R&D The biggest cost for pharmaceutical companies

What price would you retail a pill for if you spent about Bt250 billion a year researching and developing it? The Nation's Achara Pongvutitham addresses this question during her recent visit to Pfizer's active pharmaceutical ingredients manufacturing plant in Singapore.

Pharmaceutical companies like Pfizer invested nearly 6 billion (Bt250 billion) on research and development last year. The money was spent on the three main processes needed under the stringent controls related to the manufacturing of medicines: lab testing, pre-clinical testing and clinical trials.

Pfizer is one of the biggest spenders among pharmaceutical companies, researching and developing hard-to-treat diseases such as cancer. In fact, it became the top spender in the industry after it successfully acquired Wyeth last October.

On average, a pharmaceutical company spends between US$800 million to $1 billion (Bt25.7 billion to Bt32.2 billion) over eight to 16 years to research a single drug. However, this big budget does not ensure 100-per-cent success. In reality, there's a huge chance of failure, meaning big losses.

"Medical trials fail every day," Dr Amphorn Ittiravivongs, Pfizer's director for Thailand and Indochina, said, pointing out that pharmaceutical companies had no choice but to continue researching and developing drugs.

However, despite the huge amounts spent on research, medication cannot be priced like a luxury car.

A researcher at Pfizer explained that the first pill produced from research should cost as much as has been invested, but in reality pharmaceutical firms have to go for mass manufacturing to break even.

"Medicines are probably one of the most expensive products in the world to research and develop. With each new medicine costing, on average, the equivalent of about Bt30 billion and taking eight to 16 years before it can be approved by regulators and safely be sold commercially," said Anutra Sinchaipanich, director for Pfizer (Thailand)'s public affairs and communications department.

She explained how one of the key challenges facing the pharmaceutical industry was giving as many people as possible access to the most advanced medicines, while also pricing it in a way that allows the producer to recover the huge investment and generate a fair return.

"Our company is not about 'producing medicines'; it is about saving lives and improving the quality of life of people. We think about that first, and then we think about how to make those efforts sustainable so that future generations can also benefit from innovative medicines," she said.

Developed countries put a great deal of focus on public health, with nations like the United States allocating about 17 per cent of its total budget on the health industry.

Similarly, Pfizer spends about 10 to 15 per cent of its budget on research and development, which matches its vision and business strategy of focusing on quality.

The company recently invited the regional media to visit its state-of-the-art active pharmaceutical ingredients (API) plant in Singapore. The $540-million plant produces chemical substances that become key ingredients in the production of pills and capsules that are then shipped to Thailand and more than 100 other countries.

Pfizer (Thailand), the largest research-based biopharmaceutical company, focuses on quality as its top priority.

The company's production plant, located in Ayutthaya, produces capsule shells that are then sold to other medical manufacturers both in Thailand and Asian countries such as India and Indonesia.

Anutra said Pfizer (Thailand)'s core strategy was keeping its product quality very high, and it is this key point that keeps Pfizer medicines above par.

Pfizer will also be partnering with both public and private health service providers this year and next to ensure better treatment options for patients. It is also working on building its portfolio of products to cover cardiovascular, inflammation and pain management, infectious diseases, oncology and urology.

Pfizer (Thailand) is the leader in the country's pharmaceutical sector with an 8 per cent share of the market, which is worth Bt100 billion per year, according to Q1/2010 IMS data.

After acquiring Wyeth, Pfizer (Thailand) expanded to cover five new divisions, namely biopharmaceuticals, the production of capsule shells, consumer healthcare, nutrition and animal health products.

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