Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

AstraZeneca and Sanofi announced a first-of-its-kind deal Thursday night to share more than 200,000 chemical compounds in an effort to speed up drug development. This is encouraging for a highly competitive industry, averse to sharing a piece of gum without a royalty fee tied to breath freshness, let alone compound libraries that were once prized possessions. No money will change hands. Each firm can develop molecules in the other's library with no future obligation.

It's a good first step, and may even speed up drug development. Other competitors should follow suit, and hopefully think even bigger. 

Library Buddies

Both of these companies have taken a pretty serious beating from patent expirations, a possible motivator for the deal as they look to build their pipelines. AstraZeneca has lost exclusivity on Seroquel, Nexium and Crestor. Sanofi has lost $6.7 billion in sales due primarily to patent expiration since 2009, according to numbers compiled by Bloomberg Intelligence. And it expects generic pressure on Lantus, a blockbuster diabetes drugs, to drive sales down 4 percent to 8 percent through 2018. 

Drug companies spend a staggering amount of time replicating each other's work and that of academics, doing similar studies on similar molecules and chasing the same types of drugs. Part of that is herd instinct and risk aversion. But part of it is that they've been mostly unwilling to share even the earliest chemical information, long before it enters the competitive arena. The libraries in question here are just the very beginning point of the drug discovery process. Each firm has hundreds of thousands, often millions, of molecules in its library, the vast majority of which won't make the long journey to becoming drugs.

The first step is a high volume screening process to see which molecules actually have any kind of effect. But there's a great deal that needs to come after. A molecule needs massive modification to become more effective and human-friendly. That's the hard part, the real time sink of drug development.

So sharing this kind of library is not really giving up much of an advantage, if any -- particularly as more and more early research is being outsourced or acquired. The company that figures out the best drug candidate and strategy for developing it will end up winning, as always.

And still, these firms are only sharing portions of their libraries -- around a 10th in AstraZeneca's case, according to the Wall Street Journal. And a bigger screening library can only help so much; any big firm is likely to have one that's comprehensive and diverse enough already to find some good beginning points. 

A different kind of sharing could have a much greater impact. Data about validating (or knocking out) drug targets, on toxicology, or really anything that has led firms to give up on whole bunches of molecules would be far more valuable, and result in less wasted money and duplication of effort.

The potential impact of what Sanofi and AstraZeneca are doing is somewhat limited in other ways. For a long time, small molecules were behind the blockbusters central to the industry. But many of the most innovative medicines now are biologic in origin, meaning they're made using biologic rather than just chemical processes. That includes promising treatment areas such as cancer immunotherapy and gene therapy. 

Small Molecule, Big Sales
Source: Bloomberg

The best sellers will likely continue to be biologic, and molecule libraries are no help there. But biologics are vastly more expensive to manufacture, and small molecules still work better for certain purposes. They're not about to vanish from drug discovery. Gilead’s Sovaldi and Harvoni drugs for Hepatitis C are both small molecules, and they're enormous recent blockbusters. There are still piles of cash to be made from being first or best to market with a small-molecule drug. 

But without more data sharing, as-yet undiscovered treatments will languish in molecule libraries, while the firms that clutch onto them keep living in the last century.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net