GSK and diaDexus' Rx-Dx Partnership Model
Drug firms don't have a firm grasp of the development of biomarkers or their potential role in clinical decision-making. Nor have they, with few exceptions, looked to the diagnostics industry for help-they've been unwilling to outsource activities related to highly proprietary drug development projects. Moreover, traditionally, drug and diagnostic company alliances haven't fared well because both parties have different value expectations. Small diagnostic companies want biotech-like prices for their contributions; pharma marketers often see diagnostics as limiting to their sales efforts, and certainly something that can take attention away, in a 30-second detail call, from the main event-the higher-priced drug. But an eight-year-old alliance between British drug maker GlaxoSmithKline PLC (GSK) and diaDexus Inc. seems to address these barriers with some novel approaches now starting to bear fruit.
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Biomarker diagnostics are the linchpin of personalized medicine. But building a successful business around such tests is anything but straightforward, given the complexities associated with both their development and commercialization. Today's molecular diagnostic companies need to think carefully before they choose a "go it alone" strategy when developing a particular test. It may make more sense to forge a partnership with another diagnostic company or a drug developer with the goal of sharing costs and relative risks.
A small number of start-ups are developing novel specilalty-focused diagnostics that capture drug-like revenues and margins without taking drug-like development and regulatory risks. Questions about the business model abound, since most companies need multiple tests to reach profitability and a changing regulatory climate may force these companies to seek FDA approval for their tests, dramatically increasing development risk and cost.