The Innovation of Biologics (Specialty Drugs)

Beginning in the late 1970s, biopharmaceuticals began initially to be researched

conceptually for their therapeutic potential. This research continues today with
great enthusiasm.

Known also as Red Biotechnology, it is believed that the first biologic therapy ever
was a type of synthetic insulin called Humulin, which was from Genetech in 1982.
This new insulin that utilized what is called rDNA technology was also is used to
produce human growth hormones, it is believed.

Later, the rights were sold to Eli Lilly for this insulin product. Yet Genetech was
likely the catalyst and apex of biologic growth that exists now to a large degree.
And such companies are truly research-driven compared with some other
pharmaceutical companies.

Today, biologic companies are numerous- and are believed to employ around 1000
scientists who express their vocational drive to research potential biologics. And
Genentech, again which is the company who was at the advent of biologics,
continues to be an independent company, although Roche owns a large portion of
this company.

Biologics are in essence distant relatives of the common synthetic, carbon-based

pharmaceuticals that most are familiar with who are involved in treating patients.
This distant relative has experienced a lack of innovation and creation of truly
unique products in recent years utilizing this common method that has been utilized
for several decades.

In fact, presently large pharmaceutical companies are acquiring biopharmaceutical

companies that usually are comparatively very small start-up companies. These
large pharmaceutical corporations do this because, along with other reasons,
biologics are in fact monopolies due to the undeveloped protocols for biosimiliars.
Biosimiliars are the generic forms of typical branded pharmaceutical drugs.

In addition, biopharmaceutical companies have historically experienced accelerated

growth that has proven to be quite lucrative for them recently. Presently, this
biologic industry is about an 80 billion or so dollar per year franchise- with roughly
15 percent growth each year with this particular market, it is believed. It has been
reported that are about 250 biologics on the market presently, with more to come.

How do these drugs differ from typical drugs that have been made before this
advent of biopharmaceuticals? Unlike the small molecule, synthetic, carbon based
pharmaceuticals of yesterday, biopharmaceuticals essentially are larger and very
complex modified proteins derived from living biological materials, such as
antibodies, hormones, or enzymes.
One method of these creations is that a transformed host cell is developed to
synthesize this protein that is altered and then inserted into a selected cell line.
The master cell banks, like fingerprints, are each unique and cannot be accurately
duplicated, which is why there are no generic biopharmaceuticals as of yet, as there
is no known process to create them.

So the altered molecules are then cultured to produce the desired protein for the
eventual biopharmaceutical product. These proteins are very complex and are
manufactured from living organisms and material chosen for whatever
biopharmaceutical that may be desired to be created. It is difficult to identify the
clinically active component of biopharmaceutical drugs.

The goal of this molecular design created by others is to modify those physiological
systems that are dysfunctional in order to restore the health of others.

Clearly, manufacturing biopharmaceuticals clearly is a different and innovative

process, and a small manufacturing change could and has raised safety issues of a
particular biopharmaceutical in the developing process, as altering the immune
system of a potential user of a biologic therapy is risky. Also, it takes about 5 years
to manufacture a biopharmaceutical.

And each class has a different method of production and alteration of life forms to
create what the company intends to develop. Yet overall, their development
methods are rather effective, and cost over a billion dollars to bring to market.

Greater than 10 percent of biologic therapies have black box warnings now with
their prescribing information because of unexpected consequences by those who
have had such therapys . Yet as time progresses, biologics are becoming safer as
more is learned about this technology.

Over 20 biopharmaceutical drugs were approved in 2005, it has been reported, and
their growth has tripled compared with what the large pharmaceuticals experienced
then. Presently, over 20 biopharmaceutical products are blockbusters by definition,
according to others. They are overall very effective treatments for what are viewed
as very difficult diseases to manage and treat.

This is due to the fact that some biologics target specific etiologies of these
diseases, while limiting side effects because of the specific way in which such
products work. Yet of the nearly 400 biopharmaceutical companies that are publicly
traded, about a third are more or less going broke, it has been reported presently.

There is risk for such companies because of the technology being so new, perhaps.
Yet overall, this biologic industry employs about a quarter of a million people in the
United States, it is believed.

There are about a dozen different classes or mechanisms of action of

biopharmaceuticals that have about a half of dozen different types of uses today.
Label alterations for additional disease states occur often as well due to the
progressive and novel effectiveness of biopharmaceuticals. Some of these drugs
are catalysts for apoptosis of tumor cells.

Some biologics are catalysts forangiogenesis to occur to block blood supply to the
tumors of cancer patients. Then some biopharmaceuticals have multiple modes of
action that benefit certain patient types and their diseases greatly, as with most
biopharmaceutical products, the safety and efficacy is evident and reinforced with
clinical data and eventual experience with the biopharmaceutical that is chosen to
be utilized.

The clinical trial protocol is somewhat different with pending biologics in comparison
with what have been traditional medications. This is likely due to biologics being
such a new development in the world of medicine.

The country of Belgium provides the most biotech products to the

biopharmaceutical companies in the United States, and the U.S. leads the world in
regards to biopharmaceutical product creation- with more than 70 percent of both
revenues and research and development expenditures in this country. Canada is
ranked number two in this area, others have said.

And with the government health care programs, who are the largest U.S. payers for
pharmaceuticals, Medicare pays 80 percent of the cost of biopharmaceuticals, as
many are administered in the doctor’s office, and Medicare part B covers the cost in
large part for biologics.

There are, however, some concerning issues with biologics, such as suspected
overuse or inappropriate utilization of these therapies. Companies who make and
market biologics are not exempt from federal prescription regulation that exists
presently. Amgen, who makes an anemia biologic called Neupogen, recently had to
pay a settlement as well as JNJ, who makes an identical drug called Procrit due to
their marketing activities related with such issues.

The settlements were due to the rebates and incentives both companies were
giving to the users of their products, which were very lucrative benefits, and this
resulted in some cases intentional overdosing their patients with these biologics at
unreasonable and unnecessary levels, it has been reported. The doctors targeted
with these biologics by the makers of these agents are nephrologists and
oncologists, as anemia is often seen in their practices for various reasons.

One controversy involving biologics is that, while they overall are efficacious and
safe, the typical cost of biopharmaceuticals is rather unbelievable, as this cost may
approach tens of thousands of dollars per month for some of these biologics.
Furthermore, with cancer drugs, they are used together with chemotherapy for their
treatment regimens in many treatment centers, so the quality of life comes into
question if one considers the devastating side effects of chemo treatment.
One criticism of biopharmaceuticals is that, with cancer patients in particular, they
normally provide an extension of their life of only a few months. So there is a
debate as to whether the value of biologics justifies their cost.

Several years ago, I heard a presentation from Roy Vagelos, former CEO of Merck
Pharmaceuticals, and heard him as he spoke to others at Washington University in
St. Louis about his views on both the pharmaceutical and biologic industries.

And during his presentation, he stated something similar regarding the cost of
biopharmaceuticals and asked as well about the value of biologics.

Also, with many biologics, such as those approved to treat cancer, between 70and
80 percent of these biologics are believed to be prescribed off-label, so it will be
interesting on how these drugs will be used in such disease states now and in the
future, and how they will be regulated as well.

So the future looks good for this industry, as biologics have tremendous marketing
power along with superior therapeutic value with many of them. Yet perhaps they
need to improve their unreasonable cost structure with the biologics their
developers make and promote. In addition, perhaps a more aggressive approach to
bringing to market biosimiliars would enhance the image of this new industry.

Regardless of the challenges and flaws that exist with biopharmaceuticals and their
makers, I’m pleased to see the results and realization of true innovation in medicine
that has numerous possibilities for enhancing the treatment of devastating disease
states.

“The progressive development of man is vitally dependent on invention.” --- N. Tesla

Dan Abshear (what has been written is based upon information and belief)