Advertisement

If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.

ENJOY UNLIMITED ACCES TO C&EN

Drug Discovery

The great pharmaceutical-academic merger

As drug companies fret over their finances, they are increasingly partnering with universities to help with early-stage research

by Benjamin Plackett, special to C&EN
October 7, 2024 | A version of this story appeared in Volume 102, Issue 31

 

A close up of pink film covered tablets in a plastic tray
Credit: Shutterstock
Big pharma still makes the drugs, but academic partners often now do the discovery.

Pharmaceutical companies are often lambasted for rising drug costs. For example, the price of new drugs entering the US market in 2023 was 35% higher than in 2022. According to an analysis from Reuters, part of the increase is due to a move to develop therapies for rare diseases: because fewer people have those condition, drugmakers push up the per-dose price to recover their costs. But the cost of developing drugs for more common diseases, including cancers, is also rising rapidly.

In 2019, pharmaceutical companies spent $83 billion dollars on research and development. After accounting for inflation, that’s roughly 10 times what the industry spent in the 1980s, according to the US Congressional Budget Office. A 2024 study showed that the share of sales revenue devoted to research spending rose from 12% in 2008 to 18% in 2019, and drugmakers are beginning to feel the pinch.

In addition to rising research costs, several blockbuster drugs will soon be old enough to be reclassified as generic, meaning their developers are set to lose their status as the exclusive manufacturer, says Magid Abou-Gharbia, founding director of the Moulder Center for Drug Discovery Research at Temple University. “When that happens, you can kiss the money goodbye,” he says.

Pharmaceutical companies are moving to work more with academic centers to reduce their risk exposure.
Kelly Chibale, University of Cape Town Drug Discovery and Development Centre

Drug companies are increasingly looking to academics in a bid to mitigate some of these financial burdens. This often involves university researchers doing early-stage drug discovery before pharmaceutical companies take over to push a novel compound through clinical trials and get it to market. “This trend is not entirely new,” says Karl-Heinz Altmann, a synthetic organic and medicinal chemist at the Swiss Federal Institute of Technology (ETH), Zurich. “But it does have momentum now.”

Financial booster

In the life sciences, corporations have been scaling back their in-house research since the 1980s. According to the Nature Index, which tracks the output of 82 scientific journals, research partnerships between companies and academic institutions more than doubled between 2012 and 2016.

A 2022 report from the Association of the British Pharmaceutical Industry found 2,687 links between the UK pharmaceutical industry and academia in 2022, compared with 1,134 in 2003. In other words, collaborative work with academics is making up a larger share of research by private companies, including drugmakers.

“Pharmaceutical companies are moving to work more with academic centers to reduce their risk exposure,” says Kelly Chibale, an organic chemist and director at the University of Cape Town Drug Discovery and Development Centre. “It’s not a coincidence that Boston in the US or Oxford and Cambridge in the UK have so many major pharmaceutical companies. They’re based there because that’s where the academics that they want to collaborate with are.”

From pharma’s perspective, the proof-of-concept stages of drug development are laden with the risk of failure—something their accountants are keen to avoid. By comparison, academia is relatively unbothered by failure if lessons can be learned and—crucially—if papers can still be published. But even with spinout and start-up companies, universities lack the infrastructure to progress a novel compound much further than proof of concept. Clinical trials are just too expensive. If done right, collaborations between the two worlds can be mutually beneficial.

Academic migration

Along with the shift of drug discovery to the academic world, larger numbers of researchers are moving from pharmaceutical companies into academic roles.

For instance, Altman worked at Novartis until 2003, when he moved to ETH Zurich. “I was offered the job. I didn’t seek it out,” he recalls. “It was a difficult decision to go from a well-established environment where you know people to a situation where you have to start from scratch. It’s not like you’re a professor moving from one university to another where you can take your research with you. What I did at Novartis stayed there. All I had was a lab and a budget to develop ideas.”

An African woman in a lab coat, working in a laboratory environment.
Credit: Nic Bothma/EPA/Shutterstock
Scientists work in the Drug Discovery and Development Centre Laboratory in Cape Town, South Africa.

The move involved a number of serious considerations—starting with the drop in salary. “I don’t think anything that a head of research can earn in industry would ever be matched by a university,” Altman says. “I would probably make twice as much money if I’d stayed in industry.” But he says the freedom to choose a research path was worth the sacrifice in salary.

Drug discovery has gotten harder because the easier drugs to discover have already been discovered.
Charles Hart, Small Molecule Discovery Center at the University of California, San Francisco

Altman’s move into academe is part of a wider trend within drug development research as more people move back and forth between industry and universities. “Industry is stepping out of the very early stages because it’s becoming more and more expensive,” says Peter Nussbaumer, managing director at the Lead Discovery Center in Dortmund, Germany, a translational drug research company founded by the Max Planck Society’s technology transfer arm, which collaborates with academic partners.

As more early-stage research moves from industry to academia, so too do people, Nussbaumer says. And academic drug discovery centers have become a destination for them.

Those who dare, win

In 2008, Abou-Gharbia left his job as a senior vice president at Wyeth Research—which was later acquired by Pfizer—to become a professor of pharmaceutical sciences at Temple University. As part of his recruitment, Abou-Gharbia was tasked with kick-starting drug discovery research there. The concept was something of a novelty at the time, he recalls. “There were only a few drug discovery centers in universities,” he says. Now, according to a 2017 study authored by Abou-Gharbia, there are close to 100 such centers in the US alone.


A growing trend
The number of apprentices, undergraduates, PhD students, and postdoctoral researchers in the UK pharmaceutical industry is at an all-time high.
A bar graph showing hte groing industry academia links in the UK in the last 20 years.
Source: ABPI, ABPI Industry/Academic links survey 2022.

A year after starting at Temple, Abou-Gharbia was awarded a $1 million stimulus grant from the National Institutes of Health. He then wrote a pitch to establish a drug discovery center, which would include cutting-edge technologies used by the pharmaceutical industry. The university’s leadership approved the proposal and backed it with about $8.2 million, which allowed the center to recruit researchers and build laboratories.

The Moulder Center is celebrating its 15th anniversary this year. Since its founding, the center has received more than $35 million in outside support—enough to enable its staff to publish more than 180 papers in peer-reviewed journals and file more than 30 patents. Moulder has also created four spin-off companies and trained many future researchers in modern drug discovery and development. “Many universities ask me how to establish similar centers and I tell them you need university support and money,” Abou-Gharbia says.

You also need industry researchers to be readily accepted into academic roles, as Abou-Gharbia was. Such a career move used to be hard to pull off. Though being poached by industry was a well-trodden path for academics, going in the other direction was relatively rare until just a couple of decades ago. This is still the case in much of the EU, according to Nussbaumer. “It’s much easier to go back and forth in the UK and US,” he says. “Not so much in mainland Europe.”

Altman agrees but says Germany and other EU countries are beginning to catch up. “It’s starting to become a bit more relaxed,” he says.

Portrait shot of Magid Abou-Gharbia, a clean shaven man wearing glasses.
Credit: Courtesy of Magid Abou-Gharbia
Magid Abou-Gharbia founded the Moulder Center for Drug Discovery Research.

Universities used to be rigid and highly particular about what kind of experience qualified a person for the job, Nussbaumer says. And there was a question of values: Are you in it for the money or the science? But those boundaries have become less defined in recent years, thanks in part to the promise that researchers can achieve scientific progress and make money by building small companies on the back of their research with the hope of attracting the interest of a larger drug developer.

Fernando Albericio, an organic chemist at the University of KwaZulu-Natal, has noticed that this way of thinking has also started to inform the career goals of students and young researchers. “In the past, a PhD student typically wanted to work in academia for life,” he says. These days, their ambition more often is to start a company.

“The number of spin-off companies is rising rapidly, and they have a sense of being the bridge between academia and pharmaceutical companies,” Albericio says. Drug discovery centers and spinouts enable the academic scientist to carry on their work with one foot in each door.

It’s not all about the money

Drugmakers’ courtship of academic scientists is about more than quelling their financial fears. “It’s part of it, sure. But it’s also that drug discovery has gotten harder because the easier drugs to discover have already been discovered,” says preclinical pharmacologist Charles Hart, who earlier this year became codirector of the Small Molecule Discovery Center at the University of California, San Francisco (UCSF), after 30 years in biotech. “We need new drugs in cancers and new diseases like COVID-19 and other infectious agents, which is just really hard.” Hart says that industry also wants and needs access to the cutting-edge know-how that academic researchers possess.

University-based drug discovery centers and their start-up firms offer pharmaceutical companies the opportunity to use the findings and results that academic experiments have yielded. Sometimes firms exploit those data to further the research that they’re are already doing; other times they want to get a leg up on a research program into a new field in which they lack expertise. Companies may also want to buy up specific compounds and therapies that have shown promise in early experiments.

A high throughput screening lab with a computer with a blue desktop screen, scientific equuipment and storage containers and lab supplies.
Credit: Courtesy of Magid Abou-Gharbia
Research at the Moulder Center for Drug Discovery Research helps discover novel drugs and train the next generation of drug hunters.

In addition, technological advances in recent years have opened up new avenues of exploration that companies want access to. Whether it’s artificial intelligence, sophisticated cellular techniques, or gene therapies, drugmakers are looking for help in exploiting these developments. “Both biology and chemistry, as fields, have widened a lot in recent years,” says Michelle Arkin, a chemical biologist who works with Hart as codirector of the Small Molecule Discovery Center at UCSF. “There’s a real enthusiasm in the pharma companies to take advantage of this.”

This sentiment is echoed by Carsten Schultz, a social scientist at Christian Albrechts University of Kiel whose research has investigated the effects of university-​industry collaborations on research and development performance. “Even the big pharmaceutical companies need to leave old fields of activity and engage in new fields like biotechnology and cell therapies,” he says. “Pharma needs to invest in these new technologies in the medium term, but they really need academics to get ahead on the knowledge.”

Who benefits?

An optimist would say these partnerships are a way for both sectors to bring their strengths to bear: academics get more funding, pharmaceutical companies get reduced risk and more expertise, and patients get more drugs. The skeptic would say that big pharma is offloading the risk burden onto academic researchers—and the public agencies that fund them—while enjoying the fruits of their labor when things do work out.

Scientists in lab coats stand infront of Computer showing docking results.
Credit: Courtesy of Magid Abou-Gharbia
Team members at the Moulder Center for Drug Discovery Research

“If you consider this from the societal part of things, the question is who takes the financial burden,” Schultz says. “Whether a university or researcher makes money depends on the system. In Germany we still have a very traditional academic system. Legally, whatever happens at the university belongs to the university.” That makes spinout companies a challenge to establish, although Schulz says there are efforts to improve this.

Advertisement

Even if a university administration is open to the idea of its scientists starting a business, each agreement for an academic working with a pharmaceutical company is unique. “The devil is in the details,” Arkin says. “It can be exploitative, but it can be mutually beneficial.” It’s important that scientists on both sides openly discuss what they want to get from the collaboration before any draft agreement is drawn up, she adds. “As soon as the contract writers become involved, it will be more adversarial, but if scientists on either side generally have a shared vision, that’s a good start.”

Not all agreements are created equal, and academic researchers can have various degrees of engagement. “We’ve done many collaborations where we’re so involved that we go to all [the company] team meetings, and we discuss everything with them,” Arkin says. “And then sometimes we just get paid for what we do as contractors and never really find out exactly what they do with our results. Sometimes they keep the drug target a secret from us. It just makes supplementary income for our research.”

There’s no right or wrong way to do it, but researchers should just think about what they want before signing, according to Arkin. “There’s cheap money and expensive money,” she says. “Don’t get involved in the expensive money that sees you doing things you don’t want to do or aren’t interested in.”

Why drug development has become so expensive

Drugs are getting more expensive for patients, insurers, and governments. Critics say that is down to a desire for bigger profits, but costs for pharma companies are also increasing.

A 2020 study comparing the revenues of 35 large pharmaceutical companies with those of 357 other large firms in the S&P Index showed that the former had an average profitability rate of 13.8% compared with just 7.7% for the latter.

But it’s also true that progressing a new drug from the initial stages of molecule discovery through packaging and product placement has never been more expensive. Studies estimate that the average research and development costs for a new drug range from $314 million to $2.8 billion, depending on factors that include target disease and failure rate, and whether the drug has an entirely new unique mode of action or not. Drug companies argue that these rising costs are cutting into their margins.

You can see evidence of that in the number of research site closures, says Magid Abou-Gharbia, founding director of Temple University’s Moulder Center for Drug Discovery Research. Staff layoffs accompany this trend. Bristol Myers Squibb expects to cut 2,200 jobs by year-end. Novartis laid off 29 employees in San Diego and expects to drop a further 100 jobs as it winds down its research site there. Takeda cut 440 workers from its staff in July, and the list goes on.

Recent years have also seen a flurry of corporate restructuring, which can mask the industry consolidation, Abou-Gharbia says. “When I started out there were 50-plus big pharma companies, but through mergers and acquisitions, it’s gone down to about 10. They call it synergy, but it’s really downsizing.”

There are many other interlinked factors behind increasing costs. Inflationary pressures are certainly one, as is cutting-edge science. Gene and cell therapies, for example, require expensive technology and equipment that pharmaceutical companies don’t necessarily have—so as science advances, so do the overhead costs.

Growing red tape is another contributor. “Regulatory agencies like the US Food and Drug Administration and [the European Medicines Agency] are asking for more and more paperwork and hurdles to get approval,” says Fernando Albericio, a research professor and organic chemist at the University of KwaZulu-Natal.

This bureaucratic burden means clinical trials take longer and cost more. In 2018, the Tufts Center for the Study of Drug Development investigated the amount of time drugs spend in clinical trials before an approval is granted. Between 2008 and 2013, the average was 83 months; that figure rose to 90 months between 2014 and 2018.

The good news for pharmaceutical companies is that data from a 2024 Deloitte analysis give reasons to believe the industry is turning a corner. The report measures the return on investment from the research efforts of 20 large biopharma companies. The return on investment last year was 4.1%, a significant bump from the all-time low of 1.2% the year before. The hope is that investments in new technologies such as artificial intelligence will start to yield results and sustain this recovery.

Article:

This article has been sent to the following recipient:

0 /1 FREE ARTICLES LEFT THIS MONTH Remaining
Chemistry matters. Join us to get the news you need.