“The pharma industry has a looming revenue gap. We’ve estimated $300 billion of pharma revenue at risk from loss of exclusivity over the next five years,” warns Jeff Holder, Partner at L.E.K. Consulting.
Adam Siebert and Jeff Holder are partners at L.E.K. Consulting’s life science enablers practice, specialising in biopharma manufacturing and supply chain strategy. With backgrounds spanning operations, services, and drug discovery, they help pharmaceutical companies and CDMOs navigate emerging technology trends.
In the latest episode of the PharmaSource podcast, Adam and Jeff shared insights on horizon scanning – the critical practice of forecasting drug development and manufacturing trends years in advance. Their discussion revealed key strategies for pharmaceutical companies and contract manufacturers to stay ahead of industry shifts.
The $300 Billion Revenue Gap Challenge
The pharmaceutical industry faces a significant challenge with patent expiries threatening established revenue streams of approximately $300 Billion USD.
Major brands like patent expiry (see image below) are creating urgency for companies to identify new blockbuster opportunities. This is compounded by policy changes like the Inflation Reduction Act, which offers different exclusivity periods for biologics versus small molecules.
Emerging Modality Landscape
The industry is witnessing a diverse range of therapeutic approaches gaining momentum as companies seek to fill the revenue gap.
“The pipeline has shifted from about 30% to close to 40-45% biologics over the last five years,” explains Jeff. “We think that shift is likely to continue over the next five years.”
Antibody-drug conjugates (ADCs) and radiopharmaceuticals are seeing renewed interest, combining established antibody technology with either cytotoxic molecules or radioisotopes. This approach offers reduced development risk by leveraging known elements in novel combinations.
The spectacular success of GLP-1 peptides in obesity treatment has sparked widespread interest in peptide therapeutics. Adam notes that innovation extends beyond market leaders Novo Nordisk and Eli Lilly, with companies exploring novel variations and oral delivery methods. This surge in demand is driving the need for enhanced manufacturing scalability, whether through recombinant production or synthetic chemistry approaches.
Cell and gene therapies continue to evolve, with promising developments in solid tumors and autoimmune conditions. The field is also seeing exciting progress in regenerative medicine, with early positive data in Parkinson’s disease and diabetes treatment. Meanwhile, mRNA technology is finding new applications beyond vaccines, with companies like Moderna and BioNTech exploring personalised cancer vaccines in combination with immunotherapy treatments.
Despite initial concerns about the impact of the Inflation Reduction Act, small molecules remain a crucial part of the pharmaceutical landscape.
“The death of small molecules that was predicted with some of the early reaction to the Inflation Reduction Act is quite overstated,” notes Jeff. “It’s a foundational modality that’s not going anywhere.” The integration of AI in drug discovery is expected to accelerate development in this space, particularly in modelling molecular interactions with biological targets.
Strategic Forecasting Methodology
L.E.K. Consulting’s approach to long-range forecasting involves a sophisticated multi-layered analysis, explains Adam,
1. Pipeline analysis
The foundation begins with detailed pipeline analysis, incorporating phase length and success probability metrics to project how different therapeutic candidates will progress through development stages.
2. Identification of demand drivers
A crucial element is identifying the fundamental drivers of demand, which vary by modality. For some therapeutics, the number of clinical trials by phase is the key metric. However, for others like autologous cell therapies, patient numbers become the critical factor due to the one-batch-per-patient manufacturing model. Similarly, viral vector gene therapies require careful consideration of dosing requirements, which can vary by orders of magnitude between different applications.
3. Program archetyping
The team then develops program archetypes based on therapeutic areas or dose requirements, allowing for more nuanced forecasting.
4. Scenario planning
This is complemented by comprehensive scenario planning that accounts for potential technical and clinical breakthroughs, particularly important in emerging fields like cell therapy’s application in solid tumors or autoimmune conditions.
Adam emphasises the importance of maintaining current data: “These are things that need to be updated very frequently, semi-annually, annually, because everything is so dynamic.” He cautions against the trap of false precision, particularly with emerging modalities where success probabilities may vary significantly between therapeutic areas.
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