approved overseas are acquired and the drug is developed domestically ^. Examples include cabozantinib malate ( ^{CabometixⓇ) and} ibabradine hydrochloride ( ^CoralanⓇ). What is common in all of these cases is that pharmaceutical companies are responsible for delivering many valuable drugs, not only their own originals but also in-licensed products, to the patients who need them. In this respect, it is an important role of pharmaceutical companies from the patient's point of view to promote research and development of their own origin products while at the same time handling in-licensed products and delivering them to the market.

The analysis of in-licensed products, broken down into those acquired through individual product introductions and those acquired through corporate acquisitions, shows that in both cases, the largest number of in-licensed products were at the preclinical stage, followed by those that had already been approved. This suggests that companies are conducting in-licensing activities with the intention of both acquiring promising products in the early development stage and acquiring products that are expected to join their product lineups in the near future with a high probability of profitability. As shown in Figure 4, the percentage of products that are approved is lower for those introduced at an early stage of development, and higher for those introduced at a later stage of development. It is thought that pharmaceutical companies are avoiding/diversifying business risks by building a portfolio that combines high-risk early-stage in-licensed products and low-risk late-stage in-licensed products, while conducting R&D for their own originator products.

In addition, it is not difficult to imagine that the introduction of products developed based on new modalities has a positive ripple effect on companies in terms of acquiring a new technological base through the experience of developing such products, given the current diversification of modalities. This reaffirms the importance of handling in-licensed products from a company's perspective as well. The development of the drug discovery ecosystem in recent years has expanded the presence of start-ups that create drug seeds, and the division of labor within the industry, in which pharmaceutical companies with a certain scale of operations are responsible for the later phases of the commercialization of drug seeds, can be seen as an inevitable and rational trend. In the case of in-licensed products at the preclinical stage, only 2.2% (3.3% if development-stage products are excluded) have been approved, but nine products ^{, including} tazemetostat hydrobromide ( ^{Tasvelik®) and} esakiselenone ( ^Minebro®), have been approved, and several products are currently in the late development stage. The number of approved drugs is expected to increase in the future. It should be noted that the analysis in this paper did not include an evaluation of the business territory where the rights were acquired when the product was introduced. The number of products introduced and the process after introduction may differ greatly depending on whether only domestic development rights or global development rights are introduced, and this is an issue for future research.

The results of the analysis of the percentage of products that reached the market by modality showed that the percentages were 7.8% and 8.2% for Chemical and Biological products, respectively, for in-house origin products, and 9.0% and 12.1% for Chemical and Biological products, respectively, when those in the development stage were excluded. The ratio of approval was slightly higher for Biologicals when comparing Chemicals and Biologicals. The percentage of in-licensed products that received approval was similar for approved drugs and products in Phase 3 development, although it depended on the development stage at the time of in-licensing. On the other hand, when in-licensed products were introduced at the Phase 2 or Phase 1 stage, the number of approved products was smaller and the percentage was also lower for Biological. However, there are many products introduced at the Phase 2 stage that are still in the late development stage in biologicals, and we hope that some of these products will be approved in the future.

The results of the analysis of the current development stage of in-house originated products and in-licensed products by the start year of Phase 1 showed that several products that started Phase 1 between 2010 and 2015 have been approved. However, it is expected that some of them will be approved in the future. Among in-house originated products, the highest number of approvals during the survey period was 3 for products that started Phase 1 in 2013, while 5 products that started Phase 1 in 2009 were approved when analyzed retrospectively before the survey period.

Table 1 summarizes the overall picture of the number of products under development for each of the products shown in Figures 1 through 3, as well as the results of analysis limited to products that started Phase 1 within the period under analysis as shown in Figure 8. 31.0% of in-licensing and 18.8% of acquisition through corporate acquisition were approved. However, since in-licensed products include some products in the late development stage that are on the way to approval, for the purpose of comparing in-house originated products and in-licensed products on equal terms, only products that started Phase 1 during the period under analysis were analyzed. In terms of the percentage of products that were approved in Phase 1, 4.6% of in-house originals were approved, 9.1% of in-licensing, and 4.5% of acquisitions. The highs and lows of these percentages are discussed in the last section.

The percentage of Phase 1 initiated items leading to approval was analyzed in Policy Research Institute News No. 66 using an approach different from that used in this ^paper8). In addition, in Policy Research Institute News No.66, as comprehensive previous studies on the probability of success of drug discovery, a report by Yagi et al. ⁹⁾, a former senior researcher at the Pharmaceutical and Industrial Policy Research Institute, a report by DiMasi et al. ¹⁰⁾, and a report by Paul et al. ¹¹⁾ are introduced. These papers reported the percentages of approval after the start of Phase 1 as 13%, 11%, 12%, and 12%, respectively. Taking these into account, the percentages of approval obtained in this survey appear to be low at first glance. However, the analysis should take into account the fact that many items are still under development and in late-stage development as of May 2022. Previous studies have reported that approximately 50% of Phase 3 stage items, 20% of Phase 2 stage items, and slightly more than 10% of Phase 1 stage items reach ^approval8). In light of this, we multiplied the number of drugs in development by this probability for each current development stage to estimate the number of drugs that would eventually be approved, and estimated the percentage of drugs that would eventually be approved to be approximately 9.0% for in-house origin products, a figure that is slightly lower than the figures in the previous study, but not significantly different from the figures in the previous study. This figure was considered to be slightly lower than the figures in the previous study, but not significantly different. This estimate is based on a number of assumptions, and it will be important to continue to conduct similar studies in the future in order to conduct a more precise analysis.

5. Postscript

As a result of the analysis of the pipelines of nine major Japanese pharmaceutical companies since 2010, it was confirmed that they are enhancing their own pipelines by combining their own origin products and in-licensed products to deliver new drugs to patients in Japan and around the world. In-house origin drugs have the advantage of not incurring licensing fees to other companies, and thus can be expected to generate high profit margins. In addition, by bringing R&D in-house, the company can improve its drug discovery acumen, which may have a positive effect on the acquisition of good in-licensed products. However, R&D for in-house originator products that starts from scratch not only requires a long R&D period, but also entails a high risk of development discontinuation, and this alone can cause instability in corporate management. To compensate for this, the company strives to build an appropriate portfolio to ensure the stable creation of new drugs by acquiring early-stage in-licensing products, which have a high risk of development discontinuation but can be acquired at a relatively low cost, and late-stage in-licensing products, which have a relatively low risk of development discontinuation but require relatively high costs. This is considered to be a way to build an appropriate portfolio and ensure the stable creation of new drugs. By allocating resources to both in-house originator products and in-licensed products in a balanced manner, the company is playing a role in delivering new drugs to patients around the world who are suffering from diseases.

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