Issue Date: June 25, 2007
Big Pharma Chases Dogs And Cats
IS THE PHARMACEUTICAL industry going to the dogs? In a way, the answer is yes.
A flurry of regulatory approvals for dog medicines in the past several months demonstrates a growing interest in prescription drugs for pets. These pets don't just have owners—they have people. And those people want their dogs and cats to grow old with them. In an increasing number of countries, people have extra income to spend on Fido and Fluffy to keep these companions healthy and comfortable through their geriatric years.
In response, drug companies are learning to comb their growing libraries of drugs for humans to find products that will improve pet health, bring in additional income, and possibly help advance R&D for human health.
Over the past decade, products for dogs and cats have been the biggest and fastest growing sector of the animal health market, says Nigel Chapple, an analyst with the consulting firm Wood Mackenzie. "A lot of new products are entering the marketplace—a very sizable marketplace—that is increasingly competitive and very dynamic."
Big drug companies such as Pfizer, Novartis, Schering-Plough, and Wyeth that are known for making medicines for humans have animal health divisions, too. And Eli Lilly & Co., which has a food animal division called Elanco, announced its entry into the pet market in January. The pet division will take the Lilly name and focus on making brand-name medicines for dogs and cats. Companies continue to develop and manufacture products for animals raised for food, but pet products abound.
Thanks to a spate of drug approvals, veterinarians can now offer dog owners two diet drugs; treatments to ease separation anxiety, vomiting, and congestive heart failure; and a novel therapeutic cancer vaccine that might benefit humans.
Last November, the European Medicines Agency granted Johnson & Johnson's Janssen Animal Health unit approval for Yarvitan, the world's first drug for managing dog obesity. Pfizer Animal Health won approval in January for Slentrol, the first drug approved by the Food & Drug Administration for that purpose. In February, Pfizer received FDA approval for Cerenia, the first drug to treat acute vomiting in dogs and to prevent vomiting caused by motion sickness during car rides or chemotherapy.
There's more. Lilly received FDA approval in April to market its first drug for dogs. Called Reconcile, the drug treats separation anxiety and contains fluoxetine, the active ingredient in the company's blockbuster antidepressant Prozac. In May, Boehringer Ingelheim Vetmedica received approval for Vetmedin, the first drug approved by FDA in more than 10 years to treat canine congestive heart failure.
Merial, a joint venture between Merck and Sanofi-Aventis, gained conditional approval from the Department of Agriculture for a melanoma cancer vaccine for dogs in March. Although several therapeutic vaccines are in development for treating cancer in humans and animals, Merial's product is the first one on the market.
COMPANIES ADMIT that the companion animal health market is small compared with the human health market, but it is lucrative because pet owners consider cats and dogs part of their families and will pay dearly to care for them. Last year, U.S. pet owners spent $18.5 billion on veterinary care, over-the-counter medications, and supplies other than food. That figure is expected to increase by more than 6% this year, according to the American Pet Products Manufacturers Association.
Analysts who follow the animal health industry agree that Americans account for roughly 40% of worldwide spending on pet health products. In 2006, global spending totaled about $6.6 billion, according to statistics from Wood Mackenzie. Flea and tick protection for dogs and cats make up roughly a third of that figure.
"From a business standpoint, the big pharma companies have seen that the animal health business provides a good return on their investment," says Peter Hanson, executive director of pharmaceutical R&D for Merial. "We don't bring out billion-dollar blockbuster drugs, but we bring out a number of products that have sufficient sales to significantly contribute to the bottom line of the human health company."
Last year, the two top-selling flea and tick products in the U.S. were Merial's Frontline and Bayer Animal Health's Advantage. Advantage was the third best-selling consumer product in Bayer's portfolio, behind only aspirin and a diabetes drug.
Performance of animal health divisions varies by company. In the major pharmaceutical companies, those divisions add between 2.5 and 9% to company earnings, Chapple says.
Drug companies are shifting some human health focus to geriatrics, and the same is true for their animal health divisions. "As people are getting older and their animals are getting older, you see diseases which have not been covered very well on the animal health side," says Ernst Heinen, U.S. vice president of R&D for Bayer Animal Health. "There is a need for new treatments in these areas, and that is where we and our competitors are looking."
Although several companies continue strong traditions in antiparasitics and antimicrobials, they have added treatments and preventatives for cancer, diabetes, heart ailments, and chronic pain management to their R&D projects. Specialty drugs in use and under development for pets include behavioral management drugs, such as Reconcile and Cerenia, and treatments for obesity and fertility.
Companion animal health is a promising area for R&D for several reasons. Advances in biological sciences, new technologies for research and drug delivery, and recently available basic information about the canine genome, for example, have propelled animal health research in ways that wouldn't have been possible 10 years ago, according to R&D directors.
When people think about cutting-edge businesses, animal health doesn't often come to mind, but "it can be a very innovative industry," says Ellen de Brabander, vice president of R&D at Intervet, the animal health division of Organon BioSciences.
Many animal drugs result from treatments for humans, but humans have also benefited from drugs originally created for animals. A well-known example is the worming medication ivermectin, sold by Merial as Heartgard. It was developed in the 1980s by Merck animal health researchers to prevent heartworms in dogs. Merck subsequently developed ivermectin as Mectizan to treat humans with onchocerciasis, a tropical worm disease also called "river blindness."
Wyeth, in collaboration with the World Health Organization, is working on a second-generation human formulation of a compound called moxidectin to treat river blindness. Originally developed for dogs by Wyeth's Fort Dodge Animal Health unit, it is currently in Phase II human clinical trials in Ghana.
Merial also has a therapeutic vaccine for aggressive melanoma in dogs. Classic vaccines are preventative preparations that are typically made up of dead or weakened viruses that stimulate the immune system to attack disease-causing agents and prevent illness. Canine distemper and feline leukemia are classic examples of diseases that are prevented by vaccines.
Tumors, however, are part of the body, and the immune system normally won't attack itself. Therapeutic vaccines are essentially a way to retrain the body's immune system and are administered after the tumor is detected. As Hanson explains, the vaccine stimulates the immune system to recognize the tumor as foreign. The new vaccine, a DNA plasmid containing the gene encoding for human tyrosinase, is administered with a needle-free injection system that targets dendritic cells in the dog's skin.
Companies have made a big investment in R&D for dogs and cats. Pfizer Animal Health apportioned about $270 million in 2005. Intervet allots 10% of sales to R&D, and Merial spends 6-10%. R&D spending at company divisions that focus on drugs for people generally ranges from 10 to 20% of sales.
At Bayer Animal Health, R&D for companion animals—particularly dogs and cats—receives more funding than that for livestock. "We have shifted development budgets from food animal to companion animal products," Heinen says.
THE OVERALL R&D process and time frame for animal pharmaceuticals are similar to those of their human counterparts, including discovery of an active pharmaceutical ingredient, formulation, clinical testing, and government approval for marketing. Companies say the average development journey for a veterinary product is five to nine years.
A major difference, de Brabander notes, is that companies that develop drugs for humans need be concerned with only one species when picking their projects, whereas animal health companies have numerous options.
Although many animal health companies work on both vaccines and pharmaceuticals, the R&D tracks are different. For pharmaceuticals, the compounds often originate from human health R&D programs and are adapted for the target animal. However, most vaccine research must start from scratch by targeting a pathogen.
Vaccine makers say preventative care is even more important in animal health than in human health. According to Heinen, many more animal diseases can be prevented with vaccines. De Brabander explains that "the majority of the products are related to pathogens coming from microorganisms." But because the viruses and bacteria are species-specific, it is rare to be able to transfer to animals a vaccine that was developed for humans and vice versa. Rabies vaccines are one prominent exception.
Candidates for dog and cat drugs can come from a broad base of sources. For example, animal health divisions examine libraries of compounds developed by their human health parent company. Some active ingredients responsible for blockbuster human drugs simply need to be reformulated to be ready for animals. Reconcile, nicknamed "puppy Prozac," and some nonsteroidal anti-inflammatory drugs are examples.
Researchers also can get unexpected tips from clinical trials of drugs intended for human use. In the case of Pfizer's Slentrol, company researchers were investigating a microsomal triglyceride transfer-protein-inhibitor molecule to treat human atherosclerosis. According to Georgette Wilson, a manager of veterinary operations at Pfizer Animal Health, they observed that the dogs in a clinical trial were losing weight but were otherwise healthy.
Pfizer animal health executives were aware that an estimated 40% of dogs in the U.S. are either overweight or obese and that dog owners express frustration in their attempts to successfully manage their dogs' weight. To address that need, Pfizer decided to pursue a similar compound as a weight loss treatment that was eventually approved for dogs.
As in big pharma, most animal health companies contract early screening or medicinal chemistry work out to smaller companies or license compounds developed through university collaborations with bioengineering and medicinal chemistry researchers or veterinarians. Intervet examines the compound library of its parent company and partners with other companies, but it also is known for having two in-house drug discovery facilities, a rarity in animal health.
An academic researcher with a grant devoted specifically to developing an animal health drug is another rarity. But some human drug projects have a transferable animal component that animal health companies may want to license.
MANY ANIMAL products stem from collaborations entirely outside of traditional human pharmaceutical research areas. For flea and tick products, "we look into insecticides from our crop science colleagues," Heinen says. "We have a very active business development group within Bayer Animal Health. They are looking outside the company for some promising new technologies that we could develop into a product. That has become an integral part of every animal health company."
Whatever the origin of an active ingredient, it must have appropriate dosage properties and an ability to be delivered in ways that are palatable for pets and convenient for humans to administer.
Once an active compound is integrated into a practical formulation, it is ready for clinical testing. In general, companies collaborate with veterinary schools to conduct efficacy and safety testing. For late-stage trials, animal subjects, including pets with consenting owners, are recruited through veterinary clinics.
"The basic concept for the clinical trials is very similar" for humans and animals, Hanson says, but the magnitude of the study differs considerably. "Human trials are typically 3,000-10,000 human patients, and animal trials are maybe 300 animal patients."
R&D directors explain what's behind this big difference: Because dogs are used to test human drugs prior to many clinical trials, there is an initial understanding about safety in canines. Prospective pet drugs that start as human health medicines don't need to repeat the entire testing process. In addition, "we can do more extensive safety studies, as required by regulation, in laboratory animals than can be done in people," Hanson adds.
Although both human and animal drugs take a long time to develop, the overall business risk is lower with an animal drug because testing on the target animal is done early in the clinical trial process and it's easier to tell whether the drug will work out, de Brabander says. Efficacious human drugs generally come with a larger market payoff, but they also pose a higher business risk because researchers don't know if they will actually work until data come in from late-stage human tests.
Clinical trials for companion animals generally advance more quickly than trials for food animals because drug residue in the blood is not an issue. But before any animal health products go on the market, government approval is required.
EACH COUNTRY has its own rules about applications to market drugs, vaccines, and insecticide products. In the U.S., three agencies oversee companion animal products. FDA's Center for Veterinary Medicine examines applications for all new or updated pharmaceuticals. Biologicals such as vaccines must be approved by the Department of Agriculture. Flea and tick products that are applied topically to the animal, as opposed to being administered internally, must be registered with the Environmental Protection Agency.
Development continues at animal health companies even years after the initial commercialization of a product. Improvements may include a new or more convenient way to administer the product, fewer side effects, or improved efficacy, R&D directors say.
Combination treatments are another category of product development. Heinen points to a new entry in Bayer's Advantage line of flea products. Advantage Multi is an external, spot application that extends beyond flea control to include, in the same applicator, medicines to prevent heartworm and gastrointestinal nematodes in cats and dogs.
Though numerous new products for dogs have recently hit the market or are in development, R&D directors at animal health companies say cats are the next big challenge. Felines cannot always take the same medicines as canines because they are a different species and are afflicted by different diseases. In January, Fort Dodge Animal Health launched the world's first vaccine against the virulent systemic feline calicivirus.
"There is huge potential for feline products, but the industry doesn't have a grasp on that because cats are sometimes difficult to deal with," Heinen says. They notoriously reject oral medicines, have sensitive skin, and may develop cancer at injection sites. Yet, animal health companies persist because, as Heinen notes, "there are more cats in the U.S. than dogs."
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