Naturally derived medicinals: Where’s the business model?


Kola nut (cola acuminata) from Köhler's medicinal plants, 1887 (via trialsanderrors/Flickr)

It’s widely acknowledged that the pharmaceutical industry is in crisis. Pharma companies are seeing drugs coming off patent, competition from generics, diminished R&D success and increased cost pressures, all of which are contributing to the downfall of the blockbuster drug era. Various solutions have been proposed, including creating shared knowledge repositories to learn from failures and pairing treatments with companion biomarkers.

These solutions and others have merit. But I’d propose more emphasis on what I consider a major failing of the industry: the inability to effectively commercialize naturally derived compounds possessing therapeutic benefit.

Pharmaceutical companies have typically avoided naturally derived compounds because it is difficult to keep competitors out of the territory. Legislation such as the Dietary Supplement Health and Education Act prohibits market exclusivity for natural compounds with known chemical compositions. If a compound is known (generally the case if it is from a food or plant), any company is allowed to make and sell the product.

It’s easy to see why pharmaceutical companies wouldn’t want to pay for extensive clinical trials to validate a natural product’s therapeutic efficacy, only to see competitors sell the same product and reap the benefit of their hard work.

Artemisia annua (Chinese wormwood, sweet wormwood, qing hao) has proven anti-malaria action. (tonrulkens/Flickr)

Some mechanisms do allow companies to retain market exclusivity for short periods of time.  Compounds can be altered to improve delivery, or combined with other compounds in novel ways, creating new intellectual property that is enforceable. But there’s still stagnation in drugging these compounds, suggesting that these market incentives aren’t enough to generate ROI. Pharma needs a new business model for natural compounds.

At least one food supplement has been brought to market as a therapeutic with FDA approval. Lovaza, a prescription-grade omega-3 fatty acid supplement, was approved for treating high triglycerides in the blood. Lovaza is more expensive than the omega-3 supplements you can buy at a grocery store, but part of the cost to the patient is offset by insurance reimbursement. I’m not advocating this example as a perfect solution: expensive, prescription versions of commonly available supplements likely aren’t going to help reduce our health care costs. But it is notable that the company managed to find a business mechanism that justified paying for clinical trials, and somewhat successfully integrated the product into standard treatment regimes.

If more companies found ways to commercialize natural compounds, we might see breakthrough cures for chronic diseases. The treatments would likely be safer, since they evolved along with us and work via universal, endogenous mechanisms known to promote well-being. Advances in genetics and molecular biology put us in a position to substantially confirm and supplement (pun intended) the time-tested wisdom from Chinese and Ayurvedic medicine. While many traditional plant-based medicines are considered “dirty drugs,” hitting multiple molecular targets, modern pharmaceutical science allows us to enhance potency and reduce side effects with new delivery mechanisms and combination innovations, and to personalize treatment using responsiveness biomarkers.

Madagascar periwinkle leaves contain vincristine and vinblastine, used in cancer chemotherapy. (tonrulkens/Flickr)

The science is promising enough to warrant development of new products. Take the discovery, here at Children’s Hospital Boston, that a food supplement, inosine, can promote axon re-growth following nerve damage. The compound, produced naturally in the brain, could be used to treat stroke and other conditions. Non-profit organizations have found the approach compelling enough to sponsor a number of human clinical trials testing oral inosine in conditions such as Parkinson’s disease. Another compound studied at Children’s, nicotinamide (vitamin B3), protects axons from degeneration in a mouse model of multiple sclerosis. The University of California Irvine is currently testing oral nicotinamide in Alzheimer’s patients.

While the science suggests that many naturally derived products can help people get well, the business incentives do not always coax toward that end, and may even be contrary to what is best for the patient. But as we try to make the business case for developing naturally-derived compounds as proprietary molecules, consumers aren’t hesitating. The nutraceutical and functional food markets have exploded in recent years. Companies like Nestle have committed substantial investments.

The pharmaceutical industry giants would do well to follow suit. If wellness is our ultimate end, naturally derived compounds offers a largely untapped opportunity, one that is begging for pharma’s R&D and pipeline capabilities.

We may need to think of new ways to reward companies who take steps in this direction. Maybe legislation regarding market exclusivity needs to be more generous. Or perhaps consumers themselves, armed with information from clinical standards bodies on the compounds’ efficacy, could create a demand for these products.  This is what happened with organic foods: As consumers became more educated, market pressure was created and mainstream grocers began stocking more organics. I’m not sure what the best answer is, but the question of naturally derived compounds deserves to be part of the discussion as we try to revitalize our struggling pharma industry.

Keeley Wray is the Technology Marketing Specialist in the Technology and Innovation Development Office (TIDO) at Children’s Hospital Boston. She tweets her opinions @Market_Spy.

[Ed note: For more on naturally derived medicinals, see this photo gallery.]