Antibiotics Market ‘Fragile and Failing,’ Report Says

By Christopher Cheney

The antibiotics pipeline has dried up and the companies that make the bulk of antibiotics are facing multiple challenges, a new report from the Biotechnology Innovation Organization (BIO) says.

There is an ongoing struggle between antibiotic-resistant infections—superbugs such as Methicillin-resistant Staphylococcus aureus—and the makers of antibiotics. The global death toll is alarming, with more than 1.2 million people dying annually, and estimated mortality expected to reach 10 million people annually by 2050.

There is an urgent need to increase development of antibacterial medications, the BIO report says. “Despite the availability of 106 unique direct-acting antibacterial therapeutic entities on the market in the U.S. and 28 unique antibacterials outside the U.S., there remains a need for alternatives to currently available drugs that will circumvent bacterial resistance to current medicines. More than 82% of all antibiotic approvals occurred prior to the year 2000. The majority of the drugs remaining on the market are facing eventual loss in efficacy due to resistance developed by bacterial strains encountering these treatments in the population.”

Small and start-up biotechnology companies dominate the development of new antibiotics, with 80% of potential new antibiotics in the development pipeline coming from these companies, the BIO report says. Funding for antibiotic development is insufficient, according to the report.

“Funding has been sparse for these antibacterial developers, and the ecosystem is fragile and failing. Over the last decade, antibacterial start-ups raised a total of only $2.3 billion in both venture capital and [initial public offerings], well below other areas in medicine and not enough to compensate for the need of a broad ecosystem and diverse pipeline of candidates. By comparison, over this same decade oncology companies raised $38 billion in venture capital and IPOs, more than 16-fold over the amount invested in antibacterials,” the report says.

A decrease in the number of clinical trial initiations shows that small and large biotechnology companies are withdrawing from the antibiotics market, the report says. “Phase I trial initiations declined 46% when compared to the previous five-year periods (2011-2015 vs. 2016-2020). Phase II and III trial initiations declined 33%. The same percentage drop was seen when segmenting by company size, suggesting the wane in large company interest is shared by small companies and their investors. This is particularly concerning as large companies have traditionally been a critical part of the antibiotic ecosystem, with their extensive manufacturing infrastructure and global distribution capacity.”

Three dynamics are driving investors away from the antibiotics market, the report says. “First, large companies have been exiting from the space for some time, with very few listed as co-sponsors of small company pipeline candidates. Without a vested interest from large biopharmaceutical companies, licensing deals and M&A dry up, souring the incentive for early-stage investors such as venture capitalists. Second, the majority of recent examples of ‘successful’ biotechs (those that have raised venture capital, obtained funding through public offerings, … and achieved FDA marketing approval) have been commercial failures. Investors point to these recent stories of antibacterial company bankruptcies and acquisitions at fire sale valuations as evidence to avoid investment in this segment of medicine. The third factor is the lack of effective policy and regulatory solutions to address the unique characteristics of the antimicrobial marketplace.”

The economics behind the utilization of new antibiotics are driving large biotechnology companies out of the antibacterial market and financially undermining small companies, the report says. “First, new antimicrobials will primarily be used as ‘last line’ therapies for use in hospitals when other options are ineffective. These products are short duration therapies and will experience slow uptake since they are usually used sparingly to preserve effectiveness. Novel antimicrobials are also generally undervalued by reimbursement systems relative to the benefits they bring society. Finally, hospital bundled-payment reimbursement mechanisms can discourage use of novel antibacterials, even when they are the most appropriate treatment for a patient, contributing not only to market challenges but also patient access to novel products. Taken together, these challenges create a market with little to no return on investment for antibacterial medicines.”

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.