The US Biotechnology Industry
A Market Report
May 2015
Bureau AWEX – New York
Edith Mayeux, Attaché économique et commercial
Patrizia Venditti, Assistante commerciale
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Contents
I. THE US BIOTECH LANDSCAPE...........................................................................................................3
II. RESEARCH & DEVELOPMENT..........................................................................................................4
DRUG DEVELOPMENT AND APPROVAL PROCESS.............................................................................4
R&D SPENDING.................................................................................................................................5
TOP BIOPHARMA COMPANIES BY R&D INVESTMENT......................................................................6
BIOLOGIC MEDICINES IN DEVELOPMENT.........................................................................................8
III. THE BIOLOGIC MEDICINES MARKET…………………...........................................................................8
2014 NEW DRUG APPROVALS..........................................................................................................9
10 BEST-SELLING BIOLOGICS FOR 2014..........................................................................................13
THE OUTLOOK FOR BIOLOGIC DRUGS............................................................................................15
IV. THE US IN-VITRO DIAGNOSTIC TESTS MARKET............................................................................16
V. CURRENT TRENDS........................................................................................................................17
MERGERS & ACQUISITIONS.........................................................................................................17
NOTABLE ACADEMIC-PHARMA ALLIANCES FOR 2014................................................................18
VENTURE CAPITAL......................................................................................................................22
BIOSIMILARS FINALLY REACH THE US MARKET..........................................................................25
REGULATORY IMPACTS……………………………................................................................................26
FDA SPEEDS UP THE REVIEW AND APPROVAL PROCESS FOR NEW DRUGS...............................28
VI. FDA REGULATIONS....................................................................................................................29
BIOLOGICAL PRODUCTS.............................................................................................................30
IN-VITRO DIAGNOSTIC PRODUCTS REGULATION.......................................................................38
3
I.
The US Biotech Landscape
The US biotech industry remains the benchmark in international terms. It is considered to be the most
successful in the world and it is likely to maintain this leading position for the foreseeable future.
Today, there are fewer small public biotech companies. At the start of 2008, there were almost 400 active
companies. As of the end of 2013, the number of publicly traded biotech companies is down to 339. The
net decrease in the number of active companies since 2008 is about 15%.
According to the 2014 Biotechnology Industry Report released by Ernst & Young, revenues of US
publicly traded biotech companies grew 13% in 2013, the best showing since the start of the global
financial crisis and a marked improvement over the 8% growth in 2012. Driven by strong product
launches and sales growth, three stalwarts – Amgen, Biogen Idec and Gilead Sciences - delivered the
biggest increases in revenues of more than US$1.4 billion each.
US biotechnology at a glance, 2012-13 (US$b)
2013
2012
% change
71.9
23.3
2.6
633.0
109,530
63.7
19.4
4.4
361.3
99,910
13%
20%
-42%
75%
10%
19.7
41
5.6
18.9
12
4.8
4%
242%
17%
339
2,010
2,349
316
2,061
2,377
7%
-2%
-1%
Public company data
Revenues
R&D expense
Net Income
Market capitalization
Number of employees
Financing
Capital raised by public companies
Number of IPOs
Capital raised by private companies
Number of companies
Public companies
Private companies
Public and private companies
Source: http://www.ey.com
Numbers may appear inconsistent because of rounding
4
Top 10 Biotech Co’s in the United States (as of January 9, 2015)
Rank
1
2
3
4
5
6
7
8
9
10
Company
Gilead Sciences
Amgen
Celgene
Biogen Idec Inc.
Regeneron Pharmaceuticals Inc.
Alexion Pharmaceuticals Inc.
Vertex Pharmaceuticals Inc.
Illumina, Inc.
BioMarin Pharmaceutical Inc.
Agilent Technologies Inc.
Market Value
$154.3 billion
$119.9 billion
$91.9 billion
$82.7 billion
$40.2 billion
$36.4 billion
$29.8 billion
$27.9 billion
$13.9 billion
$13.7 billion
Source: http://www.forbes.com
II. Research & Development
Drug Development and Approval Process
The biopharmaceutical development process is research-intensive in nature, requires significant
investments of time and money, and has uncertain outcomes. It begins with the identification
and investigation of disease targets and often includes the screening of thousands of compounds.
Promising drug candidates then undergo substantial preclinical and clinical testing prior to
regulatory review by the FDA. The chart below highlights the US drug development and
approval process, illustrating the activities that occur during the estimated 10 to 15 years needed
for a new drug to reach the market.
Once a new compound has been identified in the laboratory, medicines are developed as follows:
● Preclinical Testing - A pharmaceutical company conducts laboratory and animal studies to
show biological activity of the compound against the targeted disease, and the compound is
evaluated for safety.
● Investigational New Drug Application (IND) - After completing preclinical testing, a
company files an IND with the U.S. Food and Drug Administration (FDA) to begin to test the
drug in people. The IND becomes effective if FDA does not disapprove it within 30 days.
The IND shows results of previous experiments; how, where and by whom the new studies will
be conducted; the chemical structure of the compound; how it is thought to work in the body;
any toxic effects found in the animal studies; and how the compound is manufactured. All
clinical trials must be reviewed and approved by the Institutional Review Board (IRB) where the
trials will be conducted. Progress reports on clinical trials must be submitted at least annually to
FDA and the IRB.
5
US Drug Development and Approval Process
Source: http://www.innovation.org

Clinical Trials, Phase I - These tests involve about 20 to 100 normal, healthy volunteers.
The tests study a drug’s safety profile, including the safe dosage range. The studies also
determine how a drug is absorbed, distributed, metabolized, and excreted as well as the
duration of its action.

Clinical Trials, Phase II - In this phase, controlled trials of approximately 100 to 500
volunteer patients (people with the disease) assess a drug’s effectiveness.

Clinical Trials, Phase III - This phase usually involves 1,000 to 5,000 patients in clinics and
hospitals. Physicians monitor patients closely to confirm efficacy and identify adverse
events.

New Drug Application (NDA)/Biologic License Application (BLA) - Following the
completion of all three phases of clinical trials, a company analyzes all of the data and files
an NDA or BLA with FDA if the data successfully demonstrate both safety and
effectiveness. The applications contain all of the scientific information that the company has
gathered. Applications typically run 100,000 pages or more. The average review time for
the 26 new therapeutics approved by the FDA in 2007 was 11.1 months.

Approval - Once FDA approves an NDA or BLA, the new medicine becomes available for
physicians to prescribe. A company must continue to submit periodic reports to FDA,
including any cases of adverse reactions and appropriate quality-control records. For some
medicines, FDA requires additional trials (Phase IV) to evaluate long-term effects.
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R&D Spending
Sustained investments in R&D are the key to biotechnology innovation. The United States used
to spend more on R&D than the entire world combined, and it still invests more than any other
country. That investment surely fueled the emergence and ongoing dominance of the US
biotechnology sector.
Pharmaceutical Research and Manufacturers of America's (PhRMA) member companies
invested an estimated $51.2 billion in biopharmaceutical research and development (R&D) in
2014, accounting for the majority of private biopharmaceutical R&D spending.
Figure 3: PhRMA Member Company R&D Investment
Top Biopharma Companies by R&D Investment
According to the GeneticEngineering & Biotechnology News, more companies (12) actually
increased their R&D spending in 2013 than decreased it (8), if the latest GEN List is any
indication.
Reasons for the fluctuations vary. Inevitably, companies that ramped up their R&D spending the
most cited the need to support later-stage clinical programs, while biopharmas that reduced R&D
spending often—but not always—did so as part of companywide restructurings designed to cut
costs and enhance efficiency.
7
Most but not all heritage “big pharma” companies reduced R&D, while biotechs continued to
increase their R&D spending, yet remaining below the levels of the pharma giants.
Top 20 Biopharma Research & Development Spenders in 2013
Rank
Company
2012
U.S. Billion
2013
U.S. Billion
Percentage
Change
1
Roche
9.654
9.910
2.7%
2
Novartis
9.332
9.852
5.6%
3
Johnson & Johnson
7.665
8.183
6.8%
4
Merck & Co.
8.168
7.503
-8.1%
5
Pfizer
7.482
6.678
-10.7%
6
Sanofi
6.818
6.608
-3.1%
7
GlaxoSmithkline
6.611
6.518
-1.4%
8
Eli Lilly
5.278
5.531
4.8%
9
Astra Zeneca
5.243
4.821
13.7%
12
Takeda Pharmaceutical
2.737
3.148
15%
13
AbbVie
2.778
2.855
2.8%
14
Bayer
2.162
2.291
6.0%
15
Celgene
1.724
2.226
29.1%
16
Novo Nordisk
2.023
2.178
7.7%
17
Gilead Sciences
1.760
2.120
20.5%
18
Daiichi Sankyo
1.796
1.777
-1.1%
19
Astellas Pharma
1.846
1.771
-4.1%
20
Merck KGaA
1.644
1.638
-0.3%
Source: http://www.genengnews.com
8
Biologic Medicines in Development
According to a new report issued by the Pharmaceutical Research and Manufacturers of America
(PhRMA), there are currently about 7,000 medicines in development around the world, many of which
offer the potential to provide new treatments or even cures for diseases or conditions for which there are
currently few or no treatment options (see Table below).
Selected Diseases
Medicines in
Development*
Cancers
Cardiovascular disorders
Diabetes
HIV/AIDS
Immunological disorders
Infectious diseases
Mental health disorders
Neurological disorders
1,813
599
475
159
1,120
1,256
511
1,329
*Defined as single products which are counted exactly once regardless of the number of indications pursued
Source: http://www.phrma.org
III. The Biologic Medicines Market
Biologics have a large presence in the global healthcare landscape today. In the U.S., these
products continue to capture a greater portion of the total health-related spending, with biologics
now representing four to five percent of the total commercial healthcare spending. The average
cost of a biologic is estimated at about 40 times that of traditional small molecule drugs. In
parallel, sales have continued to rise as more biologics become available around the world,
particularly in the U.S., Japan, and much of Western Europe. The biologic medicines market is
expected to grow to $190-200 billion by 2015, and their overall market share is expected to
double by 2020. When comparing the top therapeutic categories responsible for increases in
global healthcare spending, seven of the top areas are primarily treated with specialty medicines,
as they offer novel mechanisms and improved efficacy to treat patients with serious cancers or
genetic diseases. With an increasing focus on cost containment, markets are considering a range
of pricing strategies to help manage the steep trajectory of spending on this segment of the
healthcare market.
U.S. spending on specialty prescription drugs – those used to treat chronic, complex diseases
such as cancer, multiple sclerosis and rheumatoid arthritis – is projected to increase 67% by the
end of 2015, according to a forecast released by Express Scripts.
Prescription drug spending on 8 of the top 10 specialty therapy classes will continue to increase
over the next 3 years. This is due to both the robust pipeline of new biologics and physicians
delaying treatment of patients until the new drugs are on the market. By the end of 2015, Express
Scripts expects that cancer, multiple sclerosis and inflammatory conditions such as rheumatoid
arthritis – all specialty conditions – each will command higher drug spending than any other
therapy class except diabetes.
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Hepatitis C drug spending likely
will quadruple over the next three
years, the largest percentage
increase by far among therapy
classes. By the end of 2015,
spending on medications for
Hepatitis C will exceed that of
much more common conditions,
including high blood pressure. This
increase will be caused by new
interferon-free medications that
gained FDA-approval in 2014 (e.g.
Harvoni by Gilead Sciences), as
well as an increase in diagnoses
related to new screening guidelines.
Source: http://lab.express-scripts.com
2014 New Drug Approvals
In 2014, the FDA’s Center of Drug Evaluation and Research (CDER) approved 41 novel new medicines,
called new molecular entities or NMEs. The number of approvals in 2014 was up from 2013 with 27
approvals and up from 2012 with 39 approvals. In fact, in looking at approvals over the past ten years,
2014 had the most approvals overall.
Novel approvals since 1993
This figure shows the new molecular entities (NMEs) and biologics license applications (BLAs) approved by the
Center for Drug Evaluation and Research (CDER) since 1993. Approvals by the Center for Biologics Evaluation and
Research (CBER) are not included in this drug count. Data are from Drugs@FDA and the US Food and Drug
Administration (FDA).
Source: www.nature.com
10
Some of the highlights from the FDA’s report entitled “Novel New Drugs 2014 Summary” include:

17 of the 41 NMEs were considered “first in class” which means that they utilize a novel or
unique mechanism of action over existing therapies.

17 of the 41 NMEs were approved to treat orphan diseases. Orphan diseases are considered rare
diseases that affect 200,000 or fewer Americans. This is more approvals for orphan drugs than in
any previous year.

27 of the 41 NMEs were designated in one or more expedited pathway categories – Fast Track,
Breakthrough, Priority Review, and Accelerated Approval.

Fast Track designation is identified by FDA as drugs with the potential to address unmet
medical needs. Fast Track speeds up new drug development and review, for instance, by
increasing the level of communication FDA allocates to developers and by enabling
developers to use a “rolling review” process such that CDER can review portions of an
application ahead of the submission of the full application. (15 NMEs had this
designation)

Breakthrough designation is identified by FDA as drugs with preliminary clinical
evidence that shows the potential of substantial improvement over at least one clinically
significant endpoint compared with current therapy. A breakthrough therapy designation
conveys all of the fast track program features as well as more intensive FDA guidance on
an efficient drug development program. (9 NMEs had this designation)

Priority Review is determined by FDA that the drug has the potential to provide a
significant advance on medical care. With priority review, FDA sets a target to review
the drug within six months instead of the standard that is 10 months. (25 NMEs had this
designation)

Accelerated Approval allows early approval of a drug for a serious or life-threatening
illness that offers benefits over current treatments. This approval is based on a “surrogate
endpoint” (e.g., a laboratory measure) or other clinical measure that FDA considers
reasonable likely to predict clinical benefit. After this approval, the drug must undergo
additional testing to confirm that benefit; this speeds the availability of the drug. (8
NMEs had this designation)

32 of the 41 were approved on the first cycle, which means that they were approved without the
need for additional information that would delay approval.

26 of the 41 were approved first in the United States before any other country.
For the year 2014, FDA’s CDER approved 11 biotech drugs or biologics. This number was up from
2013 where there were just 2 approved. In addition, 9 of the 11 approved biologics participated in at least
one expedited pathway designation. Five of the eight biologics identified their expression system as CHO
Cells. Please see the table below for more details.
11
Biologics approved by FDA (CDER) in 2014, in order of approval date
Drug
Name
Active
Ingredients
FDA
Expedited
Pathway
Expression System
Company
Indications
Indicated as a treatment
for patients with
Mucopolysaccharidosis
type IVA (MPS IVA;
Morquio A syndrome)
Indicated as an adjunct to
diet as replacement
therapy to treat the
complications of leptin
deficiency in patients with
congenital or acquired
generalized lipodystrophy.
Indicated as an adjunct to
diet and exercise to
improve glycemic control
in adults with type 2
diabetes mellitus.
For treatment in advanced
stomach cancer or
gastroesophageal junction
carcinoma.
For the treatment of
patients with multicentric
Castleman’s disease
(MCD) who are human
immunodeficiency virus
(HIV) negative and
human herpesvirus-8
(HHV-8) negative.
For the treatment of adults
with moderate to severe
ulcerative colitis and
adults with moderate to
severe Crohn’s disease.
For the treatment of
patients with relapsing
forms of multiple
sclerosis.
Vimizim
Elosulfase alfa
Fast Track, Priority
Review
Purified elosulfase alfa
produced by recombinant
DNA technology in a Chinese
hamster ovary cell line.
Biomarin
Pharmaceutical Inc.
Myalept
Metreleptin for
injection
Fast Track, Priority
Review
Aegerion
Pharmaceuticals
Tanzeum
albiglutide
n/a
Metreleptin (recombinant
methionyl human leptin) is
produced in E. Coli and
differs from native human
leptin by the addition of a
methionine residue at its
amino terminus.
TANZEUM is produced by a
strain of Saccharomyces
cerevisiae modified to express
the therapeutic protein.
Cyramza
ramucirumab
Fast Track, Priority
Review
CYRAMZA is produced in
genetically engineered
mammalian NSO cells.
Eli Lilly and
Company
Sylvant
siltuximab
Priority Review
SYLVANT (siltuximab) is a
human-mouse chimeric
monoclonal antibody
produced by Chinese hamster
ovary cells.
Janssen Biotech
Entyvio
vedolizumab
Fast Track, Priority
Review
Takeda
Pharmaceuticals
Plegridy
Peginterferon
beta-1a
Keytruda
pembrolizumab
Trulicity
dulaglutide
Breakthrough,
Priority Review,
Accelerated
Approval
n/a
ENTYVIO (vedolizumab) is
a humanized lgG1
monoclonal antibody
produced in Chinese hamster
ovary cells.
The interferon beta-1a portion
of PLEGRIDY is produced as
a glycosylated protein using
genetically-engineered
Chinese hamster ovary cells
into which the human
interferon beta gene has been
introduced.
Not listed
Not listed
Eli Lilly and
Company
Blincyto
blinatumomab
Breakthrough,
BLINCYTO is produced in
Amgen, Inc.
GlaxoSmithKlein
Biogen Idec
Merck & Co., Inc.
For treatment of advanced
or unresectable melanoma
no longer responding to
other drugs.
Indicated as an adjunct to
diet and exercise to
improve glycemic control
in adults with type 2
diabetes mellitus.
Indicated for the treatment
12
Opdivo
nivolumab
Priority Review,
Accelerated
Approval
Chinese hamster ovary cells.
Fast Track,
Breakthrough,
Priority Review,
Accelerated
Approval
Not listed
of Philadelphia
chromosome-negative
relapsed or refractory Bcell precursor acute
lymphoblastic leukemia
(ALL).
Bristol-Myers
Squibb
Indicated for the treatment
of patients with
unresectabe or metastatic
melanoma and disease
progression following
ipilimumab and, if BRAF
V600 mutation positive, a
BRAF inhibitor.
Overall, the class of 2014 spanned 10 therapeutic areas. Infectious diseases and oncology dominated with
22% of approvals respectively. Metabolism and endocrinology came a distant third with 12% of
approvals followed closely by neurology at 10%.
Approvals by therapeutic area
Source: www.nature.com
13
10 Best-Selling Biologics for 2014
In February 2015 Genetic Engineering News published an article titled “The Top 25 Best-Selling Drugs
of 2014,” where they listed the best selling drugs for 2014. Ten biologics were on the list and seven of the
top eight best selling drugs were biologics. See the Table below for the top 10.
Other highlights for biologics included:

Humira finished first again in 2014 as the best selling drug for the year.

The biggest sales increases were for Humira (AbbVie) with an increase in sales of 17.7%
and Lantus (Sanofi) up 11% from 2013.

Biologics to treat Rheumatoid Arthritis represented 3 of the top 8 biologics – Humira,
Remicade, and Enbrel.

Biologics to treat cancer also represented 3 of the top 8 – Rituxin, Herceptin, and Avastin
in fifth.
Top 10 Best Selling Biologics of 2014
Rank
Biologic
Expression
System
Company
4014
Sales
Approved Indication
1
Humira (adalimumab)
CHO
AbbVie
12.543
billion
Moderate to severe
rheumatoid arthritis,
moderate to severe chronic
plaque psoriasis, moderate to
severe Crohn’s disease;
moderate to severe ulcerative
colitis, ankylosing
spondylitis, psoriatic arthritis,
moderate to severe
polyarticular juventile
idiopathic arthritis
2
Remicade (infliximab)
Murine
Myeloma
Johnson & Johnson and
Merck & Co.
9.240
billion
Moderately to severely active
rheumatoid arthritis in adults,
in combination with
methotrexate; Crohn’s
Disease in children 6 years
and older, and adults who
have not responded well to
other medicines; rheumatoid
arthritis; ankylosing
spondylitis; sporiatic
arthritis; chronic, severe,
extensive, and/or disabling
plaque psoriasis in adults;
moderately to severely active
ulcerative colitis in children 6
years and older and adults
that have not responded well
to other medicines
14
3
Rituxan (rituximab,
MabThera) includes sales
of next generation version
of Rituxan-Gazyva
CHO
Roche and Biogen Idec
8.678
billion
Non-Hodgkin’s lymphoma,
chronic lymphocytic
leukemia, and rheumatoid
arthritis
4
Enbrel (etanercept)
CHO
Amgen and Pfizer
8.538
billion
Moderate to severe plaque
psoriasis, psoriatic arthritis,
and moderate to severe
rheumatoid arthritis
5
Lantus (insulin glargine)
E.coli
Sanofi
7.279
billion
Once daily treatment for
diabetes
6
Avastin (bevacizumab)
CHO
Roche
6.957
billion
Metastatic colorectal cancer
(colon cancer), non-small cell
lung cancer, glioblastoma &
metastatic kidney
7
Herceptin (transtuzumab)
CHO
Roche
6.793
billion
HER2-positive breast cancer
and HER2-positive
metastatic gastric cancer
8
Neulasta/Neupogen
(pegfilgrastim)
E.coli
Amgen and Kyowa
Hakko Kirin
5.857
billion
Neutropenia caused by
cancer chemotherapy
9
Prevnar 13/Prevenar 13
and Prevnar/Prevnar (7valent)
Pfizer
4.464
billion
Prevention of diseases caused
by Streptococcus pneumonia
serotypes 1, 3, 4, 5, 6A, 6B,
7F, 9V, 14, 18C, 19A, 19F,
and 23F in children ages six
weeks through five years,
prevention of pneumococcal
pneumonia and invasive
disease caused by the 13
vaccine strains in adults ages
50 and older
10
Avonex (interferon beta1a)
Biogen Idec
3.013.1
billion
Relapsing forms of MS, to
slow accumulation of
physical disability and
decrease frequency of clinical
exacerbations
Source: www.genengnews.com
CHO
15
The Outlook for Biologic Drugs
With many best-selling products recently losing market exclusivity and advances in biotechnology
undercutting the entire concept of a drug, pharma is being pushed to fill product pipelines faster than
individual R&D departments can develop new compounds or transform them for commercialization. For
example, a drug used to be conceived as a small molecule, chemically-manufactured product. These
pharmaceuticals were made more effective during the late 20th century, and now the current market for
their development is concentrated in finding novel doses, administrations or uses for existing drugs.
Today, large molecule biologics are the real center of drug innovation, and medical devices are even
competing with traditional drug therapies. In 2015 a fresh wave of biologics is expected to be approved
for use by general practitioners (see the Table below).
Several of these will treat the millions of people who find that statins, the conventional treatment for high
cholesterol, do not work well enough. Amgen’s drug, evolocumab, may be first, followed by alirocumab,
from Sanofi and Regeneron. Pfizer also has a contender, bococizumab, at an advanced stage of
development.
16
Damien Conover of Morningstar, an investment-research firm, reckons that biologics provided 22% of
the big pharma companies’ sales in 2013, and he thinks this will rise to 32% by 2023. They will provide
an even bigger share of revenues at those firms which have concentrated on them, such as Bristol-Myers
Squibb, Merck, Eli Lilly and Sanofi. In America more than 900 biologics are in development, for more
than 100 diseases.
Over the next five years, a further generation of biologic drugs will start to deliver cures by using viruses
to deliver “gene therapy” – the replacement of a faulty gene in a patient’s body cells with the correct
version. Pfizer has a new partnership with a biotech company, Spark Therapeutics, to give haemophiliacs
the correct gene to produce blood-clotting factor. Scientists have already reported that ten patients with
severe haemophilia B have remained cured for a number of years. Milo Biotechnology, another genetherapy company, is developing treatments for muscle-wasting diseases such as muscular dystrophy. Len
Schleifer, the boss of Regeneron, which has several biologics close to approval, says the big advantage of
such drugs is their specificity: they do only what they are supposed to do, rarely causing the sort of sideeffects that are frequently discovered in conventional, small molecule drugs, and lead to them being
abandoned.
IV. The US In-Vitro Diagnostic Tests Market
According to Millennium Research Group (MRG), the global authority on medical technology
market intelligence, the introduction of the Patient Protection and Affordable Care Act (PPACA)
in 2014 will significantly affect the United States in vitro diagnostics (IVD) market landscape
which is expected to grow nearly $8.6 billion by 2017 in the United States. Most notably, the
implementation of this Act will increase the percentage of people covered by insurance, which
will drive test volumes, especially as the US population ages and the demand for IVD increases.
The PPACA will also lead to increased centralization of IVD testing as more laboratories,
hospitals and care facilities consolidate in the wake of health care reform. Although the rise of
centralized labs will leave manufacturers with fewer potential sites for capital sales, these
facilities will see high testing volumes and ultimately have the resources to purchase a broader
array of diagnostic tests.
High testing volumes at centralized sites will mean that these labs will look for vendors that can
offer a broad range of instrumentation and automation equipment.
"As the trend of centralization continues, these high-throughput laboratories will look to
purchase from large, cross-segment vendors that can equip them with a full array of
instrumentation," said MRG Analyst Mickel Phung. "The labs will prefer to purchase all of their
equipment from one vendor to improve workflow logistics and reduce costs."
As a result, the majority of market share is held by a few key multi-segment players, including
Siemens Healthcare, Roche and Abbott Laboratories. Large multinational companies will likely
continue to dominate the market through 2017—especially those players with a finger in
molecular diagnostics technologies. This market segment will grow rapidly through 2017,
cannibalizing sales from more mature segments such as immunoassay and microbiology testing.
17
V.
Current Trends
Mergers & Acquisitions
According to EY Firepower Index and Growth Gap Report 2015, the year 2014 was a record
year for biopharma M&A with total deals exceeding US$200 billion, well over twice the average
annual deal volume seen in the last decade, as companies used deal making to satisfy the
strategic imperatives of increasing focus, scale and/or growth.
Value of biotech deals more than doubled in 2014
Sources: Datamonitor, S&P Capital IQ, IMS Research, Ernst & Young
Big Pharmas, largely absent
over the past few years,
played a bigger role in
2014’s pyrotechnics,
spending nearly US$90
billion on M&A to close –
or attempt to close –
“growth gaps”. However,
the lion’s share of big
pharma deals that
transpired were primarily
sales and purchases of
operating divisions. As big
pharmas continue to create
more focused businesses,
there is ample opportunity
for additional selling and
buying of assets.
Tax inversion also played a big role for the year’s high M&A record, which saw pharma
companies snapping up their tax-advantaged counterparts overseas to lower their rates. The U.S.
Treasury eventually rolled out new, stricter tax rules to discourage the practice, but not before
Mylan got its hands on a Netherlands-based piece of Abbott's generics business.
While big pharmas focused on rationalizing their portfolios primarily via intra-pharma
transactions, specialty pharmas delivered the biggest deal headlines of the year as they sought to
gain the scale necessary to be competitive in a challenging global pricing environment.
Actavis' acquisition of Allergan for $66 billion and Forest Laboratories for about $25 billion
topped FiercePharma’s ranking of merger and acquisition deals in 2014 based on value in U.S.
dollars. Novartis' acquisition of GlaxoSmithKline's oncology unit for as much as $16 billion
came in third (see the Table on the next page).
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Pharma’s Top 10 M&A Deals of 2014
Rank
1
2
3
4
5
6
7
8
9
10
Company
Actavis/Allergan
Actavis/Forest Laboratories
Novartis/GSK’s Oncology
GSK/Novartis Vaccines (excluding flu)
Bayer/Merck Consumer Health
Merck/Cubist Pharmaceuticals
Roche/InterMune
Mylan/Abbott Laboratories’ generic business
Mallinckrodt/Questcor Pharmaceuticals
Lilly/Novartis Animal Health
Sun Pharmaceuticals/Ranbaxy Laboratories
Deal Value
66 billion
25 billion
16 billion
7.05 billion
14.2 billion
9.5 billion
8.6 billion
5.7 billion
5.6 billion
5.4 billion
4 billion
Source: http://www.fiercepharma.com
Notable Academic-Pharma Alliances of 2014
In an era of cutbacks in basic research by Big Pharma, companies are increasingly relying on
academic and nonprofit collaborations for basic science and drug discovery research as output
and productivity in the industry are declining.
Meanwhile, for academic researchers, these alliances are becoming just as crucial at a time when
funding from the U.S. National Institutes of Health--the world's biggest backer of biomedical
research--remains tight. It's a symbiotic relationship that we'll likely continue to see for the
foreseeable future as Big Pharma's pipeline dries up and federal R&D spending remains static.
During the first half of 2014, there were some notable academic-pharma alliances. See the list
below.
1. Peking University and Bayer Healthcare
Partner: Peking University
Company: Bayer Healthcare
Date: Jan. 8, 2014
Recognizing China's valuable place as a growing consumer of
pharmaceutical products, Bayer Healthcare and Peking University in
Beijing formed a three-year partnership earlier this year to create a
joint research center at the school called the Bayer HealthCare/Peking
University Center of Translational Research for Drug Discovery. The
center will focus on drug discovery in the areas of cardiology,
oncology, hematology and gynecological therapy.
As part of the agreement, Bayer will provide funding for collaborative
research projects and sponsor a Bayer Professorship and Bayer
Investigator Awards to promote general research in the life sciences
as well as work related to drug discovery in Bayer's core therapeutic
areas.
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Bayer has had its eye on drug discovery in China for years now. In
2009, it opened an innovation center as part of its R&D Center China
to boost R&D activities there. More
2. Duke Clinical Research Institute and Boehringer Ingelheim
Partner: Duke Clinical Research Institute
Company: Boehringer Ingelheim Pharmaceuticals
Date: Jan. 30, 2014
In anticipation of submitting its idiopathic pulmonary fibrosis (IPF) drug
nintedanib for regulatory review in the U.S. and Europe, Boehringer
Ingelheim teamed up with the Duke Clinical Research Institute, an
academic affiliate of the Duke University School of Medicine, to
better understand the progression of the disease.
IPF is a progressive and fatal lung disease that has no known cause,
but certain environmental factors like cigarette smoking seem to
increase the risk of getting the disease.
As part of the partnership, Boehringer and Duke Clinical Research
Institute will launch an IPF registry in the U.S., dubbed the Idiopathic
Pulmonary Fibrosis Prospective Outcomes Registry, a long-term study
that will collect and analyze data from a large group of patients. The
collaboration will also establish a biomarker bank to identify potential
blood or genetic markers of the disease--an effort that could eventually
help identify at-risk populations. More
3. UCSF and MedImmune
Partner: University of California, San Francisco
Company: MedImmune
Date: Feb. 12, 2014
As a leading biomedical institute, the University of California, San
Francisco, is an attractive partner for Big Pharma. Last year, Pfizer
struck a deal with UCSF, and this year AstraZeneca's MedImmune
followed suit.
Under a three-year agreement, MedImmune will work with UCSF's
Clinical and Translational Science Institute to support the university's
Catalyst Awards program, which is designed to help UCSF scientists
move their research out of the lab and into product development.
Specifically, MedImmune is seeking promising research proposals in
the therapeutic areas of cardiovascular and metabolic disease,
oncology, respiratory, inflammation and autoimmunity, neuroscience
and infectious diseases. AstraZeneca said the collaboration will build
on its existing small-molecule portfolios. More
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4. Shenzhen University and AstraZeneca
Partner: Shenzhen University
Company: AstraZeneca
Date: March 31, 2014
Zeroing in on a more specific health problem, AstraZeneca also joined
forces with Shenzhen University in Shanghai for a preclinical research
collaboration focused on chronic kidney disease--a large and growing
unmet medical need in China.
The partnership builds on AstraZeneca's existing relationship with
Fibrogen, which began in July 2013, to develop and commercialize the
oral compound FG-459 to treat chronic kidney disease and end-stage
renal disease.
In 2013, AstraZeneca-affiliated scientists in China delivered its first
preclinical drug candidate, in the area of oncology, to the company.
Now, the pharma giant hopes to capitalize on that success and put its
scientists in China to work in chronic kidney disease. More
5. Cleveland Clinic and Genzyme
Partner: Cleveland Clinic
Company: Genzyme
Date: April 30, 2014
Sanofi's Genzyme formed a research collaboration with the Cleveland
Clinic focused on developing new therapeutic approaches to the
treatment of multiple sclerosis, particularly progressive forms of the
disease.
Over a minimum period of 5 years, the partnership will seek to find
therapeutic strategies to address neurodegeneration, a hallmark of
progressive MS, as well as develop new technologies to better
understand the pathology of the disease. A joint steering committee
comprised of Genzyme and Cleveland Clinic researchers will lead the
initiative.
The fact that Cleveland Clinic's Mellen Center for Multiple Sclerosis is
one of the largest MS programs in the world makes the institution an
attractive fit for Genzyme, which has been active in MS R&D for over a
decade. More
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6. GMEC and Pfizer
Partner: GMEC
Company: Pfizer
Date: May 9, 2014
In a move to quell concerns that a possible Pfizer buyout of
AstraZeneca would hurt R&D in the U.K., Pfizer struck a deal with the
U.K.'s Global Medical Excellence Cluster (GMEC), which includes
Cambridge University, Imperial College London, Queen Mary
University of London and Oxford University.
The consortium will focus on exploring the human genome to find new
treatments for the world's 6,000 recognized rare diseases, which affect
about 60 million people across Europe and the U.S. The 5-year
agreement will build on genomic research already being undertaken
by the U.K. government, such as Genomics England.
The 5-year agreement will establish joint drug discovery programs that
address the 80% of diseases that have genetic origins. More
7. Sanford-Burnham Medical Research Institute and Daiichi Sankyo
Partner: Sanford-Burnham Medical Research Institute
Company: Daiichi Sankyo
Date: May 21, 2014
Japan's Daiichi Sankyo signed on to a three-year drug discovery and
preclinical alliance with the nonprofit Sanford-Burnham Medical
Research Institute to develop new drugs to treat cardiovascularmetabolic diseases, a key priority research area for both parties.
Under a so-called open-innovation model, Daiichi Sankyo's
Cardiovascular-Metabolics Research Laboratories will work with
Sanford-Burnham researchers to identify and validate new drug
targets.
After validating targets, the two will work together to conduct drug
screening to identify compounds that modulate the newly identified
targets using facilities at both Daiichi Sankyo and Sanford-Burnham.
More
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Venture Capital
Venture capital (VC) funding for the Life Sciences sector – Biotechnology and Medical Devices
– increased 49% in dollars but declined 18% in deals during the fourth quarter of 2014,
compared to fourth quarter of 2013, according to the MoneyTree™ Report from
PricewaterhouseCoopers (PwC) LLP and the National Venture Capital Association (NVCA),
based on data provided by Thomson Reuters. The report, entitled "Biotech funding surges,"
shows that VCs invested $2.8 billion in 202 Life Sciences deals during the quarter, versus $1.9
billion going into 245 deals in the fourth quarter of 2013 and $1.7 billion in 197 deals during the
previous quarter in 2014.
Overall, investments for full year 2014 in the Life Sciences sector rose to the highest level since
2007 with $8.6 billion invested into 789 deals, a 29% increase in dollars but a 3% drop in deals
compared to 2013. Biotechnology investment dollars rose 29% compared to 2013 to $6.0
billion, while the number of deals decreased 4% to 470 deals, making it the second largest
investment sector for the year in terms of dollars invested, behind the Media and Entertainment
sector. The Medical Devices industry finished 2014 up 27% in dollars to $2.7 billion, and the
number of deals remained relatively flat in 2014, compared to 2013.
"The life sciences sector saw five megadeals last year, a testament to the highly innovative
biotech and medical device technologies and the resulting confidence of venture capitalists in the
business models of these start-ups," said Greg Vlahos, Life Sciences partner at PwC. "The
biotechnology industry attracted record-high venture investments in the second quarter of 2014
and ended the year with even higher investments in the fourth quarter. In addition, the medical
device industry continued to show strong growth for the year. This is in line with PwC's
projection in early 2014 of a very strong year for life sciences. Given the strong level of
investments in this sector and others in recent quarters, we expect continued high investment
levels in life sciences in the first half of 2015."
First-Time vs. Follow-On Funding
Investments into Life Sciences companies receiving VC investment for the first time in Q4 2014
totaled $403 million – an increase of 35% from the same quarter in the prior year. Life Sciences
follow-on funding in the fourth quarter of 2014 surged 51% year over year to $2.4 billion. In
fact, follow-on funding for the Life Sciences sector and Biotechnology industry during the
quarter achieved the highest level since 1995, when MoneyTree began reporting VC investing
levels. For the full year 2014, first-time funding in the Life Sciences sector was $1.1 billion and
follow-on funding was $7.5 billion, representing growth of 25% and 29%, respectively. For the
full year, first-time deals in the sector averaged $7.3 million and follow-on funding deals
averaged $11.8 million.
Funding by Sub-segment
When compared to the fourth quarter of 2013, five of the seven Biotechnology sub-segments that
received investment rose during the fourth quarter of 2014. The biotech-human sub-segment
captured the largest share of Biotechnology funding, increasing 46% to $1.7 billion compared to
the first quarter of 2013. In addition, pharmaceutical increased 60% to $115 million; biotech
equipment rose 148% to $100 million; biotech research saw a slight 1% increase to $39 million;
while biosensor investments increased 259% to $28 million. The two biotechnology subsegments that saw a decrease in funding in the fourth quarter compared with the same period last
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year were biotech-animal, down 64% to $10 million and biotech-industrial, declining 74% to $7
million.
Funding for each of the three Medical Device sub-segments increased during the fourth quarter
of 2014 compared to the same quarter in 2013, including medical therapeutics up 8% to $368
million; medical/health products rising 170% to $201 million and medical diagnostics increasing
216% to $180 million.
Top 10 U.S. Biopharma Clusters for the year 2014
According to GEN’s annual ranking of the nation’s most nurturing regions, the top 10 U.S.
Biopharma Clusters for the year 2014 are the following:
1.
Boston-Cambridge
The region’s 5,002 patents were second only to the San Francisco Bay area. Boston/Cambridge
was number one on three measures: 2014 venture capital, albeit by only $4 million more than
the Bay Area ($1.82 billion in 88 deals), NIH funding ($312.797 million), and lab space (21.204
million). Boston/Cambridge’s worst ranking was third on number of jobs (no matter if you go
by JLL with 54,008, or statewide industry group MassBio, which counts 57,642).
2.
San Francisco Bay Area
The region and vicinity tops the field in patents (8,851), only 19% of which are the 1,683 patents
held by the Trustees of the University of California. SF finishes a very close second to
Boston/Cambridge in 2014 venture capital ($1.816 billion in 110 deals) and fourth in NIH
funding ($143.996 million) and jobs (50,038 according to JLL). While the region was also
pegged fourth in lab space with 10.89 million square feet of lab space, that’s an awful lot lower
than recorded in past years (29.7 million, according to the 2014 GEN List).
3.
New York/New Jersey
The region is in top place in jobs (77,645 according to JLL) and lab space (20.6 million square
feet), reflecting its status as having the nation’s largest region, numerous research institutions,
and a sizeable heritage pharma industry. But size alone is less an explanation for its number two
showing in NIH funding ($177.521 million) than all those research centers. Yet those centers’
2,514 patents lag behind those of Maryland and San Diego, let alone Boston/Cambridge and the
Bay Area. Despite being the home region of Wall Street and the nation’s finance industry,
NY/NJ only places fourth in VC funding ($321.015 million in 25 deals), yet that’s an
improvement over five years earlier ($286.807 million).
4.
San Diego
The city and surrounding area had its best score in venture capital funding (number three at
$494.46 million in 42 deals), and also did well in patents compared to three much larger regions
(fourth with 2,644). Where the region slid on the scale was in NIH funding (seventh at $90.899
million), jobs (sixth at 46,145 according to JLL), and lab space (fifth at 9.5 million square feet),
though that will grow when sequencing giant Illumina completes the San Diego manufacturing
center announced over summer 2015. The job numbers appear to reflect layoffs at home-grown
companies in recent years (400 former Amylin Pharmaceuticals employees were laid off in 2013
following the company’s sale to Bristol-Myers Squibb).
24
5.
Maryland/DC Metro
The home region of the NIH, FDA, and CDC has something to show for the distinction – a
number three ranking in patents (3,531), just over half of which (1,798 or 51%) are held by the
parent of all three agencies, the U.S. Department of Health and Human Services. MD-DC metro
is also third in lab space (11.1 million square feet). The region is middle-of-the list in NIH
funding (fifth at $133.499 million), of which Johns Hopkins University accounted for 71% or
$94.867 million; and lower in jobs (36,558 according to JLL), and venture capital (11th with
$77.32 million in 25 deals).
6.
Greater Philadelphia
The region experienced a nice year-over-year increase in venture capital financing, leaping
almost 30% over 2013 to $211.376 million in 23 deals last year, good enough for fifth on this
year’s VC rankings. It’s the strongest sign yet that it has made progress in evolving from a
heritage pharma mecca to a more diverse concentration of biopharma businesses and institutions
(including 25 medical schools). Philadelphia’s University City Science Center has long been an
anchor for regional biopharma; in October 2014 it won a $1 million grant from the U.S.
Economic Development Administration for a second commercialization program, Phase 1 space
(6.62 million square feet), as well as eighth in NIH funding ($87.596 million).
7.
Seattle
The region has racked up a lot of money in private capital (more than $300 million since 2013)
and an initial public offering (about $265 million last December) through a single company,
home-grown Juno Therapeutics. Seattle came in third for NIH funding, and sixth in VC
($196.162 million in 13 deals) and patents (1,623). The region lags, however, in lab space (#8 at
4.6 million square feet) and especially jobs (#11 at 14,997 according to JLL).
8.
Raleigh-Durham, NC (includes Research Triangle Park, NC)
The mecca of biopharma in North Carolina draws its best rankings in NIH funding ($102.603
million) and lab space (6.64 million), both good enough to place sixth. The region ranks ninth in
VC funding ($103.499 million in 10 deals); ninth in jobs (22,960 according to JLL, 24,470
according to Battelle Technology Partnership Practice); and lower in patents (#11 with 816).
While big pharma’s migration from the Northeast put Research Triangle Park on the proverbial
map, it has been contract research organizations and biotechs that have expanded in North
Carolina in recent years.
9.
Los Angeles
Los Angeles and nearby Orange County may constitute California’s third biotech cluster after
the Bay Area and San Diego. But it shouldn’t be too surprising that the second largest region by
population has the second largest workforce (54,575 jobs according to JLL) among the clusters.
But it’s all downhill from there, as the region ranks eighth in patents (1,163), and ninth in both
NIH funding ($87.352 million) and lab space (4 million square feet). LA/Orange fared worst in
2014 venture capital financing, racking up $35.417 million in 12 deals. Many of these rankings
should be expected to improve in coming years as the Los Angeles County Board of Supervisors
in November 2014 approved a “Biotech Master Plan” to advance the industry and identify
biotech opportunities at all five LA county medical campuses after a study by Battelle.
10. Chicagoland
Chicago and its suburbs ranked best in 2014 venture capital (eighth), with $146.608 million in
six deals, and at least one significant VC award already this year – a $45 million investment from
Third Rock Venture to launch Revolution Medicines. Chicagoland was ninth in patents (898),
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tenth in both NIH funding ($67.752million) and jobs (15,646 according to JLL, though the
Illinois Medical District alone counts 29,230 without breaking down specialties), but 12th in lab
space (1.5 million square feet). Over the past year or so, two research centers have opened –
incubator EnterpriseWorks Chicago, whose “Health, Technology and Innovation” (HTI)
initiative anchored at Chicago Technology Park offers shared wet and dry labs for startups; and
the AbbVie Innovation Center at the University of Illinois Research Park in Urbana-Champaign,
where students have started work on several of the biopharma’s R&D IT projects.
Biosimilars Finally Reach the U.S. Market
Although the United States has been behind the rest of the world in providing a clear approval
pathway for biosimilars, two developments are now driving a push forward:
1. President Obama incorporated the Biosimilar Price Competition and Innovation Act
(BPCIA) into the Affordable Care Act in 2010, thus facilitating a large number of FDA
approvals expected in the coming months and years.
2. Second, biologic products with aggregate sales of approximately $60 billion are expected
to be off patent in the U.S. by 2016.
Under the Biologics Price Competition and Innovation Act (BPCIA), enacted in 2009, the FDA
will approve a biosimilar if there is a showing of high similarity to an FDA-approved biologic,
known as a reference product. The biosimilar cannot have any clinically meaningful differences
in safety or effectiveness. It must use the same action mechanism, administration route, dosages,
and strengths, and can only be used to treat the same conditions. The increased complexity of
biologics necessitates a more thorough development, testing, and review process than that
utilized for other generics. Additionally, biosimilars require a doctor’s involvement in the
prescription process.
On March 6, 2015, the FDA approved the first biosimilar called ZarxioTM (filgrastim-sndz),
which will compete with Neupogen® (filgrastim) – a blockbuster treatment used to decrease
rates of infection in certain cancer patients during chemotherapy. Neupogen accounted for $1.2
billion in U.S. drug spend last year.
The next in line to gain approval as early as June is InflectraTM (infliximab), the first
monoclonal antibody biosimilar. It could be indicated in all uses approved for Remicade,
including rheumatoid arthritis, psoriasis, psoriatic arthritis, Crohn’s disease, ulcerative colitis and
ankylosing spondylitis. Remicade U.S. sales totaled $4.5 billion last year.
Biosimilars are likely to revolutionize the pharmaceutical industry. A large number of
biosimilars currently used in Europe or under development will attempt to follow Zarxio onto the
market as the corresponding biologic’s exclusivity period ends. Competition with biosimilars
will drive down the price of biologics, according to a Congressional Budget Office prediction,
saving the U.S. health system $25 billion over the next ten years.
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Source: http://www.compasscgroup.com
Regulatory Impacts
Across the life sciences industry, evolving regulatory and compliance requirements are necessary
and expected, though their implications are not always foreseeable. Along with the various
global and domestic regulations, and grey areas involving regenerative therapies and
personalized technologies, there are particular regulatory forces that biotechs need to consider.
While the impact may be greater if commercialization is the strategy, these regulations will
largely affect how therapies are marketed to potential partners, payers, and consumers.
1.
Innovation Act
The Innovation Act bill (H.R. 3309) may impact how biotechs defend their patents. Intended to
help reduce frivolous, lengthy and costly patent disputes, the Innovation Act raises many
concerns among biotechs that start-ups and innovators will not be adequately protected. The
Biotech Industry Organization (BIO), the largest biotechnology trade association, published its
concerns about the act, and also identified amendments that could help address those concerns.
Biotechs should stay abreast of the legislation, preparing for the long-term effects it may have on
IP protection and innovation in the industry.
27
2.
Drug Quality and Security Act
In the U.S. and internationally, there are growing concerns around the safety of the medical
supply chain, which has led to increased legislation. In the U.S., the Drug Quality and Security
Act was recently signed into law, and provides clear guidance for all products distributed in the
U.S.; paper or electronic lot-level traceability is required by 2015, and unit-level serialization is
required by late 2017. Other countries and regions like the European Union, China and South
Korea, have similar serialization requirements taking effect between 2015 and 2017, as well. As
biotechs begin the commercialization process, they must incorporate these serialization
requirements, and should consider how their partners are doing so, also.
3.
Affordable Care Act (ACA)
As a result of the ACA, millions of previously uninsured individuals have registered for health
insurance in early 2014. This massive influx of patients into the healthcare system will create
ripple effects, with physician bandwidth being one in particular. Biotechs have the opportunity
to build communities that provide information and support to healthcare professionals, as well as
patients. Big Pharma companies are already exploring ways to fill this need, MerckEngage and
Sanofi’s The DX being two such examples. By focusing on the physician and patient
communities served by their therapies, which often fall into the specialty or orphan categories,
biotechs have the opportunity to connect on an even more personal – and valuable – level.
The ACA is also going to create challenges that may be more acutely felt by biotechs than their
Big Pharma counterparts. Discussed further in the next section, reimbursement challenges will
only intensify under the ACA, as Accountable Care Organizations push companies to prove the
overall value of their therapies.
As a driving regulatory force, the Affordable Care Act is escalating the power of payers and
fueling the importance of formulary positioning. Under the ACA, payers and Accountable Care
Organizations (ACO) are becoming increasingly interested in the overall value of a therapy. As
a result, the need to demonstrate efficacy, ongoing therapy adherence, and improved quality of
life will be even more critical for therapies with higher costs. Many quality measures have been,
and will continue to be developed for each therapeutic area. These measures will help biotechs
identify the types of information they need to capture, analyze, and present in order to prove their
value and gain an adequate share in the market.
a) Fighting for Formularies
Formularies are an increasingly crowded place, and securing optimal positioning will prove to be
more and more difficult. With many biotech therapies being understandably expensive,
requiring notably large investments to typically serve smaller patient populations, demonstrating
effectiveness and improved quality of life will be essential. Efficacy will no longer be enough to
gain a formulary spot, and once secured, biotechs will have to defend their position. This will
require ongoing data collection surrounding therapy adherence and patient activities.
Additionally, with the intensity of the rebate market, products that are past patent exclusivity, or
that don’t significantly differentiate themselves, will likely suffer.
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b) Proving Their Value
As biotechs and investors look to invest in a technology’s clinical trials, the potential market
value of the technology should only be part of the investment decision equation. Reimbursement
value is increasingly driving the market, ultimately determining how the value opportunity must
be evaluated and adjusted. Certainly, out-licensing partners and investors will put greater
emphasis on reimbursement value, but biotechs should also use this as an important component
in their own business decisions, whether deciding if or how much to invest, to commercialize or
sell, and when to do so.
To better position technologies, biotechs should enhance their trials by not only tracking
effectiveness and safety, but also increasing their emphasis on quality of life measures. This will
help build a stronger business case for their products and will provide data to make more
informed decisions. In addition, building relationships with payers, working to collaborate
throughout the drug development process, will help biotechs set realistic market expectations and
improve investment strategy decisions.
FDA speeds up the Review and Approval Process for new drugs
The approval of new drugs in the United States is a complex process that seeks to balance the
need to protect the health and safety of the population with the need to provide treatment as soon
as possible for serious or life-threatening disorders.
The U.S. Food and Drug Administration (FDA), in recognition of the complexity of “too slow”
versus “too fast” approval of new drugs, has put into place several measures that apply to serious
or life-threatening diseases and allow the agency some flexibility in the review and approval
process.
The Food and Drug Administration has developed four distinct and successful approaches to
making such drugs available as rapidly as possible:
1. Fast track: To qualify for this designation, the drug developer must provide early evidence
that the new drug may provide benefit over available therapies (if there are any). The evidence
can come from animal or other laboratory studies or from human testing.
2. Breakthrough therapy: Under the Food and Drug Administration Safety and
Innovation Act (FDASIA) signed into law by President Obama on July 9th, 2012, the FDA has
now been given the power to accelerate approval of life saving treatments for patients with rare
diseases. FDASIA Section 902 provides for a new designation called “Breakthrough Therapy
Designation” established by the FDA to expedite the development and review of drugs that
show signs of extraordinary benefit at early stages of the clinical development process.
This designation is similar to fast track designation, with one important difference — the
evidence for benefit over available therapies must come from humans, not from laboratory
experiments.
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According to the FDA a breakthrough therapy is a drug that is:

Intended alone or in combination with one or more other drugs to treat a serious or life
threatening disease or condition and

That may demonstrate substantial improvement over existing therapies on one or more
clinically significant endpoints, such as substantial treatment effects observed early in
clinical development, as indicated by preliminary clinical evidence.
The breakthrough therapy designation allows for early and positive awareness of a drug’s
therapeutic value, signaling that the product delivers substantial improvement on at least one
clinical endpoint.
3. Priority review: This designation applies to a later stage of the drug approval process —
after the drug’s developer has submitted a complete new drug application (NDA) to the agency
but before that application has received a complete review.
To qualify for priority review designation, a new drug must appear to provide:




a significant improvement in safety and/or effectiveness over available therapies;
reduction of an important adverse reaction compared to existing therapies;
better patient compliance than with existing therapies; or
safety and efficacy in a new population.
If the new drug is a biologic substance, such as a protein, it can qualify for priority review only if
it is directed at a serious or life-threatening disorder.
If the new drug is a chemical not directly derived from a biologic substance, it can qualify for
priority review if it’s aimed at any condition.
4. Accelerated approval: While the previous designations are aimed at making the FDA’s
review of a new drug faster, the accelerated approval mechanism actually changes the basis on
which a new drug can be approved.
In general, approval of a company’s application to market a new drug requires studies that show
an effect on an endpoint that clearly reflects clinical benefit, such as an improvement in function
or survival.
Endpoints, also called outcome measures, are the measurements taken during a clinical trial. For
example, if the goal of the treatment is weight loss, then change in weight would be a good
endpoint for the trial. If the goal of the treatment is migraine headache prevention, a good
endpoint would be the number of headaches in a given time period.
The accelerated approval mechanism, added to FDA regulations in 1992 for treatments for
serious or life-threatening illnesses, allows regulators to use what is called a surrogate endpoint
rather than a true endpoint as a measure of a drug’s effect in a trial. These substitute endpoints
are particularly useful in conditions where a true endpoint, such as survival time or avoidance of
disability, would require exceptionally long or exceptionally large clinical trials.
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The FDA defines a surrogate endpoint as an outcome measure that is either known to predict a
clinical benefit or is “reasonably likely to predict clinical benefit” but does not itself reflect a
direct clinical benefit.
VI. FDA Regulations
Biological Products
Both the FDA’s Center for Drug Evaluation and Research (CDER) and Center for Biologics
Evaluation and Research (CBER) have regulatory responsibility for therapeutic biological
products, including premarket review and oversight. The categories of therapeutic biological
products regulated by CDER (under the FDC Act and/or the PHS Act, as appropriate) are the
following:
 Monoclonal antibodies for in vivo use.
 Most proteins intended for therapeutic use, including cytokines (e.g., interferons),
enzymes (e.g. thrombolytics), and other novel proteins, except for those that are
specifically assigned to the Center for Biologics Evaluation and Research (CBER)
(e.g., vaccines and blood products). This category includes therapeutic proteins
derived from plants, animals, humans, or microorganisms, and recombinant versions
of these products. Exceptions to this rule are coagulation factors (both recombinant
and human-plasma derived).
 Immunomodulators (non-vaccine and non-allergenic products intended to treat
disease by inhibiting or down-regulating a pre-existing, pathological immune
response).
 Growth factors, cytokines, and monoclonal antibodies intended to mobilize,
stimulate, decrease or otherwise alter the production of hematopoietic cells in vivo.
Categories of Therapeutic Biological Products Remaining in CBER
 Cellular products, including products composed of human, bacterial or animal cells
(such as pancreatic islet cells for transplantation), or from physical parts of those cells
(such as whole cells, cell fragments, or other components intended for use as
preventative or therapeutic vaccines).
 Gene therapy products. Human gene therapy/gene transfer is the administration of
nucleic acids, viruses, or genetically engineered microorganisms that mediate their
effect by transcription and/or translation of the transferred genetic material, and/or by
integrating into the host genome. Cells may be modified in these ways ex vivo for
subsequent administration to the recipient, or altered in vivo by gene therapy products
administered directly to the recipient.
 Vaccines (products intended to induce or increase an antigen specific immune
response for prophylactic or therapeutic immunization, regardless of the composition
or method of manufacture).
31
 Allergenic extracts used for the diagnosis and treatment of allergic diseases and
allergen patch tests.
 Antitoxins, antivenins, and venoms
 Blood, blood components, plasma derived products (for example, albumin,
immunoglobulins, clotting factors, fibrin sealants, proteinase inhibitors), including
recombinant and transgenic versions of plasma derivatives, (for example clotting
factors), blood substitutes, plasma volume expanders, human or animal polyclonal
antibody preparations including radiolabeled or conjugated forms, and certain
fibrinolytics such as plasma-derived plasmin, and red cell reagents.
Please refer to the Transfer of Therapeutic Biological Products to the Center for Drug Evaluation
and Research at http://www.fda.gov/oc/combination/transfer.html for updates that further define
the categories of biological products that are regulated by CDER and CBER.

Establishment Registration
Blood Establishments - All owners or operators of establishments that manufacture blood
products are required to register with the FDA, pursuant to section 510 of the Federal Food,
Drug, and Cosmetic Act, unless they are exempt under 21 CFR 607.65. A list of every blood
product manufactured, prepared, or processed for commercial distribution must also be
submitted. Products must be registered and listed within 5 days of beginning operation, and
annually between November 15 and December 31. Blood product listings must be updated
every June and December.
Human Cells, Tissues and Cellular and Tissue-Based Products (HCT/Ps) Establishments Establishments that manufacture HCT/Ps that are regulated solely under section 361 of the
PHS Act and the regulations in part 1270 are required to register and list under 21 CFR Part
1271 in 2001. Establishment that manufacture HCT/Ps that are: 1) Drug, 2) Medical
Devices, 3) Biological Products, 4) Hematopoietic stem cells from peripheral and cord blood,
5) Reproductive cells and tissues; or 6) Human heart valves and human dura mater, are
required to register with FDA and list HCT/Ps using the registration and listing procedures in
21 CFR part 1271, subpart B. HCT/P establishments that only manufacture HCT/Ps
currently under IND or IDE do not need to register and list their HCT/Ps until the
investigational HCT/P is approved through a Biologics License Application (BLA), a New
Drug Application (NDA), or a Premarket Approval Application (PMA); or cleared through a
Premarket Notification Submission 510(k).

Investigational New Drug Application - A drug that passes animal safety studies may move
into human testing following the submission of an investigational new drug (IND)
application to the FDA. Most studies, or trials, of new products may begin 30 days after the
agency receives the IND. During this time, FDA has an opportunity to review the IND for
safety to assure that research subjects will not be subjected to unreasonable risk.
Almost every new drug goes through multiple clinical trials, beginning with early studies
(Phase I) in small groups of patients to test safety. Larger mid-stage trials (Phase II) examine
safety and obtain preliminary efficacy data. The final stage of pre-market testing (Phase III)
32
seeks to gather convincing efficacy data in the specific patient population the drug's
developer hopes to treat.
There are three IND types:
o
An Investigator IND is submitted by a physician who both initiates and conducts an
investigation, and under whose immediate direction the investigational drug is
administered or dispensed. A physician might submit a research IND to propose
studying an unapproved drug, or an approved product for a new indication or in a
new patient population.
o
Emergency Use IND allows the FDA to authorize use of an experimental drug in
an emergency situation that does not allow time for submission of an IND in
accordance with 21CFR , Sec. 312.23 or Sec. 312.34. It is also used for patients
who do not meet the criteria of an existing study protocol, or if an approved study
protocol does not exist.
o
Treatment IND is submitted for experimental drugs showing promise in clinical
testing for serious or immediately life-threatening conditions while the final clinical
work is conducted and the FDA review takes place.
There are two IND categories:
o
o
Commercial
Research (non-commercial)
The IND application must contain information in three broad areas:
o
Animal Pharmacology and Toxicology Studies - Preclinical data to permit an
assessment as to whether the product is reasonably safe for initial testing in
humans. Also included are any previous experience with the drug in humans (often
foreign use).
o
Manufacturing Information - Information pertaining to the composition,
manufacturer, stability, and controls used for manufacturing the drug substance and
the drug product. This information is assessed to ensure that the company can
adequately produce and supply consistent batches of the drug.
o
Clinical Protocols and Investigator Information - Detailed protocols for proposed
clinical studies to assess whether the initial-phase trials will expose subjects to
unnecessary risks. Also, information on the qualifications of clinical investigators-professionals (generally physicians) who oversee the administration of the
experimental compound--to assess whether they are qualified to fulfill their clinical
trial duties. Finally, commitments to obtain informed consent from the research
subjects, to obtain review of the study by an institutional review board (IRB), and to
adhere to the investigational new drug regulations.
The initial IND submission and each subsequent submission to the IND should be
accompanied by a Form FDA 1571 and must be submitted in triplicate (the original and two
photocopies are acceptable).
33
Mailing addresses for initial IND submissions are:
For a Drug:
Food and Drug Administration
Center for Drug Evaluation and Research
Central Document Room
5901-B Ammendale Rd.
Beltsville, Md. 20705-1266
For a Therapeutic Biological Product:
Food and Drug Administration
Center for Drug Evaluation and Research
Therapeutic Biological Products Document Room
5901-B Ammendale Road
Beltsville, MD 20705-1266

Biologics License Application - Biological products are approved for marketing under the
provisions of the Public Health Service (PHS) Act. The Act requires a firm who
manufactures a biologic for sale in interstate commerce to hold a license for the product. A
biologics license application is a submission that contains specific information on the
manufacturing processes, chemistry, pharmacology, clinical pharmacology and the medical
affects of the biologic product. If the information provided meets FDA requirements and the
establishment passes the inspection, the application is approved and a license is issued
allowing the firm to market the product. Form356h specifies the requirements for a BLA.
This includes:
o
Applicant information
o
Product/Manufacturing information
o
Pre-clinical studies
o
Clinical studies
o
Labeling
Some responsibilities of a licensed biologics manufacturer include:
o
complying with the appropriate laws and regulations relevant to their biologics
license and identifying any changes needed to help ensure product quality
o
reporting certain problems to FDA’s Biological Product Deviation Reporting
System
o
reporting and correcting product problems within established timeframes
o
recalling or stopping the manufacture of a product if a significant problem is
detected
34

Post-Approval - Every approved drug comes with an official product label, in a standardized
format, whose contents are developed by the FDA and the company marketing the drug. The
label contents include the approved indication, as well as a description of the drug, its side
effects, dosage, clinical trial summaries and other information useful to physicians.
Although doctors may prescribe a therapy "off-label" for indications not expressly approved
by the FDA, manufacturers are prohibited from marketing off-label indications, and
insurance does not always cover such uses.
The story does not end with approval and labeling. Companies often conduct additional
Phase II and III trials in other indications and may apply for approval through a supplemental
BLA. If approved, the new indication is added to the product label.
Companies also conduct Phase IV trials to refine knowledge about the drug. In addition, drug
makers are required by law to report adverse events to the FDA, and they are subject to
ongoing manufacturing and marketing rules.
General Biological Product Standards

Potency - Tests for potency shall consist of either in vitro or in vivo tests, or both, which
have been specifically designed for each product so as to indicate its potency in a manner
adequate to satisfy the interpretation of potency given by the definition in 600.3(s) of this
chapter.

General Safety Test - A general safety test for the detection of extraneous toxic contaminants
shall be performed on biological products intended for administration to humans. The
general safety test shall be conducted upon a representative sample of the product in the final
container from every final filling of each lot of the product. If any product is processed
further after filling, such as by freeze-drying, sterilization, or heat treatment, the test shall be
conducted upon a sample from each filling of each drying chamber run, sterilization
chamber, or heat treatment bath.

Sterility Test

Purity - Products shall be free of extraneous material except that which is unavoidable in the
manufacturing process described in the approved biologics license application. In addition,
products shall be tested as provided in paragraphs (a) and (b) of this section.

Identity - The contents of a final container of each filling of each lot shall be tested for
identity after all labeling operations shall have been completed. The identity test shall be
specific for each product in a manner that will adequately identify it as the product
designated on final container and package labels and circulars, and distinguish it from any
other product being processed in the same laboratory.
Identity may be established either through the physical or chemical characteristics of the
product, inspection by macroscopic or microscopic methods, specific cultural tests, or in
vitro or in vivo immunological tests.
35

Constituent Materials

Total Solids in Serums - Except as otherwise provided by regulation, no liquid serum or
antitoxin shall contain more than 20 percent total solids.

Permissible Combinations - Licensed products may not be combined with other licensed
products either therapeutic, prophylactic or diagnostic, except as a license is obtained for the
combined product. Licensed products may not be combined with non-licensable therapeutic,
prophylactic, or diagnostic substances except as a license is obtained for such combination.

Cultures

Labeling Standards
 Container Label
(a) Full label - The following items shall appear on the label affixed to each container of a product
capable of bearing a full label:
(1) The proper name of the product;
(2) The name, address, and license number of manufacturer;
(3) The lot number or other lot identification;
(4) The expiration date;
(5) The recommended individual dose, for multiple dose containers.
(6) The statement: "`Rx only'" for prescription biologicals.
(7) If a Medication Guide is required under part 208 of this chapter, the statement required under
208.24(d) of this chapter instructing the authorized dispenser to provide a Medication Guide to
each patient to whom the drug is dispensed and stating how the Medication Guide is provided,
except where the container label is too small, the required statement may be placed on the
package label.
(b) Package label information - If the container is not enclosed in a package, all the items required for
a package label shall appear on the container label.
(c) Partial label - If the container is capable of bearing only a partial label, the container shall show as
a minimum the name (expressed either as the proper or common name), the lot number or other lot
identification and the name of the manufacturer; in addition, for multiple dose containers, the
recommended individual dose. Containers bearing partial labels shall be placed in a package which
bears all the items required for a package label.
(d) No container label - If the container is incapable of bearing any label, the items required for a
container label may be omitted, provided the container is placed in a package which bears all the
items required for a package label.
(e) Visual inspection - When the label has been affixed to the container a sufficient area of the
container shall remain uncovered for its full length or circumference to permit inspection of the
contents.
36
 Package Label
The following items shall appear on the label affixed to each package containing a
product:
(a) The proper name of the product;
(b) The name, address, and license number of manufacturer;
(c) The lot number or other lot identification;
(d) The expiration date;
(e) The preservative used and its concentration, or if no preservative is used and the
absence of a preservative is a safety factor, the words "no preservative";
(f) The number of containers, if more than one;
(g) The amount of product in the container expressed as (1) the number of doses, (2)
volume, (3) units of potency, (4) weight, (5) equivalent volume (for dried product to
be reconstituted), or (6) such combination of the foregoing as needed for an accurate
description of the contents, whichever is applicable;
(h) The recommended storage temperature;
(i) The words "Shake Well", "Do not Freeze" or the equivalent, as well as other
instructions, when indicated by the character of the product;
(j) The recommended individual dose if the enclosed container(s) is a multiple-dose
container;
(k) The route of administration recommended, or reference to such directions in an
enclosed circular;
(l) Known sensitizing substances, or reference to an enclosed circular containing
appropriate information;
(m) The type and calculated amount of antibiotics added during manufacture;
(n) The inactive ingredients when a safety factor, or reference to an enclosed circular
containing appropriate information;
(o) The adjuvant, if present;
(p) The source of the product when a factor in safe administration;
37
(q) The identity of each microorganism used in manufacture, and, where applicable, the
production medium and the method of inactivation, or reference to an enclosed
circular containing appropriate information;
(r) Minimum potency of product expressed in terms of official standard of potency or, if
potency is a factor and no U.S. standard of potency has been prescribed, the words
"No U.S. standard of potency."
(s) The statement: "`Rx only'" for prescription biologicals.
 Proper name; package label; legible type
(a) Position - The proper name of the product on the package label shall be placed
above any trademark or trade name identifying the product and symmetrically
arranged with respect to other printing on the label.
(b) Prominence - The point size and typeface of the proper name shall be at least as
prominent as the point size and typeface used in designating the trademark and trade
name. The contrast in color value between the proper name and the background shall
be at least as great as the color value between the trademark and trade name and the
background. Typography, layout, contrast, and other printing features shall not be
used in a manner that will affect adversely the prominence of the proper name.
(c) Legible type - All items required to be on the container label and package label shall
be in legible type. "Legible type" is type of a size and character which can be read
with ease when held in a good light and with normal vision.
 Divided manufacturing responsibility to be shown
If two or more licensed manufacturers participate in the manufacture of a biological
product, the name, address, and license number of each must appear on the package
label, and on the label of the container if capable of bearing a full label.
 Name and address of distributor
The name and address of the distributor of a product may appear on the label
provided that the name, address, and license number of the manufacturer also
appears on the label and the name of the distributor is qualified by one of the
following phrases: "Manufactured for _____", "Distributed by ______",
"Manufactured by _____ for _____", "Manufactured for _____ by ____",
"Distributor: _____", or "Marketed by _____". The qualifying phrases may be
abbreviated.
38
 Bar code label requirements
Biological products must comply with the bar code requirements at 201.25 of this
chapter. However, the bar code requirements do not apply to devices regulated by the
Center for Biologics Evaluation and Research or to blood and blood components
intended for transfusion. For blood and blood components intended for transfusion, the
requirements at 606.121(c)(13) of this chapter apply instead.
In-vitro Diagnostic (IVD) Products Regulation

Establishment Registration - Manufacturers (both domestic and foreign) and initial
distributors (importers) of medical devices must register their establishments with the FDA.
All establishment registrations must be submitted electronically unless a waiver has been
granted by FDA. All registration information must be verified annually between October 1st
and December 31st of each year. In addition to registration, foreign manufacturers must also
designate a U.S. Agent. Beginning October 1, 2007, most establishments are required to pay
an establishment registration fee. Please find below the schedule of registration fees for
fiscal years 2013 through 2017.
Year FY 2013
Fee $2,575
FY 2014
FY 2015
FY 2016
FY 2017
$3,313
$3,646
$3,872*
$3,872*
* These fees are estimates. Actual fees for that fiscal year will be determined and posted by
August prior to that fiscal year.
More information about FDA establishment registration can be found at:
http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/Overview/default.ht
m#reg.

Classification of IVD Products - FDA classifies IVD products into Class I, II, or III
according to the level of regulatory control that is necessary to assure safety and
effectiveness. The classification of an IVD (or other medical device) determines the
appropriate premarket process.
Class I Devices: include commodity products such as stethoscopes, scalpels, and other
commodity products that pose relatively little patient risk. Makers of these products need
only register their establishment, conform to Good Manufacturing Practices (GMP) and
notify the FDA at least 90 days before they start marketing the devices. GMP's are standards
set by the FDA for ensuring manufacturing quality. More information about GMP
requirements can be found at:
http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/PostmarketRequire
ments/QualitySystemsRegulations/default.htm.
39
Class II Devices: include devices that present a moderate degree of risk to the patient.
Examples include x-ray machines, endoscopes, and surgical lasers. Manufacturers have to
provide the FDA with some evidence of safety and efficacy and meet certain performance
standards. In addition, they are responsible for post-market surveillance and maintenance of
patient registries.
Class III Devices: these are sophisticated products that present significant risk to patients
and must go through extensive clinical trials before undergoing FDA reviews. Included in
this category are life supporting devices, such as implantable cardiac pacemakers,
angioplasty catheters, stents, and similar devices that prevent potentially dangerous medical
conditions such as heart attacks and cardiac arrhythmias.

Premarket Notifications - Premarket notifications are also known as 510(K). This is a more
commonly used filing and applies to devices that are Substantially Equivalent (SE) to
approved products already on the market. Many Class I devices are exempt from the 510(K)
process, although other regulations apply. Once the device is determined to be SE, it can
then be marketed in the U.S. The SE determination is usually made within 90 days and is
made based on the information submitted by the submitter.
In many cases, descriptive data and a labeling review are sufficient, though some devices
may require further clinical studies to support a 510(K). Before marketing a device, each
submitter must receive an order, in the form of a letter, from FDA which finds the device to
be substantially equivalent and states that the device can be marketed in the U.S. This order
"clears" the device for commercial distribution. The submitter may market the device
immediately after 510(K) clearance is granted.

Premarket Approval - Premarket approval (PMA) apply to most Class III devices due to the
level of risk. PMA is the most stringent type of device marketing application required by
FDA. The applicant must receive FDA approval of its PMA application prior to marketing
the device. PMA approval is based on a determination by FDA that the PMA contains
sufficient valid scientific evidence to assure that the device is safe and effective for its
intended use(s). An approved PMA is, in effect, a private license granting the applicant (or
owner) permission to market the device. The PMA owner, however, can authorize use of its
data by another.
FDA regulations provide 180 days to review the PMA and make a determination. In reality,
the review time is normally longer. Before approving or denying a PMA, the appropriate
FDA advisory committee may review the PMA at a public meeting and provide FDA with
the committee's recommendation on whether FDA should approve the submission. After
FDA notifies the applicant that the PMA has been approved or denied, a notice is published
on the Internet (1) announcing the data on which the decision is based, and (2) providing
interested persons an opportunity to petition FDA within 30 days for reconsideration of the
decision.
40
On October 26, 2002 the Medical Device User Fee and Modernization Act of 2002 was
signed into law. This law authorizes FDA to charge a fee for medical device product
reviews. These fees apply to Premarket Approvals (PMAs), Product Development Protocols
(PDPs), Biologics Licensing Applications (BLAs for certain medical devices reviewed by
FDA's Center for Biologics Evaluation and Research), certain supplements, and Premarket
Notification 510(k)s.
The fee must be paid for the above listed applications, unless the applicant is eligible for a
waiver or exemption. Small businesses may qualify for a reduced fee. Payment must be
received on or before the time the application is submitted. If the applicant has not paid all
fees owed, FDA will consider the application incomplete and will not accept it for filing.
FY15 User Fees (in U.S. Dollars)
application type
small business fee†
standard fee
510(k)‡
$5,018
$2,509
513(g)
$3,387
$1,694
PMA, PDP, PMR, BLA
$250,895
$62,724
panel-track supplement
$188,171
$47,043
180-day supplement
$37,634
$9,409
real-time supplement
$17,563
$4,391
BLA efficacy supplement
$250,895
$62,724
PMA annual report
$8,781
$2,195
30-day notice
$4,014
$2,007
† For small businesses with an approved SBD.
‡ Note: all types of 510(k)s (Traditional, Abbreviated, and Special) are subject to the user fee.
However, there is no user fee for 510(k)s submitted to the FDA on behalf of an FDA-accredited thirdparty reviewer.
Source: www.fda.gov
Small businesses with an approved SBD with gross receipts or sales of $30 million or less are
eligible to have the fee waived on their first PMA, PDP, PMR, or BLA.
Annual Establishment Registration Fee: $3,646
There are no waivers or reductions for small establishments, businesses, or groups – all
establishments must pay the establishment registration fee.
41
The following exemptions or waivers apply to PMA applications:
Fee Exemptions and Waivers (No Fee for These)
Category
Exemption or Waiver
Special PMA supplement
no fee
PMA supplement for manufacturing site change
no fee
BLA for product licensed for further manufacturing no fee
use only
Any application for a device intended solely for
pediatric use
Exempt from user fee. If an
applicant obtains an exemption
under this provision, and later
submits a supplement for adult
use, that submission is subject to
the fee in effect for an original
premarket application.
Any application from a State or Federal
Government entity
Exempt from any fee unless the
device is to be distributed
commercially.
First premarket approval submission (PMA, PDP,
BLA, or premarket report) from a small business
with gross receipts or sales <$30 million
One-time waiver of the fee that
would otherwise apply.
Source: www.fda.gov

Labeling Requirements - The label for IVD's must state the following information, except in
cases where it is not applicable. In addition, all information must appear on the outside
container or wrapper, or be easily legible through the outside container or wrapper. If the
presence of any label information will interfere with the test, the information may appear on
the outside wrapper or container instead of the label. If the immediate containers are too
small, or otherwise unable to bear labels with sufficient space, then the required labeling as
listed below annotated with an asterisk (*) may appear on the outer container labeling only.
Label requirements for the immediate container:
o
The established and proprietary names of the product, e.g., cholestrolometers;
* o
The intended use or uses, e.g., pregnancy detection, diabetes screening, etc.;
* o
A statement of warnings or precautions for users listed in 16 CFR part 1500
(hazardous substances) and any other warnings appropriate to user hazards, and a
statement "For In Vitro Diagnostic Use";
o
Name and place of business of the manufacturer, packer, or distributor;
42
o
Lot or control number traceable to the production history
- Multiple unit products must have traceability of the individual units;
- Instrument lot numbers must allow for traceability of subassemblies; and
- A multiple unit product that requires use of its components as a system should
have the same lot number, or other suitable uniform identification, on all units.
For Reagents:
o
Established (common or usual) name;
o
Quantity, proportion, or concentration of all active ingredients: e.&., mg., weight
per unit volume, mg./dl etc., and for reagents derived from biological materials
the source and measure of its activity, e.g., bovine, I.U., etc.;
o
Storage instructions, i.e., temperature, humidity, etc.;
o
Instructions for manipulation of products requiring mixing or reconstitution;
o
Means to assure that the product meets appropriate standards of purity, quality,
etc., at the time of use, including one or more of the following:
1. expiration date (date beyond which the product is not to be used);
* 2. statement of any visual indication of alteration;
* 3. instructions for a simple check to assure product usefulness;
* - The net quantity of contents.
Label requirements for inserts and outer packaging:
Labeling must contain in one place the following information in the format and order
listed below, except where information is not applicable, or as specified in a standard for
a particular product class. If the device is a reagent intended as a replacement in a
diagnostic system, labeling may be limited to that information necessary to adequately
identify the reagent and to describe its use in the system. If the device is a multiple
purpose instrument used for diagnostic purposes, and not committed to specific
diagnostic procedures or systems, labeling can be restricted to those points annotated by
an asterisk (*).
*
o
The proprietary and established product name;
*
o
The intended use of the product and whether it is a qualitative or quantitative
type of procedure, e. g., screening, physician's office, home use, etc. ;
o
Summary and explanation of the test, including a short history containing
methodology and the special merits and limitations of the test;
o
The chemical, physical, physiological, or biological principles of the procedure.
43
For Reagents:

o
The common name, if any, and quantity, proportion, or concentration or each
reactive ingredient; and for biological material, the source and measure of its
activity;
o
Appropriate cautions or warnings listed in 16 CFR Part 1500; the statement: "For
In Vitro Diagnostic Use;" and any other limiting statements appropriate to the
intended use of the product;
o
Adequate directions for reconstitution, mixing, dilution, etc.;
o
Appropriate storage instructions;
o
A statement of purification or treatment required for use; and
o
Physical, biological, or chemical indications of instability or deterioration.
Exemptions from Labeling Requirements - Shipments or other deliveries of IVD devices are
exempt from label and labeling requirements in the above headings and from standards listed
under Part 861 provided the following conditions are met:
o
A shipment or delivery for an investigation subject to Part 812, Investigational
Device Exemption (IDE), if the device is in compliance with the subject IDE; or
o
A shipment or delivery for an investigation that is not in compliance with Part 812
most IVD are exempt from the IDE because of the following labeling) if the
following conditions are met:
- A product in the laboratory research phase, not represented as an IVD, that is
prominently labeled: "For Research Use Only. Not for use in diagnostic
procedures;" and
- A product that is being shipped or delivered for product testing prior to full
commercial marketing that is prominently labeled: "For Investigational Use
Only. The performance characteristics of this product have not been
established.

Investigational Device Exemption (IDE) - An investigational device exemption (IDE)
allows the investigational device to be used in a clinical study in order to collect safety and
effectiveness data required to support a Premarket Approval (PMA) application or a
Premarket Notification [510(K)] submission to the FDA. Clinical studies are most often
conducted to support a PMA. Only a small percentage of 510(K)'s require clinical data to
support the application. Investigational use also includes clinical evaluation of certain
modifications or new intended uses of legally marketed devices. All clinical evaluations of
investigational devices, unless exempt, must have an approved IDE before the study is
initiated. Many IVDs are exempt from IDE requirements.