Harsh environment threatens antibacterial development

London- Antibacterial resistence has become so prevalent that in some regions, sensitivity to some commonly used antibiotics is as low as 40%. Coupled with increased regulatory scrutiny and the large number of leading products facing imminent patent expiry, the profit margins of antibacterial producers are also under threat. This has lead to a significant reduction in R&D investment in the field, and has contributed to the relative decline in antibacterial return on investment, according to a new report by independent market analyst Datamonitor*.

Growing resistance - a threat?

The development of resistance severely threatens future revenues of leading antibacterial compounds, most notably the penicillins and macrolides, and has even led to new practices being introduced by government officials, Datamonitor Infectious Disease manager John Savopoulos says.  "Data from the PROTEKT study suggests that in some regions, sensitivity to commonly used antibiotics such as erythromycin is now below 40%."

These low sensitivities have and will continue to have a two-fold impact on relevant compounds, he says. "First, physicians have started to switch first-line therapy to compounds with lower resistance, such as fluoroquinolones or newer macrolides like Zithromax (azithromycin), which has a direct impact on sales revenue. Second, concerned healthcare authorities and governments have introduced a number of policies in attempts to reduce unnecessary antibacterial prescriptions, such as watchful waiting in the community setting."

According to Datamonitor's opinion leader research, these schemes have had varying degrees of success:

"...there are specific indications in some patients in which it is deemed to be an appropriate option....its because they present with a clinical syndrome that may be viral, may be bacterial, has a natural history that 50% of them resolve by themselves and so it's a low risk situation. Watchful waiting in the setting of a known pneumococcal pneumonia or a known bacterial sinusitis, don't think anybody would do that in this country." - US opinion leader.

"It tends to be used inappropriately, infrequently, that is there is greater opportunity for watchful waiting than we actually take advantage of....either in the hospital or the community, and this is something that is particularly useful in the community." - UK opinion leader.

While in medical terms such schemes have clear benefits in terms of reducing antibacterial use and potentially delaying the onset of resistance, they also limit product revenues and place greater pressure on antibacterial producers.

However, the development of resistance does create opportunity for novel product introductions, especially in the hospital setting. This is highlighted by the large proportion of late-phase clinical trials incorporating patients with resistant infections (most commonly MRSA). While this may be seen as an opportunity, the mixed uptake of recent examples, such as Pfizer's Zyvox (linezolid) and King Pharmaceutical's Synercid (dalfopristin/quinupristin), suggests that products with efficacy against resistant pathogens may be preserved for second-line therapy and hold limited long-term potential, Savopoulos says.

Regulatory scrutiny

Across the seven major markets, regulatory scrutiny and responsibilities for pharmacovigilance are becoming more intense, highlighted by the sharp rise in regulatory fines and litigation settlements in recent years, Savopoulos says.

"Inevitably, harsher scrutiny increases the costs of developing and marketing antibacterials, as key players are forced to tighten compliance practices in order to avoid the implications of regulatory fines and litigation."

"In addition, companies have faced delays in securing product approvals (Ketek and gemifloxacin in the US), greater pressure to provide comprehensive pediatric data (recent calls from the UK government) and increased responsibilities for pharmacovigilance (2000 EU Directive)," he says. 

In attempts to reduce regulatory time, a number of companies have gained fast-track review status in the US, including Cubist's Cubicin and Basilea's BAL5788. However, this was only achieved through demonstrating efficacy in clinical trials against problematic resistant pathogens, and such products face additional challenges once approved.

Generic competition placing pressure on prices

During 2004-2005, five leading antibacterials are expected to experience patent expiry in the US and EU, leading to a flood of cheaper generic alternatives entering the antibacterial market. This sudden availability of a range of cheaper antibacterials is likely to have effects beyond the direct impact on the respective brands, Savopoulos says.

"Datamonitor believes that during the next two to three years, branded manufacturers will be forced to review their pricing strategies, lowering list prices or offering considerable discounts in order to maintain competitivity with the increasing number of generic products."

The continuing increase in the number of leading products exposed to generic competition, greater regulatory scrutiny and growing resistance have all placed greater pressure on antibacterial profit margins. This explains, in part, the lack of significant activity in the current antibacterial pipeline. As such, Datamonitor predicts that, by 2014, pipeline compounds will only account for 10.9% of total antibacterial revenue across the major markets.

Ends

Notes to editors

Related research *Commercial Insight: Antibacterials - Regulations, Resistance & Generics

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