Healthy Skepticism Library item: 1494

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Publication type: news

Landers P.
With Dry Pipelines, Big Drug Makers Stock Up in Japan: Shunning High-Tech Gizmos, The Asian Scientists Score With Traditional Lab Work
Wall Street Journal 2003 Nov 24

Full text:

TOKUSHIMA, Japan — For Tetsuro Kikuchi, the clue was in the rats’ whiskers.

Dr. Kikuchi had spent eight years looking for a schizophrenia medicine that had minimal side effects. Over long nights at his lab, he began to recognize a twitching in rats’ whiskers that corresponded to repetitive body movements in humans, a particularly bothersome side effect of older drugs.

That insight helped scientists at Otsuka Pharmaceutical Co. discover Abilify, an antipsychotic it believes has fewer side effects than its predecessors and has become one of the hottest new drugs in the U.S. Before Abilify was fully tested, multinational companies raced to license it, and the winner, Bristol-Myers Squibb Co., agreed to give Otsuka a hefty 35% of the drug’s revenue. A patient who takes Abilify graces the cover of Bristol-Myers’s current annual report.

“I was living with rats every day all year round,” Dr. Kikuchi says. “You gradually figure it out.”

Japanese companies are reaping the benefits of a decade-long effort to develop blockbuster drugs for Western markets. In the past five years, discoveries in Japan accounted for 13% of new drugs approved by the Food and Drug Administration, compared with 8% between 1989 and 1993. The recent Japanese drugs treat a wide spectrum of diseases. A decade ago, 70% of new Japanese drugs were antibiotics.

Among the Japanese drugs making a splash in the U.S. is this year’s biggest launch: Crestor, a cholesterol-lowering pill discovered by Shionogi & Co. and licensed to AstraZeneca PLC. GlaxoSmithKline PLC is betting on an incontinence drug it licensed from Yamanouchi Pharmaceutical Co. earlier this year.

That success is fueling a debate about the best way to develop drugs. U.S. and European giants, having placed big bets on high-tech tools such as robots that perform large-scale drug experiments, are struggling to find new products. Japanese companies, meanwhile, continue to emphasize the low-budget, painstaking lab work that was the norm in both Japan and the U.S. when Abilify was discovered. Japanese researchers say that lets them scoop up opportunities missed by the Western companies.

The Japanese rely heavily on their chemists’ willingness to try new ideas in tweaking a drug’s chemical makeup — which is why Otsuka’s president, Tatsuo Higuchi, says, “We put a high value on weird people.”

Carl Decicco, Bristol-Myers’s head of discovery chemistry, concedes that many Western companies initially over-hyped the potential of technology in drug discovery and lost time while they figured out how to use it. But he sees an important role for the machines that can create millions of slightly different variations on a single molecule and test which variation is most likely to block diseases. “It’s an enabling technology,” says Dr. Decicco.

Creative Spirit

Otsuka, best known in Japan for its Pocari Sweat sports drink, likes to think of itself as encouraging a creative spirit. Its former president built an art museum consisting entirely of copies of famous artworks on ceramic tiles. The $350 million museum’s centerpiece is a full-scale replica of Michelangelo’s “Last Judgment.”

Dr. Kikuchi, a veterinarian by training, studied chicken brains in graduate school before joining Otsuka in 1980. At the time the company had an orientation program that included an early-morning jog around its sprawling complex in Tokushima. After the jog, Dr. Kikuchi was offered Pocari Sweat. It’s marketed as a drinkable version of Otsuka’s intravenous fluids and racks up sales of nearly $1 billion a year, helping to fund drug research. At first he found it “horrible,” but he came to like it.

By Western standards, his laboratory is poorly funded. Otsuka’s entire annual research-and-development budget is just $300 million and it spends less than 5% of that on psychiatric-drug research. Bristol-Myers’s annual R&D budget is about $2.2 billion. At Otsuka’s factory on the outskirts of the provincial capital of Tokushima, the aroma of curry from a nearby factory wafts over the labs. At night, many scientists return to tiny company dormitory rooms next to the labs, sleeping on futons.

Dr. Kikuchi’s job was to help Otsuka develop a drug for schizophrenia. Typical symptoms of the disease include hallucinations, paranoia and low energy. Scientists have long known that excess of a brain chemical called dopamine can cause schizophrenia. But many drugs that control dopamine levels have severe side effects such as grimacing, rapid eye blinking and other repetitive, involuntary body movements.

An early Otsuka drug failed to help most patients in clinical trials, and by the mid-1980s many company executives believed continuing with psychiatric-drug research would be a waste of money. But Dr. Kikuchi saw how the drug had helped one man in a mental institution return to work, and he convinced the company’s then-president that the research had promise. Improving the drug required several breakthroughs — but no fancy machines. One was a conceptual leap. Dr. Kikuchi hit upon the idea of combining two ways of controlling the brain’s dopamine flow into a single drug.

The first, used in most schizophrenia drugs, was to block dopamine from landing at neurons in the brain. The second way, used in the earlier Otsuka drug, was to help dopamine return to the neurons from which it came. If the neurons that sent out dopamine sensed a lot of it coming back without having reached its destination, they might stop sending out so much dopamine in the first place, Dr. Kikuchi reasoned.

Some Western specialists call that a highly original approach, because others at the time were fixated on the idea of blocking the landing of dopamine. “They have done wonderful work at Otsuka. I’m very impressed,” says Arvid Carlsson, a Swedish scientist who won the Nobel Prize in medicine in 2000 for his work on dopamine.

Still, the idea was useless without an actual drug. Here Dr. Kikuchi turned to a chemist colleague, Yasuo Oshiro. Today, many Western companies use robots to simultaneously screen thousands of potential drugs for particular medical problems, something that is impractical to do by hand. Dr. Oshiro used a more old-fashioned method common at that time, drawing on his experience and gut instinct to guess what type of compound might hit the brain’s dopamine control centers the right way.

When Dr. Oshiro came up with a good candidate, he’d hand it over to Dr. Kikuchi, ensconced with a collection of rodents who were fed drugs to induce psychosis-like symptoms, including running madly around their cages. In his concrete-walled, two-story lab, Dr. Kikuchi studied the rats and paid attention to seemingly irrelevant factors such as the behavior of their whiskers. He reported back to Dr. Oshiro.

The two men went back and forth until 1988, when Dr. Oshiro fashioned the molecule that would later be named Abilify. Dr. Kikuchi’s tests suggested the new drug did much better than Otsuka’s previous version. The psychotic rats stopped running around their cages. This time, persuading Otsuka executives was easy: They approved a large-scale research program into Abilify.

Human trials moved slowly at first, in part because Otsuka was more interested in pushing a heart drug that ultimately failed a clinical trial in 1998. In 1996, two Bristol-Myers scientists stumbled on a poster describing Abilify’s effects at a neuroscience meeting in Puerto Rico. Bristol-Myers, whose own labs were in the midst of a 15-year dry spell, wooed Otsuka intensively. Donald Hayden, the head of Bristol-Myers’s U.S. pharmaceutical business, traveled to Japan as often as every two months pitching his company’s development and marketing prowess.

According to Dr. Kikuchi, other major Western drug companies also expressed an interest, including the companies now known as AstraZeneca and GlaxoSmithKline. AstraZeneca confirms its interest. GlaxoSmithKline declines to comment. In 1999, Bristol-Myers won the battle with an offer to pay a royalty rate of 35% — several times the typical rate at the time. It also agreed to share the promotion of Abilify with a sales force fielded by Otsuka’s U.S. subsidiary.

Such copromotion deals represent an increasingly common strategy for Japanese companies. The biggest, Takeda Chemical Industries Ltd. of Osaka, created a wholly owned U.S. subsidiary in 1998. It sells a diabetes drug called Actos with Eli Lilly & Co. under a copromotion agreement that gives Takeda the lion’s share of the revenue.

‘Like a Bulldozer’

In a little more than three years, Bristol-Myers conducted a large-scale trial of Abilify in the U.S. and won approval from the Food and Drug Administration to sell the drug — speedy work by industry standards. Dr. Kikuchi says the U.S. company was “like a bulldozer” during the human trials of Abilify, setting strict deadlines and meeting them with a discipline alien to Otsuka’s more laid-back culture.

Since the launch in late 2002, Abilify has taken more than 5% of the market for schizophrenia drugs, in part because of heavy use by doctors in other diseases such as attention deficit hyperactivity disorder in children. The top-selling schizophrenia drug is Eli Lilly & Co.‘s Zyprexa, which had sales of $3.69 billion in 2002.

While Japanese executives admire the marketing clout of Western pharmaceutical giants, they show little interest in their high-tech tools. This month, Takeda President Yasuchika Hasegawa said he ordered his scientists to return to traditional methods after a recent flirtation with new technologies. Mr. Hasegawa told an analysts’ meeting that Takeda had been “swept away in the direction … of the U.S. and European way” but will now “return to the fundamentals of drug discovery.”

Executives at Bristol-Myers say they believe in robot drug discovery and other high-tech tools. The company has drugs for Alzheimer’s and other diseases in early testing that it says would have taken longer to find without the help of new technology.

Nonetheless, the company’s research chief, James Palmer, has recently increased the emphasis on human talent. In the past year, he has doubled the number of chemists and biologists working on each major discovery project. “If we get good chemists and good biologists working on these focus programs, we get better molecules,” Dr. Palmer told a conference of investors in mid-November.

The push by Japanese companies to expand in the U.S. reflects their fears about a shrinking home market. Since the early 1990s, when Japan’s economy fell into the doldrums after a stock-market bust, its pharmaceutical companies have invested heavily in overseas markets.

That’s bearing fruit right now in part because of the slow progress of clinical trials in Japan compared with the U.S. Many U.S. drugs developed at the same time as Abilify have been on the market for a while. In Abilify’s case, the gap between the drug’s discovery and its U.S. approval was 14 years. Now Japanese companies often conduct trials of potential blockbusters first in the U.S. and worry about their home market later.

In the short term, the Japanese products are a boon for Western companies who would rather pay royalties on somebody else’s drug than have nothing new to sell at all. Some analysts estimate Abilify could bring in as much as $2 billion a year at its peak because it has a different mechanism from other schizophrenia drugs and may reduce the risk of weight gain. That would mean $1.3 billion of revenue for Bristol-Myers.

But Japan’s pharmaceutical companies could seek to keep more of the rewards from their discoveries. Many, including Otsuka, are setting up their own U.S. subsidiaries to test and market drugs. Between 1989 and 1993, only one Japanese company secured FDA approval for a drug; between 1999 and 2003, that number rose to six.

Otsuka is now conducting large clinical trials of two drugs in the U.S. The dream of Mr. Higuchi, Otsuka’s president, is to sell these drugs entirely through Otsuka’s salespeople, without relying on help from any Western partner. One drug under trial is for patients with an inflamed colon or rectum and another for heart-failure patients who suffer from excess water retention. Dr. Kikuchi, meanwhile, is back in his old lab in Tokushima, studying a potential new schizophrenia drug in his rodents.

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Good Medicine
Drugs discovered in Japan are being snapped up by Western companies:
Drug (Date Launched) Treatment Japanese Discoverer Partner in U.S. Peak World-Wide Sales
Pravachol (1991) High cholesterol Sankyo Bristol-Myers Squibb $3.3 billion
Prevacid (1995) Heartburn Takeda Abbott $4.3 billion
Aricept (1997) Alzheimer’s Eisai Pfizer $1.1 billion
Abilify (2002) Schizophrenia Otsuka Bristol-Myers Squibb $2 billion (a)
Crestor (2003) High cholesterol Shionogi AstraZeneca $4 billion (a)

(a) Analyst estimate

Source: the companies