After dismantling its antibiotics team in 1999, Switzerland’s Roche Holding AG RO.EB -2.10% is recruiting a head of anti-infectives to rebuild its in-house expertise. Last year, Roche licensed an experimental new antibiotic from Polyphor Ltd., a biotechnology company, and is investing as much as $111 million in antibiotic-focused RQX Pharmaceuticals Inc.
GlaxoSmithKline GSK.LN -1.69% PLC of the U.K. recently said it will receive as much as $200 million in U.S. government funding for its antibiotic program.
Those companies join just a handful of major pharmaceutical competitors, including AstraZeneca AZN.LN -1.74% PLC and Novartis AG NOVN.VX -2.99% , that are now active in antibiotic discovery and development.
Pharmaceutical companies moved out of antibiotic development en masse in the past 15 years, citing high research costs, poor returns and onerous regulations. Consequently, the pipeline for new antibiotics dried up. In the 1980s, 30 new antibiotics gained approval in the U.S. Between 2010 and 2012, only one did.
Pfizer Inc., PFE -2.97% one of the pioneers of penicillin mass production, shut its antibiotic-research facility in 2011, along with Johnson & Johnson. JNJ -2.30% In 2002, Eli Lilly LLY -1.87% & Co. left the field to focus on chronic illnesses. Sanofi SA SAN.FR -4.19% shed its anti-infectives unit Novexel in 2004.
“We were not having success developing novel approaches for difficult-to-treat bacterial infections,” says Pfizer’s vice president of clinical research, Charles Knirsch. “After a great deal of consideration, we decided that enhancing our focus on infection prevention would represent a more prudent return on investment.”
Luckily for public health, the unfavorable economics are changing. Regulators in the U.S. and Europe recently have moved to clear roadblocks that have impeded antibiotic development, with the U.S. granting priority review for innovative new drugs.
Research funding is beginning to flow as well. The European Union funds antibiotic research projects with industry and universities. U.S. government funding is available to companies developing promising new molecules.
Alternative commercial models are being discussed that get around the problem of low sales volumes: selling new drugs in bulk to health-care providers for use when needed, or charging a fixed license fee for access to them.
There is an acute medical need for new antibiotics. Antibiotic-resistant infections now kill around 50,000 people a year in the U.S. and Europe, and that number is rising, according to the World Health Organization. In the U.S., two million people a year will contract a drug-resistant infection, with direct health-care costs of as much as $20 billion, according to the Centers for Disease Control and Prevention.
Overuse of antibiotics has built up bacterial resistance to them, making current drugs less effective. Their widespread use in animals farmed for meat introduces more antibiotics into the food chain, undercutting their efficacy.
With few new drugs to prescribe, and the old standbys frequently failing against drug-resistant strains, doctors are sometimes forced to reach for older, more-toxic drugs.
Finding new ones has become a huge scientific challenge. “Gram-negative” bacteria, including superbugs such as carbapenem-resistant enterobacteriaceae, are particularly hard to target. A kind of double cell wall makes it hard to get antibiotics into the organism, and if they make it inside, “pumps” inside the bacteria often push the drug out.
“The low-hanging fruit of antibiotics that were easy to discover has been picked,” says Brad Spellberg, infectious-disease expert at the Los Angeles Biomedical Research Institute.
Even if antibiotics make it to market, oncology drugs are on average three times as profitable, and musculoskeletal drugs produce more than 10 times the returns, according to estimates from a 2009 London School of Economics report.
For example, ceftaroline fosamil, an antibiotic approved in the U.S. in 2010, costs around $600 for a seven-day course. Contrast that to yervoy, a new drug to treat melanoma, that costs $120,000 for a 12-week course.
“Society values antibiotics wrongly,” says David Payne, head of antibacterial research at GlaxoSmithKline. “These are lifesaving drugs—they don’t just give patients a few extra months.”
John Rex, head of infection at AstraZeneca—which has one of the stronger current antibiotic pipelines—concedes that his unit isn’t as big an economic driver as areas such as oncology. “The math is clear,” he says. “It’s hard for the whole anti-infective industry.”
Unlike a drug to treat a chronic condition, antibiotics are usually taken for a week or two, limiting sales. The most commonly prescribed ones, including azithromycin and amoxicillin, are now available as low-cost generics.
Charging higher prices could help spur development. In a recent paper in Nature, Drs. Spellberg and Rex argue a hypothetical new drug to treat Acinetobacter baumannii, a cause of hospital-acquired infections, could offer value for health-care providers even if priced at as much as $30,000 a course.
U.S. health insurers Aetna and Cigna declined to comment on the hypothetical price, but the U.K.’s pricing-advisory body NICE already recommends the use of two cancer drugs that cost more relative to the additional lifespan they offer patients.
While most big drug makers continue to invest elsewhere, some smaller companies are stepping into the antibiotics breach. Small and medium-size companies are now responsible for 73% of antibiotics in development, according to BioPharma statistics.
Boston-based Cubist Pharmaceuticals CBST -1.21% was formed in 1992 and now has two approved antibiotics and a $5 billion market capitalization.
Another Boston startup, Enbiotix, is in discussions with multiple big drug makers interested in a deal, including those without active anti-infectives divisions, according to its chief executive, Jeff Wager.
“Antibiotics are never going to be huge blockbusters,” Mr. Wager says. “And yet the short answer is, we need these drugs. I don’t think big pharma can call themselves good corporate citizens without them.”