A recent market analysis by IMS Institute for Healthcare Informatics projects that the global pharmaceutical industry will reach nearly $1.1 trillion by 2015. As the pharmaceutical industry is poised to cross this historic threshold, what might we expect to see in terms of the near-term and future composition of the pharmaceutical market?

The overarching trends in the industry of increased generic-drug incursion, strong growth in emerging markets, and slowing growth in established markets in the US and Western Europe are well known. But what of new product development? An ominous sign is a significant drop in the number of applications for new molecular entities (NMEs) filed with FDA. In 2010, 23 NME applications were filed with FDA, the lowest number filed in more than 15 years, with the exception of 2002, when 22 NME applications were filed. The 23 NME applications in 2010 were significantly below recent levels: 37 in 2009, 34 in 2008, 35 in 2007, 26 in 2006, 38 in 2005, and 32 in 2004.

Although NME filings were down in 2010, the approval rate was higher than in recent years. In 2010, 21 NMEs were approved by FDA, or 91.3% of NME applications. In 2009, 26 NMEs were approved or 70.3% of NME applications. A similar level occurred in 2008, when 24 NMEs were approved or 70.6% of NME applications. In 2007, 18 NMEs were approved or only about half (51.4%) of NME applications, and in 2006, 22 NMEs were approved, representing approval of 84.6% of NME applications.

Reaching the point in late-stage drug development to file a new drug application for a NME is a crucial goal, but the real prize is only in regulatory approval of that NME. So in looking at 2010, are fewer NME applications with higher approval rates reflective of overall better drug development or not? Did innovation decline in 2010 or were drug-development efforts more successful in weeding out product failures earlier in development? Can less be more when it comes to new drug development? For the NME class of 2010 or any crop of newly approved NMEs, the ultimate judge of successful innovation will be the market performance of a given NME; that is the answer to the trillion-dollar question.