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

• Author: Trudo Lemmens,Hamid R. Raziee,Shannon Gibson
• DOI: http://doi.org/10.1002/wmh3.131
• Published date: 01 March 2015
• Date: 01 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

Introduction

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

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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.

1

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)

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