On international cost-sharing of pharmaceutical R&D

Ramsey pricing has been proposed in the pharmaceutical industry as a principle to price discriminate among markets while allowing to recover the (fixed) R&D cost. However, such analyses neglect the presence of insurance or the fund raising costs for most of drug reimbursement. By incorporating these new elements, we aim at providing some building blocks towards an economic theory incorporating Ramsey pricing and insurance coverage. We show how coinsurance affects the optimal prices to pay for the R&D investment. We also show that under certain conditions, there is no strategic incentive by governments to set coinsurance rates in order to shift the financial burden of R&D. This will have important implications to the application of Ramsey pricing principles to pharmaceutical products across countries.

Globalization of pharmaceutical R&D. Pharmaceutical R&D governance forms in People's Republic of China

Yrityksen selviytyminen ja menestyminen ovat riippuvaisia sen kyvystä innovoida, luoda tietoa ja hyödyntää tietämystä ja keksintöjä (Dunk ja Kilgore 2001). Yrityksen menestyminen erityisesti korkean teknologian alalla on siten suoraan riippuvainen sen T&T:stä, johon tehdyt investoinnit tuovat merkittäviä taloudellisia etuja yritykselle uusien tuotteiden, palveluiden ja prosessien muodossa (McEvily ja Chakravarthy 1999). Teknologinen etumatka ja sen tuotteistaminen innovatiivisiksi tarjoamiksi mahdollistaa monopolististen etujen saavuttamisen yrityksen kansainvälisessä kilpailussa (Lall 1977). Tämä kaltainen kilpailuetu voidaan saavuttaa yrityksen kyvyllä yhdistää maantieteellisesti hajautettu T&T:nsä tehokkaaksi verkostoksi (Porter 1986). Boehen (2008) mukaan T&T:n globalisoitumista voidaan johtaa eri hallintömuodoilla: T&T:n kansainvälistymisellä, T&T:n ulkomaille sijoittamisella ja T&T ulkomaille ulkoistamisella. T&T:n globalisoituminen on osa 2000-luvun taloudellista muutosta, ja sille on esitetty useita vaikuttavia tekijöitä, kuten kustannuserot, työvoimaresurssit, erityisosaamiskeskukset, paikallinen teknologia osaaminen ja kohdemarkkinoiden potentiaali (bardhan 2006; Norwood, ym. 2006; von Zedtwitz ja Gassmann 2002). Tutkimuksen on osoitettu eroavan tuotekehityksestä ja eri tekijöiden on osoitettu vaikuttavan niihin (von Zedtwitz ja Gassmann 2002; Leifer ja Triscari 1987). Samoin T&T on osoitettu olevan jatkumo perustavanlaatuisesta soveltavaan ja lääkekehityksen muodostavan vastaavan T&T jatkumon (Lall 1980; Iansiti 1993), jonka yksittäiset osat vaikuttavat sen hallintomuotoon. Tutkimus esittää eri tekijöitä voivan hyödyntää hallintomuodosta riippuen. Tätä tutkimusta varten tutkija haastatteli lääketeollisuuden johtajia Kiinassa vahvistaakseen tai hylätäkseen eri tekijöitä ja niiden suhdetta lääketeollisen T&T:n hallintomuotoihin. Markkinoiden todettiin olevan ensisijainen tekijä mutta myös kustannuserojen, insentiivien, työvoimaresurssien ja erityisosaamiskeskusten merkitys T&T:n globalisoitumiseen vaikuttavina tekijöinä vahvistettiin yhdessä perusvaatimusten ja riskitekijöiden kanssa. Tutkimuksessa vahvistetaan myös lääketeollisen T&T-jatkumon vaikutus ja esitetään viitekehys hallintomuodoille.

Globalization of pharmaceutical R&D Pharmaceutical R&D governance forms in People's Republic of China

Firm's survival and success, which are dependent on its ability to innovate, to create knowledge and to capitalize on inventions and know-how, is in essence directly linked to its R&D process (Dunk and Kilgore 2001). Especially in technology driven industries, such as the pharmaceuticals, there are significant positive returns to R&D investments through introduction of new or improved products and services (McEvily and Chakravarthy 1999). Technological lead and its transformation to innovative products as fruits of corporate R&D can be seen as monopolistic advantage that helps enterprises to compete in today’s market (Lall 1977). This competitive advantage can be derived from corporation's ability to integrate its activities across geographic locations (Porter 1986). According to Boehe (2008) globalization of R&D can executed with different governance forms: R&D internationalization, R&D offshoring or R&D offshore outsourcing. Globalization of R&D is intervened with the changes in global economy of the 21st century. Some studies argue for its influencing factors to be access to vast skilled labor pools and centers of excellence (Bardhan 2006). Other studies indicate the R&D cost differentials between countries to be the major expected benefit (Norwood et al. 2006). Von Zedtwitz and Gassmann (2002) presented benefits as divided to accessing markets and customers or to accessing local science and technology. This study proposes that based on governance form distinct factor derived benefits can be capitalized. To corroborate or refute factors and their relations on R&D globalization governance forms, an empirical study based on expert interviews of pharmaceutical directors was conducted in the People's Republic of China. The market was found to be the major influencing factor. Local requirements and adaptation were corroborated as factors connected with markets. Furthermore, influencing factors, such as labour, centers of excellence, cost, financial incentives were corroborated together with conditional and risk factors. Furthermore this research argues that the globalization of pharmaceutical R&D is dependent on the financial, scientific and operational requirements of the drug discovery stage. And thus establishes the influence of drug discovery's stages continuum on pharmaceutical R&D globalization. Finally, a R&D globalization governance form decision framework is proposed based on the frameworks presented in literature and author's corroborated empirical findings.

To what extent and in what manner do Chinese and Indian contract research organisation learn and upgrade with the unbundling the global pharmaceutical R&D value chain?

The paper applies the GVC framework to analyse the organisational and geographical reconfiguration of the global R&D function of leading US and European pharmaceutical MNCs. Though pharmaceutical MNCs have been outsourcing clinical trial activities since the mid-1990s, the outsourcing of discovery research tasks is a phenomenon of the 2000s (Ramirez 2013). Moreover, in the context of a crisis of R&D productivity and increasing pressure from shareholders, a number of US and European pharmaceutical MNCs are breaking up their R&D function in an attempt to increase flexibility and reduce risk as well as costs and are thereby restructuring the global architecture of their R&D function. This break-up, or unbundling (Sako 2006), of the R&D function is particularly interesting given the prevalence of market failure in innovation (Howells et al 2008), the non-modular nature of the R&D process in this industry (Pisano 2006) and the strategic important of this activity to the core competence and long-term competitive advantage of firms in this sector. The focus of this paper is on the outsourcing of R&D activities to Chinese and Indian independently-owned contract research organisations (CROs) and the way these firms are becoming integrated as service providers into the global R&D function (or R&D value chain) of pharmaceutical MNCs. Above all the paper is concerned with the development of capabilities of CROs from these two countries and the dynamics of upgrading in GVCs in knowledge-intensive functions. The paper therefore discusses the role of both knowledge flows within global pharmaceutical R&D value chains as well as national innovation systems on the development of capabilities of Chinese and Indian CROs. Our analysis is based on data from semi-structured interviews collected from senior R&D managers from a sample of ten US and European pharmaceutical MNCs and owners and senior R&D managers from five Chinese and five Indian CROs who are providing research services to MNCs in this industry. We discuss the emergence of R&D outsourcing in this industry and the nature and mechanisms of knowledge flows within R&D value chains. The embeddedness of CROS in the national innovation systems of their home countries is also discussed.

Strategic outsourcing of R&D: The location-specific advantages of India to the pharmaceutical industry

Companies are increasingly under pressure to be more efficient both in terms of costs and overall performance and thus, they seek new ways to develop their products and innovate. For pharmaceutical industry it can take several decades to launch a new drug to the markets. Since pharmaceutical industry is one of the most research-intensive industries, is outsourcing one way to enhance the R&D processes of such companies. It is said that outsourcing to offshore locations is vastly more challenging and complicated than any other exporting activity or inter-company relationship that has evoked a lot of discussion. By outsourcing strategically, companies must also thoroughly focus on transaction costs and core competences. Today, the suppliers are looked for beyond national boundaries and furthermore, the location of the outsourcing activity must also be thoroughly considered. Consequently, the purpose of this study is to analyze what is known of strategic outsourcing of pharmaceutical R&D to India. In order to meet the purpose of the study, this study tries to answer three sub-questions set to it: first, what is strategic outsourcing, second, why pharmaceutical companies utilize strategic outsourcing of R&D and last, why pharmaceutical companies select India as the location for outsourcing their R&D. The study is a qualitative study. The purpose of the study was approached by a literature review with systematic elements and sub-questions were analyzed through different relevant theories, such as theory of transaction costs, core competences and location advantages. Applicable academic journal articles were comprehensively included in the study. The data was collected from electronic journal article databases using key words and almost only peer-reviewed, as new as possible articles were included. Also both the reference list of the included articles and article recommendations from professionals generated more articles for inclusion. The data was analyzed through thematization that resulted in themes that illuminate the purpose of the study and sub-questions. As an outcome of the analysis, each of the theory chapters in the study represents one sub-question. The literature used in this study revealed that strategic outsourcing of R&D is increasingly used in pharmaceutical industry and the major motives to practice it has to do with lowering costs, accessing skilled labor, resources and knowledge and enhancing their quality while speeding up the introduction of new drugs. Mainly for the above-mentioned motives India is frequently chosen as the target location for pharma outsourcers. Still, the literature is somewhat incomplete in this complex phenomenon and more research is needed.

25 years of knowledge creation processes in pharmaceutical contemporary trends

The pharmaceutical industry is knowledge and research-intensive. Due to technological, socio-political and organisational changes there has been a continuous evolution in the knowledge base utilized to achieve and maintain competitive advantages in this global industry. There is a gap in analysing the linkages and effects of those changes on knowledge creation processes associated with pharmaceutical R&D activities. Our paper looks to fill this gap. We built on an idiosyncratic research approach – the systematic literature review – and looked to unearth current trends affecting knowledge creation in international/global pharmaceutical R&D. We reviewed scientific papers published between 1980 and 2005. Key findings include promising trends in pharmaceutical innovation and human resource management, and their potential implications on current R&D practices within the pharmaceutical industry, from managerial and policy-making perspectives.

O papel governamental como ator essencial para a P&D de medicamentos: um estudo de casos

The importance of natural products as a source of new high value-added drugs has, no doubt, transformed Brazilian megadiversity into one of the country's most valuable and strategic assets. Thus the rational exploration of the Brazilian flora on an economic basis should be considered as part of a national development strategy. In this respect, governmental mechanisms to stimulate regulation on the access, bioprospection and industrial use of natural products represent a crucial issue. The aim of this paper is to show how the incentives and institutional arrangements that led to one of the greatest breakthroughs in the pharmaceutical industry, the development and commercialization of the anti-cancer agent Taxol, could be applied to the Brazilian case.

R&D in the pharmaceutical industry: A world of small innovations

It is commonly argued that in recent years pharmaceutical companies have directed theirR&D towards small improvements of existing compounds instead of more risky drastic innovations. In this paper we show that the proliferation of these small innovations is likely to be linked to the lack of market sensitivity of a part of the demand to changes in prices. Compared to their social contribution, small innovations are relatively more profitable than large ones because they are targeted to the smaller but more inelastic part of the demand. We also study the effect of regulatory instruments such as price ceilings, copayments and reference prices and extend the analysis to competition in research.

Propolis Standardized Extract (EPP-AF (R)), an Innovative Chemically and Biologically Reproducible Pharmaceutical Compound for Treating Wounds

The aim of this study was to develop a formulation, containing the propolis standardized extract (EPP-AF (R)), which can assist in the healing of skin lesions. To achieve this objective the antimicrobial activity and chemical composition of the propolis extract was determined. The final product was subjected to in vitro and in vivo pre-clinical evaluation. The broth macrodi-lution method was used to determine the antimicrobial activity of the extracts and formulations against the microorganisms most commonly found in burns, Pseudomonas aeruginosa, Klebsiella pneumoniae, Escherichia coli, Staphylococcus aureus and Staphylococcus epidermidis. Wistar rats with puncture wounded skin were used to evaluate the wound healing properties of propolis. The results of chemical and biological characterization demonstrated the batch-to-batch reproducibility of the standardized extract which is an unprecedented result. The antimicrobial and wound healing activity of the pharmaceutical studied showed the best results when samples contain 3.6% propolis, suggesting that this is the most promising composition.

Propolis Standardized Extract (EPP-AF (R)), an Innovative Chemically and Biologically Reproducible Pharmaceutical Compound for Treating Wounds

The aim of this study was to develop a formulation, containing the propolis standardized extract (EPP-AF (R)), which can assist in the healing of skin lesions. To achieve this objective the antimicrobial activity and chemical composition of the propolis extract was determined. The final product was subjected to in vitro and in vivo pre-clinical evaluation. The broth macrodi-lution method was used to determine the antimicrobial activity of the extracts and formulations against the microorganisms most commonly found in burns, Pseudomonas aeruginosa, Klebsiella pneumoniae, Escherichia coli, Staphylococcus aureus and Staphylococcus epidermidis. Wistar rats with puncture wounded skin were used to evaluate the wound healing properties of propolis. The results of chemical and biological characterization demonstrated the batch-to-batch reproducibility of the standardized extract which is an unprecedented result. The antimicrobial and wound healing activity of the pharmaceutical studied showed the best results when samples contain 3.6% propolis, suggesting that this is the most promising composition.

Pharmaceutical quality of ceftriaxone generic drug products compared with Rocephin (R)

The pharmaceutical qualities of 34 ceftriaxone generic products were compared with Rocephin as the reference standard. Quality standards specified in the European and US Pharmacopoeias were violated on 18 occasions, including those for sterility (4 products) and impurities (5 products). All 34 generics tested failed to meet Roche specifications for Rocephin, with 100 contraventions of the Roche Pharmaceutical standards. The most common failures amongst generic drug products were clarity of solution (30 products) and presence of thiotriazinone (33 products).

Innovation in the pharmaceutical industry: New estimates of R&D costs.

The research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug and biologics development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2558 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars).

Molecularly Imprinted Solid Phase Extraction Of Fluconazole From Pharmaceutical Formulations.

This work encompasses a direct and coherent strategy to synthesise a molecularly imprinted polymer (MIP) capable of extracting fluconazole from its sample. The MIP was successfully prepared from methacrylic acid (functional monomer), ethyleneglycoldimethacrylate (crosslinker) and acetonitrile (porogenic solvent) in the presence of fluconazole as the template molecule through a non-covalent approach. The non-imprinted polymer (NIP) was prepared following the same synthetic scheme, but in the absence of the template. The data obtained from scanning electronic microscopy, infrared spectroscopy, thermogravimetric and nitrogen Brunauer-Emmett-Teller plot helped to elucidate the structural as well as the morphological characteristics of the MIP and NIP. The application of MIP as a sorbent was demonstrated by packing it in solid phase extraction cartridges to extract fluconazole from commercial capsule samples through an offline analytical procedure. The quantification of fluconazole was accomplished through UPLC-MS, which resulted in LOD≤1.63×10(-10) mM. Furthermore, a high percentage recovery of 91±10% (n=9) was obtained. The ability of the MIP for selective recognition of fluconazole was evaluated by comparison with the structural analogues, miconazole, tioconazole and secnidazole, resulting in percentage recoveries of 51, 35 and 32%, respectively.