Why the Shift? Taking a Closer Look at the Growing Interest in Niche Markets and Personalized Medicine

AuthorTrudo Lemmens,Hamid R. Raziee,Shannon Gibson
Published date01 March 2015
Date01 March 2015
Why the Shift? Taking a Closer Look at the Growing
Interest in Niche Markets and Personalized Medicine
Shannon Gibson, Hamid R. Raziee, and Trudo Lemmens
Pharmaceutical research and development is increasingly focused on niche markets, most notably
treatments for rare diseases and “personalized” medicine. Drawing on the results of a qualitative
study of 34 key Canadian stakeholders (including drug regulators, funders, scientists, policy experts,
pharmaceutical industry representatives, and patient advocates), we explore the major trends that
are reportedly contributing to the growing interest of the pharmaceutical industry in niche markets.
Informed by both these key informant interviews and a review of the relevant literature, our paper
provides a critical analysis of the many different—and sometimes conf‌licting—views on the reasons
for and extent of the shift toward niche markets. We consider some of the potential advantages to
industry, as well the important implications and risks that arise from the increasing pursuit of niche
markets and pharmacogenomics. While there are many potential benef‌its associated with targeted
therapies and drug development for historically neglected rare diseases, niche market therapies also
present evidentiary challenges (e.g., smaller clinical trials and enrichment strategies) that can make
approval decisions diff‌icult, and uncertainties remain around the true benef‌its of many therapies.
KEY WORDS: pharmaceutical policy, niche markets, pharmacogenomics
In recent years, a wide range of studies and reports in the literature and news
media have raised the issue of an apparent innovation crisis in the pharmaceuti-
cal sector (Garnier, 2008; Light & Lexchin, 2012). According to some sources,
while research and investment in pharmaceutical development has nearly
doubled in recent decades, there has been no corresponding increase in the
discovery of new chemical entities (Woodcock, 2007). Others point to escalating
drug development costs (DiMasi & Grabowski, 2007), declining new drug
approvals (Hait, 2011), and an increasingly stringent regulatory environment
(Avery, 2010). Concurrently, reports abound about the death, or at least the
decline, of the blockbuster model of drug development (Collier, 2011)—where
large, brand-name pharmaceutical companies rely on a portfolio of drugs that
gross more than U.S. $1 billion per year—which has dominated the pharmaceuti-
cal sector for decades.
World Medical & Health Policy, Vol. 7, No. 1, 2015
1948-4682#2015 The Authors. World Medical & HealthPolicy published by Wiley Periodicals,Inc. on behalf of Policy Studies Organization
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and
distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford, OX42 DQ.
Faced with new challenges and an evolving drug development environment,
many pharmaceutical companies are now shifting development strategies (Policy
Experts 1 and 5; IP Expert 1) and considering “new directions to maintain growth
and stability” (Evans, 2010, p. 97). In recent years, one widely observed shift has
been that “pharmaceutical R&D has slowed and has tended to concentrate on
smaller markets such as conditions affecting fewer people or drugs tailored to
meet an individual’s needs” (UK Parliamentary Off‌ice of Science & Technology,
2010, p. 1). While the pharmaceutical industry has traditionally shied away from
smaller drug markets due to the revenue limitations presented by the reduced
patient base (Woodcock, 2007), many major pharmaceutical companies are now
aggressively pursuing the rare disease market (Dolgin, 2010). According to
the U.S. Food and Drug Administration (FDA), nearly 200 drugs for the treatment
of rare diseases enter development every year and further, about one third of
new drug approvals are used in the treatment of rare diseases (Rockoff, 2013).
At the same time, rapid advances in genomic technologies have improved
our understanding of how genes and genetic variation contribute to drug
response, which has spurred the trend toward “personalized medicine.” Advan-
ces in the f‌ield of pharmacogenomics, the study of the inf‌luence that genetic
factors play in drug response (National Human Genome Research Institute, 2014),
may eventually allow physicians to routinely use an individual’s genetic
information to guide drug treatment decisions (National Human Genome
Research Institute, 2014). More and more pharmaceutical companies are now
pairing drug products with companion diagnostics that can stratify populations
based on an individual’s genetic predisposition to respond to drug treatments
(Collier, 2011). Pharmacogenomics contributes to the establishment of niche
markets by targeting patient subsets with particular genetic biomarkers, thereby
stratifying broader disease categories into rarer disease genotypes.
Some have
even suggested that pharmacogenomics may help to jump start drug develop-
ment pipelines by identifying new targets for treatment and improving the
success of drug development (Hogarth et al., 2006, p. 11).
The number of pharmacogenomic products on the U.S. market has increased
steadily from only a handful in 2001 to several dozen in 2011 (Cohen, 2012), but
this trend may be accelerating. According to the Personalized Medicine Coalition
(2014), more and more products in clinical development rely on a clinical
biomarker: 30 percent of all treatments in late clinical development, 50 percent of
all treatments in early clinical development, and 60 percent of all treatments in
pre-clinical development. Researchers now increasingly consider whether existing
drugs, or those under development, are broadly applicable to all patients, or
whether they are most effective in a particular subset of patients (Pharmaceutical
Representative 2).
The potential prof‌itability of niche market therapies is well demonstrated by
the number of these drugs that have already achieved blockbuster status.
Thomson Reuters reports that drugs for the treatment of rare or “orphan”
diseases now account for an increasing proportion of blockbuster drugs: of the 86
orphan drugs included in a 2012 study by Thomson Reuters, 25 (or 29 percent)
4 World Medical & Health Policy, 7:1

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