There are many unmet medical needs. We (mankind in general) have some fantastic drugs and therapies, but there are great strides yet to be made.
Going into 2012, there were two specific classes of drugs that held great promise. The fist of these drugs are CETP inhibitors. These drugs raise HDL (good cholesterol) by over 50%. As previous studies of populations have shown that people with high levels of HDL appear to have reduced risk of cardiovascular disease, this class of drugs was hoped to be the next breakthrough in cardiovascular medicine. Alas, two drugs in this class have now completed late stage trials. The results – there was no benefit. The first of these drugs, torcetrapib (from Pfizer), actually may have increased the risk of having a myocardial infarction (heart attack). The second, dalcetrapib (being developed by Roche) also did not have any benefit.
A key lesson here is to avoid confusing correlation with causation. We observe that high levels of HDL protect against cardiovascular events (such as ‘heart attacks’). Unfortunately, we don’t know whether these high levels themselves are protective or whether they simply reflect other things that are occurring (and it is these other things that really confer the benefit).
Take for example the “C-reactive protein” (aka CRP) a molecule that can be measured in the blood and that reflects general levels of inflammation in the body. High levels of CRP are associated with increased risk of cardiovascular events. Vioxx, the anti-inflammatory drug from Merck, was pulled off the market because, despite lowering CRP levels, it also increases the risk of ‘heart attacks.’
The second class of drugs that held promise entering 2012 is a new therapy for Alzheimers disease. As of yet, the cause of Alzheimers is not well understood. We know that certain abnormal proteins build up in the brains of Alzheimers patients (the protein is called Beta-amyloid, often referred to as “AB”), and one hypothesis is that these proteins cause the disease. To that end, pharmaceutical companies have developed antibodies that bind to AB. Effectively, these act as sponges that sop up the AB in the body, thereby preventing subsequent deposition in the brain. In the last month or so, the two most advanced therapies (one from Eli Lilly and the other from Pfizer/JNJ/Elan) have failed.
Drug development is a challenging business. Only about 10% of drugs that start development ultimately make it to market. The remainder fail. Some of these simply don’t have the desired effect. Others prove to actually be harmful.
To give a sense of the investment in R&D that exists, Pfizer provides a great example. In 2011, Pfizer spent $8.4 billion in R&D (yes, that correctly read “billion”). 2012 R&D spending will be somewhat lower, at approximately $6.7 billion. Despite the enormity of this spending,there are only a handful of new drugs that catch my eye as noteworthy. Among these are an oral drug for rheumatoid arthritis (tofacitinib, which will compete with injectable drugs such as Humira), and apixaban, a novel oral anticoagulant (blood thinner). You can see the entire Pfizer pipeline here.
Importantly, I mention Pfizer simply as an example (not intending to be either complimentary or disapproving). Indeed, the entirety of the pharma industry is similar in their R&D productivity. From an investor standpoint, it would be preferable for R&D spending to yield more promising results. That same goal holds true (perhaps even more so) from the standpoint of humanity.