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Rethinking the Future: New Business Models for API

Healthcare reforms have moved from saving costs to initiatives focused on improving health outcomes and sustainability. The pharmaceutical companies can transform their businesses to demonstrate that they can bring new value to healthcare systems.

In countries around the world, healthcare spending continues to grow at an unsustainable rate. As a result, a growing priority for governments today is increasing the effectiveness of their healthcare systems. Many countries, from the US, parts of Europe and Japan to fast-growing markets such as China and India, have made healthcare reform a top priority. Initially, the primary objective of most healthcare reforms has been to contain costs. But, more recently, policymakers have taken new initiatives to improve the sustainability of healthcare systems, looking beyond cost considerations to population health. Spending on drugs has been a highly visible target for cost containment. But, as it weathers short-term cost-cutting initiatives, the pharmaceutical sector is being presented with clear opportunities to prove that it is able to bring value to healthcare systems. The fundamentals of the pharmaceutical industry are strong. In most countries, years of better care and nutrition have led to ageing populations, expanding the potential patient base. Meanwhile, rising incomes in emerging countries are boosting demand for higher-quality healthcare. These trends are underpinned by an ongoing surge in the prevalence of chronic diseases, such as cancer, diabetes and heart disease, which require long-term treatment. But pricing and regulatory challenges, among others, have put the industry's traditional business model, if one like under tremendous pressure. As a result, it is being forced to become more innovative, collaborative, diversified, global and value-driven. Today, most pharmaceutical companies are in the process of transforming their businesses along these API.
        Just as the industry began to embark on its API journey, new and sweeping trends are again transforming the business environment. Changing incentives are reshaping the healthcare ecosystem, as policymakers realise that in a sustainable value proposition, health outcomes are the most valuable currency. This shift will, in turn, require the pharma industry to also develop business models focused on health outcomes, where the traditional product a drug is only one part of pharma's value proposition.
        This tremendous expansion of availability of health data is empowering payers to implement outcomes-based pricing and reimbursement. The same transformation is happening on the patient side. The convergence of social media and health information means that we are empowered to improve our health, with access to information that, in the past, was available only to physicians. Traditional patients are becoming 'super consumers,' capable of making real, value-based decisions based on their health outcomes. These shifts are attracting many non-traditional players, including e-health and mobile health firms, consumer electronics companies, large retailers, medical technology firms and information aggregators. At API, recently surveyed business development and innovation leaders and found overwhelming agreement that these new entrants will play an increasingly important role in the health outcomes ecosystem. What can pharma do to prove its value in this new, complex environment? If it is to deliver on health outcomes, it will have to engage in the cycle of care around the patient, from predisposition testing, prevention, diagnosis and therapy to patient monitoring. The industry's business model is not equipped to deliver on such a value proposition. To move to, it will need to collaborate with non-traditional players and co-create value for patients, payers, governments and business partners. Pharma companies seeking to deliver health status improvements need to reach new patients by tackling underserved markets, meet unmet medical needs and do a better job of serving existing patients by managing patient outcomes.
        Over the decades, the biomedical drug discovery community's efforts were focused on a single gene and the gene product, such as isolated enzymes, for examples: kinases and phosphatases. During this course of drug discovery, serious efforts were made to obtain the 3D structural information of a given enzyme; this was then heavily guided by extensive computational studies leading to the design of novel small molecules serving to kick-start the drug discovery programme. In this age, for example, the challenge is to discover novel small molecule that has the potential to hit only one i.e. the desired kinases or phosphatases. The post-genomic era taught us that this is not going to be an easy undertaking, keeping in mind that human genome encodes more than 600 kinases and 250 phosphatases.
        The completion of the human genome that resulted in the indication of nearly 30,000 genes promised a flood of targets to be further undertaken in drug discovery. Although highly useful, the information at gene level is not easy to translate to functional protein complexes that are the key to various cell signalling events. Moreover, this information also does not lead to any post-secondary modifications that proteins undergo, such as glycosylation and ubiquitination etc., and, their effects on the signalling functions. In fact significant progress made in genomics and proteomics research has brought us to the doors of a high degree of complexity that lies in our biological system. Furthermore, it also challenges us to develop new research models for understanding the complexity of gene functions, such as the Protein-Protein Interaction (PPI) networks (commonly known as the signalling pathways) that are central to various cell functions in normal as well as disease states. The moment we accept the fact that, proteins do not function in isolation and that they are a part of highly complex network machinery, sets new challenges to examine their role(s) in the drug discovery arena. Why is this case? The pathways that involve multiple protein-protein interactions are highly complex and dynamic. In many cases, even though, we as a community have been successful to obtain the structural information of a given protein-protein interaction, their participation is much more complex (for example, multi-protein complexes), and often leads to a limited information capture for the design of small molecules with desired biological effects.
        The earlier approaches focused on enzymes (such as kinases and phosphatases) and relied heavily upon the structural information of a given isolated target which would then aid in the design and synthesis of small molecules. With a few exceptions, in most cases, the organic synthesis and medicinal chemistry efforts led to producing "heterocyclic compounds and small molecules that are rich in the sp2 character. The growing desire to undertake biological targets that are focused on protein-protein interactions and on the de-regulation of dynamic signaling pathways is changing our thought process for the choice of small molecules serving as a good starting point to developing the drug discovery research path. Unlike the deep and well-defined pockets that enzymes do offer, in general, PPIs involve a shallow, large surface area with extensive hydrophobic interactions. Over the years, bioactive natural products have shown an excellent track record as modulators of PPIs, and, in most cases, this is achieved through allosteric sites rather than functioning at the PP-interface. Despite much progress that has been made towards obtaining structural information of a given PPI, due to the nature of these interactions that are generally a part of complex multi-meric protein complex, cell-based screens remain the choice to search for novel small molecules.
        There are two prime reasons to explore new research models in drug discovery and these are: (i) as discussed above, the traditional pharma collection of small molecules contains compounds that lack the features commonly found in bioactive natural products that are known to function as the modulators of PPIs and signalling pathways; and, (ii) in general, most pharma expertise resides in the classical drug discovery approaches with a focus on kinases, phosphatases and other enzymes. The development of a phenotype or pathway-based screening program is still in its infancy within most or several pharma groups. With an in-depth look at the current limitations covering both points within the pharma community, it is becoming apparent that these bottlenecks can be taken care-of by working closely with the academic groups. Outlined below are some of the advantages that would allow taking care of these two short-comings.
        API represents a significant shift from contractual collaborative approach, where pharma companies have been in the driver's seat in managing collaborations with business partners and controlling and commercializing most of the value creation. So to succeed in companies will need to step outside the familiar and relinquish control, combining capabilities, resources, channels and customer relationships with those of their business partners. The life sciences industry is already good at traditional R&D collaborations with peers or biotech. Partnering with non-traditional players from other industries, such as technology, insurance, internet services, food and retail, may require assimilating a host of differences in operations and cultures.

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