Winning the superbug battle - what is it going to take? (Part 1)

14 November 2019


by David Leonard Strategy Consultant, Pharmaceutical and life sciences

Email +44 (0)7483 361737

by Dragos Mircea Strategy Consultant, Pharmaceutical and life sciences

Email +44 (0)7841 804195

18 – 24 November is World Antibiotic Awareness Week 2019 which aims to increase global awareness of antibiotic resistance and encourage best practices among the public, health workers and policy makers to avoid the further emergence and spread of antibiotic resistance. In this series we will share our views on the challenge ahead.

In 1942, before the launch of penicillin, the world of medicine and public health was in a place that now seems unimaginable. In the absence of antibiotics, simple wounds often resulted in infections leading to sepsis and subsequent death; diseases such as pneumonia, tuberculosis, diphtheria were the leading causes of death and suffering. Thankfully, antibiotics have become widely available since then, and the world has forgotten about this distant, “dark” era of deadly infections - at least until recently. 

More than half a century later, the threat and fear of incurable infections has resurfaced. Inappropriate use of antibiotics has led to a surge in “superbugs” - microbes that are now resistant to multiple antibiotics. In recent years, antimicrobial resistance (AMR) has even emerged against last line antibiotics such as colistin or carbapenems. These signs are deeply alarming: if left unchecked, rising AMR may bring us back to the pre-antibiotics era.

The UN estimated that AMR may become a leading cause by 2050, potentially causing 10 million deaths per year; WHO warned that it could force up to 24 million people into extreme poverty by 2030. We need a response, and we need to act before it’s too late.

Tackling AMR

AMR should be tackled from two different angles: decreasing the inappropriate use of antibiotics and increasing the availability of new antibiotics.

1. The use of antibiotics needs to be managed better

As healthcare communities around the world have become increasingly aware of this challenge, policy and guidelines have been updated to promote stewardship of antibiotics. This has also resulted in reserving new antibiotics for last line use, in order to preserve their efficacy; although effective and necessary in AMR control, these practices have lowered the commercial attractiveness of developing new antibiotics.

2. We need more new antibiotics

The number of new antibiotic discoveries has significantly declined over time, as illustrated below. This should not come as a surprise - intuitively, antibiotics do not make commercial sense, given their low prices, low use, yet significant R&D costs; anecdotally, the bankruptcy of companies within one year of launching a new antibiotic sends strong warning signals.

Figure 1: Number of new antibiotic approvals by the FDA over time.

Figure 1Source: OECD (2018), Stemming the Superbug Tide: Just A Few Dollars More, OECD Publishing, Paris. 

This issues presented thus far are known, and also explored in our prior publication on The State of the Nation report on UK R&D.

Encouraging the currently timid antibiotics R&D can be achieved through two mechanisms.

  • Push incentives refer to directly supporting antibiotic R&D, e.g. through research grants; they currently total ~$500mn annually (OECD), with initiatives such as the Fleming Fund, CARB-X and the Wellcome Trust being significant contributors. These are helpful, but not enough
  • Pull incentives are about creating a financially attractive market for antibiotics, drawing in prospective investors or drug manufacturers, just like other therapeutic areas. The idea that a market entry reward is needed to achieve this has gained strong traction. The UK is leading the way, having recently announced the “world’s first subscription style payment model” for antibiotics; this is truly innovative, and has powerful policy and budgetary implications for other healthcare systems

The focus of these blog posts is to discuss the introduction of a market entry reward as a solution for increasing investments in development of new antibiotics.

What is the size of the problem?

An effective market entry reward sends a strong signal to the market, convincing prospective, rational investors & drug manufacturers that antibiotics can be good business again. To estimate the size of this reward, we are answering the following four questions: Four questionsFirstly, as part of this blog post, we are assessing the size of the problem: antibiotics appear to be a poor investment choice, but how bad are they? Figure 2 below represents our visualisation of the following key financials, estimated by Towse A. et al, 2017, in an Office for Health Economics academic publication:

  • Total R&D costs of an antibiotic, including cost of failures
  • Forecasted global revenues, based on the number of patients infected with a relevant pathogen, resistant to alternative treatment, and the price of treatment
  • The costs of manufacturing the drug and running the business

Figure 2: Estimated financials for a new antibiotic launched globally.  Figure 2The analysis above provides clear, quantitative proof that the business of antibiotics is “broken”. The total, capitalised cost of launching an antibiotic adds up to $1.58B, below the $2.6B figure that is often cited when looking at the cost of launching an average drug. The post-launch profits are nowhere near enough to cover these large upfront costs of R&D, leading to a cumulative estimated NPV of negative $1.51B.

Therefore, investing in antibiotics is not just financially unattractive - it is expected to be loss making, and massively so. To bridge this huge gap and make antibiotics a viable investment before it’s too late, a large market entry reward is required from the global healthcare community.

For answers to the remaining questions - including “what’s the size of a market entry reward that fixes this issue?”, or “how much should the world, and specifically the UK pay?” - please stay tuned for part two.

by David Leonard Strategy Consultant, Pharmaceutical and life sciences

Email +44 (0)7483 361737

by Dragos Mircea Strategy Consultant, Pharmaceutical and life sciences

Email +44 (0)7841 804195