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Diaceutics Identifies Critical Market Drivers for Personalized Medicine Development

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Traditional models for predicting marketplace potential for “one-size-fits-all” drugs are inadequate for the new world of personalized medicine in which developers of targeted therapies hope to follow in the footsteps of successful drugs, such as Genentech’s Herceptin® or Tarceva®, according to the authors of a special report in the current issue of Personalized Medicine (Vol. 7, Issue 1, 2010, pp.103-114).

The report describes why conventional financial models for predicting net present value (NPV) and return on investment (ROI) for traditional drugs don’t work for development of targeted therapies. Currently, pharmaceutical development teams lack financial benchmarks needed to understand how targeted therapies and related diagnostics will perform in the emerging personalized medicine marketplace – with a potential value of $245 billion, by some estimates.

Personalized medicine involves diagnostic testing to identify a patient’s or a disease’s specific genetic makeup and the use of this information to identify the most appropriate therapy for that patient.

“Typically, executives fail to understand that targeted therapies and associated tests are fundamentally different products from one-size-fits-all drugs,” said Peter Keeling, chief executive officer of Diaceutics and a co-author of the report. “Targeted drugs and stand-alone tests do not behave in the market in the same way as one-size-fits-all drugs or diagnostic tests.”

According to Keeling, pharmaceutical development teams have yet to establish a financial model that enables them to maximize NPV and ROI for targeted drug therapies that rely on a companion diagnostic test.  In fact, the authors estimate that Herceptin, as successful as it was, lost an additional $3 billion in revenue as a result of a poorly executed companion diagnostic strategy.

“Assuming that the economics of a targeted therapy are the same as other drugs is a dangerous premise that has not proven itself in actual development,” said Keeling. “Better market models are essential as estimates indicate that 25% to 50% of future drug launches will be based on personalized medicine.”

The report describes Diaceutics’ Case-Based Reasoning Financial Benchmarking ModelTM an interactive, evidence-based benchmarking and financial tool that identifies what drivers will be most effective for ensuring successful development and marketing of a unique targeted therapy.

The Model is based on an examination of over 200 cases in which a drug therapy and a diagnostic test have interacted (negatively or positively) in the marketplace. (Case-based reasoning uses real-world cases from which reasonable analogies may be drawn to identify factors similar to a study problem, such as introducing a targeted therapy.)

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