Antibiotic Persistence – Or Where Big Pharma Went Wrong

7 mins. to read
Antibiotic Persistence – Or Where Big Pharma Went Wrong

What is your favourite apocalypse? Global warming precipitating cataclysmic sea-level rise? Thermonuclear war caused by hackers violating the Pentagon? Fundamentalists with dirty bombs? A global pandemic of bird flu? President Donald? Brexit? Or: what about antibiotic resistance?

I’ve just listened to a BBC R4 programme[i] on the subject of the increasing immunity of super-bugs. According to the best medical minds, unless we can tackle this threat we are looking into the abyss. We’re already at 700,000 preventable deaths per year globally as a result of antibiotic resistance, and the recent O’Neill Report[ii] suggests that this will rise to 10 million people by 2050. That’s more people than die of cancer every year right now. Recently it was announced in the US that a patient was suffering from a form of e-coli which was entirely resistant to all available antibiotics.

The problem arises because antibiotics have been used too freely, not least in intensive agribusiness, and the bugs have been allowed to evolve faster than new medicines have become available.

I don’t want to worry you but antibiotic resistance is looming at precisely the time that all of the big pharmaceutical players are in retreat. What I mean by that is that they are scaling back investment in R&D around new blockbuster drugs in favour of what used to be called proprietary remedies. And the science and economics behind this has been little reported.

Back in February 2011, the US giant Pfizer (NYSE:PFE and LON:PFZ) announced the closure of its research facility in Sandwich, Kent – the very stable that created the blockbuster Viagra. In the event, total closure was averted. This was part of a change of strategy. The company wanted to trim $3 billion from its US$9 billion research budget and to expand into non-prescription medicines such as multivitamins. (Funny how our skinny forebears managed without multivitamins – or supplements of any kind, for that matter.)

At about the same time, GlaxoSmithKline (LON:GSK) announced a reduction in the proportion of sales reinvested in R&D from prescription medicines. It then closed its depression research unit in Harlow, Essex, with the loss of 380 jobs, after concluding there was insufficient prospect of producing a new blockbuster drug.

This is not just a UK phenomenon. Bayer (FRA:BAYN) and Merck (FRA:MRK) in Germany have cut R&D jobs while Novartis (VTX:NOVN) and Roche (VTX:ROG) in Switzerland have pursued “efficiency programmes” within their R&D departments.

Something significant has been happening just as the microbes get more resistant. In a nutshell, pharmaceutical R&D does not deliver the returns anymore. The white coats no longer pay.

All the great European and North American drugs companies, until recently, were massive laboratories with successful sales departments. And they were not bad at building brands, either. Just take a peek in your medicine cabinet. You might find some fantastically successful branded products which have delivered massive value-added for their originators. Like Lipitor (anti-cholesterol: Pfizer) one of the biggest-selling medications in the world. Or the non-prescription pain champion, Nurofen, owned by that great depository of consumer brands, Reckitt-Benckiser (LON:RB).

These products often have very long product life-cycles, even though patents last only about 15 years. Aspirin was first commercialized by Bayer in 1897 and is still selling. Bayer was forced to surrender its global patent for Aspirin under the Treaty of Versailles in 1919.

Fundamentally, there seems to be a long-term decline in the ratio of drug revenues to R&D outlay. This is partly because the prices of innovative drugs are under pressure globally as state-sponsored healthcare providers balk at paying top-dollar. Consider the stance of the UK’s National Institute for Medical Excellence (NICE) on treatments for, amongst other things, Alzheimer’s.

Another reason why returns on R&D are faltering is that the cost of clinical trials is becoming prohibitively expensive. The typical cost of bringing a new drug to market has soared from US$150 million to at least US$1 billion in the last 20 years. And for every successful drug brought to market there might be a dozen which are never commercialised. For this reason the O’Neil Report suggests that future governments might have to “support” pharmaceutical R&D to the tune of £18 billion over ten years. In other words Jim O’Neil (ex-Goldman Sachs, remember) is proposing that Big Government bails out Big Pharma for the good of all.

But actually, £18 billion is about one third of the cost of HS2 and about the same as the cost of three new aircraft carriers. If it were added to the annual spend on the NHS over ten years it would represent an increase in the UK health budget of about 1.5 percent.

Pharmaceutical companies have historically been reluctant to link up with universities where the raw science is best understood for fear that academic publications will put their competitive advantages in the public domain and thus favour their competitors. The UK Centre for Medical Research and Innovation (UKCMRI), now known as the Francis Crick Institute, due to open formally later this year, is part of an attempt to promote cross-fertilization between academia and the pharmaceutical industry. The Institute is planned to have 1,500 staff, including 1,250 scientists, and an annual budget of over £100 million making it the biggest centre for biomedical research and innovation in Europe.

In the golden era of drug discovery in the mid-20th century, wonder treatments like antibiotics and beta-blockers could be developed and commercialized relatively cheaply. But these were, in retrospect, the low-hanging fruit.

Antibiotics are manufactured out of microbes which until now have been found in soil. The race is now on to find new microbes elsewhere to make new drugs – this is known as bio-prospecting. They could be located in the deep sea – or even in ants’ nests. Professor Matt Hutchings[iii] has been researching how leaf-cutter ants have evolved their own antibiotics from fungus. They have been around a lot longer than we have, and they don’t seem to have encountered antibiotic resistance. By sequencing the genomes of these little creatures, microbiologists can identify which chemical combinations offer the best immunity to infection. Dr Adam Roberts, a senior microbiologist at University College London, is studying how bacteria which have already developed antibiotic resistance can be zapped by other bacteria which reside all around us. The big pharmaceutical companies have just stopped looking for them.

Antibiotics are not the only weapon in the war against microbial infections. A hundred years ago a type of virus was discovered that only attacks and destroys bacteria. They’re called bacteriophages, or phages for short. Phages inject their genetic material into bacteria which rapidly replicate themselves thus killing their bacterial hosts. Phage therapies were widely used in the Soviet Union and are still favoured in some former Soviet countries such as Georgia. Professor Martha Clokie of the University of Leicester thinks that phage therapy might usefully be employed in the UK. Hitherto, phages were considered an inferior treatment path to antibiotics, but that is now in question. A lot of work now needs to be done to determine in which cases phage therapy may be preferred. Bacteria can develop resistance to phages, but there are many types of phage which can be used in any number of combinations.

The market valuations of Big Pharma have languished in recent years. If public funds are to be spent on developing new strains of antibiotics and phages, one wonders who will make money out of the resulting new medicines. We seem to have encountered a massive case of market failure here: we cannot rely on the pharmaceutical industry to develop the medicines we desperately need. It is true that stem cell research and gene therapies promise extraordinary advances; but again – who will reap the rewards? That’s why I’m not bullish on Big Pharma stocks.

State-sponsored healthcare providers seeking better value for money have come to see that prevention is better than cure. This has put the focus back on immunology – once considered the poor relation in the pharmaceutical world. I’ll let you know about one player which in my view scores highest in immunology very soon.

[i] BBC Inside Science, with Adam Rutherford, first broadcast 09 June 2016.  The podcast can be downloaded at :

[ii] Review on Antimicrobial Resistance: Tackling a Global Health Crisis, by Jim O’Neil, published February 2015.  Available at:

[iii] Professor of Molecular Biology, University of East Anglia (Norwich).

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