It's Getting Harder to Come Up With a Successful Drug

The success rate for bringing new medicines to market in recent years is nearly one in 10 -- about half of the previous rate, according to a new study released this week by the Biotechnology Industry Organization and BioMedTracker.

Some may see this as proof the Food and Drug Administration has gotten tougher, but it's important to note that the study, which covers 2004 through 2010, looks at all stages of drug development -- not just FDA approvals.

The success rates vary among the different stages of clinical trials. For example, there's a 66% chance companies will get through Phase I, but only a 33% chance of success in Phase II, and a 55% chance in Phase III. Having run that gauntlet, once the drug has been submitted for FDA approval, the success rate is actually 80%.

Cancer Drugs Have a Rough Road

The FDA's tougher safety stance in the last two years may have caused drug approvals in 2010 to be "relatively modest," as The Wall Street Journal puts it. But according to the Journal's chart of the recent decade, or this list at MediaMatters, there doesn't seem to be a trend toward fewer approvals -- or any obvious pattern.

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What's interesting from the study is the varying success rates across therapeutic categories. For example, drugs for infectious diseases had the highest rate of approval of 15% for lead indication, followed by endocrine system therapies at 14% for lead indication.

"Strikingly, oncology drugs have the toughest time making their way through the clinic, despite cancer being the most closely studied area in drug development," remarks Michael Hay, senior biotechnology analyst at BioMedTracker. The success rate for oncology drugs remained low even through Phase III at 34%.

And while the overall success rates from Phase I to FDA approval is nearly 9%, lead indications have close to a one in seven approval rate, while secondary indications have a rate of one in 30.

Biotech As a Smart Investment

"This groundbreaking study highlights the depth and breadth of risk inherent in the drug-development process more comprehensively than any other previous study," says Alan Eisenberg, executive VP at BIO. "Knowing more about the magnitude of risk can lead to smarter drug development as well as smarter investing."

No doubt, one of those smart investments is biotechnology because the study shows that biologics are twice as successful in gaining approval than traditional small-molecule chemical drugs. Indeed, pharmaceuticals have been increasing their investment and their reach in the field. On Feb. 16, French pharmaceutical company Sanofi-Aventis (SNY) bought American biotech and rare-disease drugmaker Genzyme (GENZ) for $20.1 billion.

It's important to note, said the press release about the study, that while building on previous studies, this latest analysis also "uses a broader, deeper and larger sample than previous reviews of clinical trials and approvals data using the BioMedTracker (BMT) proprietary database of 4,500 drugs and over 8,000 unique development paths."