Big pharma missing the nanotechnology boat?

The US National Institutes of Health counts nanomedicine as one of its top five priorities, and the National Cancer Institute committed $144 million to nanotechnology research in October 2004, according to the report, published by Lux Research. Meanwhile, 40 per cent of all nanotechnology venture capital since 1998 has gone to life sciences start-ups.

Meanwhile, governments in Europe are also making funding available to support nanotechnology. Most recently, Germany made a €50m fund available to help start-up companies in the 'bionanotechnology' sector, while the European Union has committed €15.6m to applications in life sciences and in 2003 the UK government earmarked £90 million for micro- and nanotechnology research across all sectors.

Yet despite nanotechnology's promise in improving how drugs are developed and delivered, major pharmaceutical companies are committing almost no money or people to nanotechnology research -- exposing them to strategic risks, according to the report, entitled Why Big Pharma Is Missing the Nanotech Opportunity.​

"Nanotech presents many opportunities to pharmaceutical giants, ranging from better delivery of existing drugs to entirely new therapies based on nanomaterials,"​ commented Lux Research's vice president of research, Matthew Nordan. "But big pharma is not investing in nanotech today. If this trend continues, nanotech will play out in pharmaceuticals just as biotechnology did, with major pharmaceutical companies leaving money on the table and allowing new competitors to take root."​

Failure to invest in biotechnology at the outset has led the pharma industry to become reliant on its smaller biopharmaceutical brethren for the supply of novel drugs into research pipelines. For example, in 2003, 24.4 per cent of the sales of the top 20 pharmaceutical companies were derived from in-licensed drugs.

And despite massive increases in R&D spending - the European pharmaceutical industry alone has increased its spending on R&D from around €11.5bn in the mid 1990s to more than €20bn in 2002 and in the US it grew more than fivefold in the same period - the number of new drugs launched onto the market has declined from an average of close to 40 a year in the 1990s to just over 20 since 2000.

While it is clearly not a magic wand to solve the industry's pipeline problems, nanotechnology could improve the delivery and efficacy of developmental and marketed drugs, while new nanomaterials could evolve into entirely new treatment strategies in the form of biologically active implants.

Lux Research bases its conclusions on in-depth interviews conducted with individuals accountable for nanotechnology at 33 global corporations with annual revenues exceeding $5 billion.

The interview data reveals that not a single life sciences interviewee rates nanotech as a high corporate priority, as opposed to 78 per cent of interviewees in electronics and materials. In addition, just one out of six life sciences respondents claims to have an explicit strategy for nanotechnology, compared with two-thirds of those in other sectors.

"Big pharma companies on average commit 16 people and less than half of one per cent of R&D spending to nanotechnology research, whereas like-sized electronics and materials firms commit more than 100 people and more than 8 per cent of R&D,"​ according to the report's findings.

Lux Research's analysis finds that large drug manufacturers pay little attention to nanotechnology for three reasons: Organization, history, and hubris.

First, big pharma companies typically entrust accountability for nanotechnology to an executive responsible for drug discovery, pharma's biggest cost driver -- but nanotech's big near-term impact is in drug delivery.

Second, big pharma companies learned during the biotech revolution that they could avoid their own investment and instead in-license drugs from start-ups at a late stage, but greater pressure on big pharma's drug pipelines today gives nanotech start-ups a negotiating advantage.

Finally, many big pharma executives claim they've been 'doing nanotech' for years by developing small-molecule drugs or engineering proteins. But Lux believes that few can claim the materials science expertise that truly novel nanotech innovations depend on.

Pharmaceutical companies' laissez-faire attitude towards nanotech will have consequences, it notes.

"Big pharma will have to contend with a new wave of superbranded generics that will erode market share,"​ according to Nordan. He noted that this trend has already begun, with the approval​ of American Pharmaceutical Partners and American Bioscience's nano-enabled Abraxane (paclitaxel) cancer therapy this January.

"On the other hand, opportunity exists for a forward-thinking drug manufacturer to go on the offensive and acquire competitive capabilities by picking up a nanoscale reformulation specialist,"​ said Nordan, noting that Irish pharma manufacturer Elan and medical devices leader Baxter have already gone down this route. Elan bought NanoSystems from Eastman Kodak in 1998 while Baxter has built up a position in the sector through its own NanoEdge drug delivery technology and the acquisition of Epic Therapeutics in 2002.

Looking at companies that might be of interest for big pharma, Nordan said: "We think Kereos in the US, Nanocarrier in Japan, and Solubest in Israel look like prime targets."​.