Horizons

Beating Natural Selection: Bending the Drug Development Cost Curve

2009-12-26T21:28:00.003-05:00

On the blog, In The Pipeline, Derek Lowe’s post on Pfizer’s spiraling research and development costs and stagnant drug output illustrates the predicament the pharmaceutical industry faces in the near future. He cites a recent article in Nature by Robert Munos on the reason for this. Munos lays out how the pharmaceutical market has dual problems of development cost and petering innovation which both hobble giants like Pfizer and small start ups. Through research, he shows despite start up companies innovating more efficiently, they still fail due to pinning their hopes on one drug because of the enormous development costs. On the other hand, large companies, due to short sighted leadership, have stifled innovation to capture short term gains, by forcing researchers to make “me too” blockbuster drugs. Both modes of operation are combining to slowly box the pharmaceutical industry into competing over a few blockbuster drugs, killing innovation and dooming the industry to a slow death. This obviously needs to change. Munos writes that a paradigm change is needed to break this deadlock. While Munos offers good solutions, none of them offer an easy path to breaking the near term deadlock.

Unlike Munos, I believe the solution to the industry deadlock lies partially in technology. A decrease in development costs would enable research and development of more drugs, increasing the likelihood of having a blockbuster drug. However, current methods make multiple drug development untenable for smaller start up companies. Thus, a method of drastically reducing the costs of development while combining the innovation drive of smaller start ups can break the deadlock.

The main reason for spiraling development costs lie in the difficulties of properly ascertaining how a researched drug will affect the patient. The cost drivers are the enormous amounts of time needed to both predict drug reactions and wait for drug reactions during trials. Currently, trial and error is needed for newly researched molecular entities to see how the compound will affect a patient’s body. However, the understanding of biology and chemistry has progressed far enough to predict with considerable accuracy how a compound will affect a human body’s systems. Unfortunately, geometry of the compound is needed to predict the reactions. Currently, the only way to ascertain this is to crystallize the molecule and scan or bombard the crystal with EM radiation. The crystals must be perfect to allow accurate readings. Formation of these crystals in a gravitational environment is still more art than science, and takes months many times yielding no usable crystals.

Even with compounds with known geometries, animal clinical testing for certain diseases takes up large amounts of time. Due to the huge number of variables present in a biological system, clinical tests are often iterative, with incremental improvements being made on the compound to mitigate undesirable side effects. Time is very valuable, as competing companies have parallel development efforts to reach lucrative markets first. Under the present paradigm, there is no way of significantly decreasing the time compounds take to affect complex biological system.

Fortunately, there is a solution to this. The microgravity environment of space accelerates cell division, muscle and bone atrophy. All complex organisms have higher stress levels in the low gravity environment. Also, since natural convection is diminished greatly, perfect crystalline structures of any complex compound can be made. These advantages can reduce downtime, thus lessening costs of drug development.

The use of the microgravity environment can be integrated into the existing development structure, used to accelerate specific parts of the development process. For example, a company can send up complex molecular solutions to create crystals in space, retrieve the finished crystals, and analyze them on Earth to get structures for the molecules. Also, companies can use the microgravity environment for animal trials, taking advantage of increased cell division, higher stress levels, and/or accelerated muscle atrophy to shorten the time the drugs take to act.

The entire orbital infrastructure would be automated. The equipment for this type of testing already exists, commonly used by NASA for biological experiments. No manned presence would be needed, and all control could be from the ground, done through a wireless uplink with the space station. The company would not have to change its operations visibly to capture the benefits of microgravity. Since the entire infrastructure would be very mass efficient, costs to execute this would be under $500 million per year. Following posts will further outline the costs of maintaining, supplying, and benefits this infrastructure.

Crossing the Threshold: Gaining Access Into the Third World Mobile Phone Market

2009-12-15T11:09:00.002-05:00

Today’s world is more connected than ever. Nearly one billon plus are connected through computers or cell phones. As the third world climbs its way into industrialization, their enormous populations are beginning to demand more connectivity. This group’s population is 80 percent of the world’s population. Economists say this group is a ten trillion dollar market, and as of now nearly completely untapped. Currently, most of the developing world’s people cannot afford full size computers or laptops. However, mobile phones fall into their income range. With continuing advances, mobile phones have now become mini computers, allowing the users to surf the internet, check email, and use applications. For the average third world person, it gives them all the utility needed to better accomplish their daily tasks. This market is enormous, and has only begun to be tapped.

Unfortunately, despite having superior designs, most traditional semiconductor companies are locked out of this market due to their inability to cheaply manufacture application specific integrated circuits or ASIC’s. ASIC’s are chips that can perform a single defined task very efficiently. This translates into longer battery life, and for a mobile phone this is crucial. The main reason traditional semiconductor companies cannot easily enter this market is due to their manufacturing costs. ASIC’s are designed to cater to specific products. For example, an IPod ASIC would not work in a Zune, despite doing the same function. Also, since the main market for mobile phones is consumers, products on average have very short life spans either being fads or being taken over by newer designs. Under the current paradigm, short of a major overhaul in the way semiconductors are manufactured, traditional semiconductor manufacturers cannot compete in this market.

Fortunately, if the paradigm is changed to include manufacturing in space, traditional semiconductor companies can compete. Since space manufacturing involves natural vacuum and microgravity, it is a MUCH less material intensive process. Space manufacturing would be a completely dry process, using plasma and gases instead of fluids for etching and cleaning. Fortunately, all these tools are available, being used in the next generation nanometer chips. With the addition of natural vacuum, the bulky vacuum pumps can be dropped from the system. Due to the dry chip manufacturing process and natural vacuum, many of the cleaning processes used on Earth become redundant, and can be dropped. This leads to 33% drop in the time it takes a chip to fabricated, from one month, to two and a half weeks. Also, due to the cleaner environment, fewer starts are needed to fix faults in the design. This combines to give the owner of the factory a much shorter response time, allowing them to capture the dynamic consumer electronic markets. With consistent transportation, the owner can quickly gain market share, and pay off the fixed capital costs of the factory.

Threading the Needle: How Biotech and Pharma Can Flourish in a Post-Reform Environment

2009-12-11T12:24:00.005-05:00

The past year has seen the ravaging debates of health care, with both sides making attacks and counter attacks. However, one thing has remained abundantly clear. A form of health reform will pass sometime soon, either late this year or early next year.

So how could this reform affect drug companies? In the short term, it is guaranteed to either reduce their revenues through collective bargaining for drug prices, or through head to head competition for FDA approvals. While the list of hazardous diseases is still long, the resources to fight these diseases with new drug development are decreasing. Drug companies already have a difficult enough time as it is to pay off current research costs. Also, there is a dearth in the number of market viable drugs in the research pipeline. This all adds up to squeezed profits, and further endangers many companies who are already on thin ice.

Companies have a couple of options to stave of bankruptcy. They can dilute the reform package through an army of lobbyists, slowly chipping away at the core guidelines to ensure that bill won’t affect them badly. However, only the large companies can afford to do this, and it won’t guarantee you protection for long.

Companies can merge with or acquire competitors to ensure collective survival with pooled resources. However, this also only gives temporary protection, and doesn’t guarantee the most efficient use of resources.

The root of the problems stems from research costs. Currently, the process takes nearly ten years and two billion dollars per drug. Even then, it doesn’t guarantee that the drug will sell, and most times, most drugs that make it through the FDA regulations don’t recuperate their research costs. Thus, the few blockbuster drugs pay off the myriad of other drugs that fail to sell to ensure the company does not go under.

The ideal situation would be quick, inexpensive research that yields higher quantities of market ready drugs. This way a company can spread out their risk, and ensure that at least one drug would work. The question is, Can this be done now?

Surprisingly, the answer is yes. The microgravity environment of space yields higher volumes of useful data on a myriad of diseases and disabilities ranging from osteoporosis to E-Coli to cancer. The environment accelerates muscle and bone loss, while at the same time elevating stress levels in living organisms. This offers a perfect environment to study atrophy diseases like osteoporosis and stroke and stress related diseases like high blood pressure and cardiovascular disease. Also due to the low gravity environment, X-ray crystallography to yield exact geometries of complex proteins can be done with high accuracy due to perfect crystal growth. This can all be done autonomously for little added cost from current ground based research. The only added cost would be the supply and the cost of putting a lab into orbit. Even with today’s astronomical launch costs, companies can still recover their investments through shorter research time lines. Since organic compound geometries can be determined with high accuracy quickly in space, research can be targeted instead of trial and error as it is now. This can potentially save companies billions, and give them a safety net for both the long and short terms, allowing them to weather any change in market conditions or regulations. More detail on what specific advantages that space based life sciences research can give will be on following posts.

Beating Moore’s Law: How Semiconductor Companies Can Reduce Costs AND Keep Innovating Every 18 months

2009-12-05T13:38:00.004-05:00

Everyone knows about the phenomenal progress of innovation in the semiconductor industry. The law driving this is known both in the industry and colloquially as Moore’s Law. It states that microchips will double their computing power every 18 months. Basically, that means that the number of circuit parts that can be crammed into a space will double in 18 months. This translates into smaller and smaller parts which require cleaner and cleaner spaces to manufacture. Making a clean enough space for nanometer size parts to be manufactured on a large scale requires near perfect vacuums. Making this possible on Earth requires large energy intensive vacuum pumps and stringent handling procedures. To top it off, the yield for these ever smaller chips decreases due to difficulty of preventing contaminants from coming in. This all combines to skyrocketing fixed costs and a diminishing ability to recover the investment due the bad yields. Add to that, the chips being manufactured become obsolete within 18 months, and due to the poor yields never reach their full potential sales.

This trend has forced many semiconductor companies to become either “fabless”; basically outsourcing their manufacturing to companies specialized in only manufacturing, or make alliances with competitors to survive cost increases. However, even these measures are beginning to have diminished effects as chips come into the nanometer range, with manufacturers spending large amounts of money to try to increase yields and maintain quality.

How can a company free itself from this burden? The only way is to solve the root problem of creating a clean environment cheaply. Fortunately, the cleanest environment in the universe exists a short five hundred miles away from any part of the planet. That environment is space. Low earth orbit offers an environment that is a thousand times cleaner than the cleanest clean room on Earth. And, it’s available for free. Semiconductor companies can get rid of its bulky hardware required to maintain clean rooms on Earth. They can have the freedom to innovate and manufacture smaller chips without having to worry about making a cleaner environment. Companies that choose this option can freely out-innovate the competition without having to worry about whether their chip can be manufactured.

Aviation Based SSTO: Orbital Transport for the 21st Century

2009-12-04T16:51:00.002-05:00

Mankind has been in space for the better part of a half century. Yet, our method of reaching space has stayed the same for that entire length of time. We still rely on expendable rockets to reach orbit. This is a very expensive method of reaching orbit, thus locking off orbit from everyone except for a select few. To understand why aviation based single stage to orbit (SSTO) transport is better, one needs to know the original rational for rocket based SSTO.

The original impetus for orbital transportation came from military during the early 1950’s. Seeing how attaining orbital velocities gave their weapons global range, the military saw how it could give them the ability to bomb targets with nuclear weapons from the safety of the homeland. Rockets were chosen as the vehicle because they offered faster response than aircraft. They were designed to be expendable because in the event of a nuclear attack, the home base from where they were launched would probably not survive the first salvo, and thus did not need to come back. This was the design rationale for the first generation of orbital launch vehicles, designed as ammunition instead of as reusable systems, intended to carry weapons of war. All the systems on the rocket were designed to have enough reliability to get to the target once, and maintain that reliability through long dormant periods of inactivity, sitting in silos waiting for the go commands. And, for this purpose, rockets are the ideal vehicle, providing the excellent throwaway strike capability the military needed to keep on constant readiness.

Unfortunately, economic civilian use diametrically differs from military use. Civilian, and especially, business use requires that a single vehicle service a myriad of markets, efficiently, for the lowest cost possible. It requires the vehicle to be constantly operating, through a myriad of conditions, and be flexible enough to reach its destination, no matter where it is. A good example of this is the air cargo market. FedEx travels everywhere, in all conditions, and always gets it packages to market on time. Thus, this is why aviation based orbital transportation is ideal for a cargo transports. Having the ability to operate in less than ideal conditions, land at airports, and use less fuel, they offer the operator the ability to do business anywhere, and the customer have that transportation conform to their needs. An aviation based SSTO would be the ideal cargo vehicle to transport raw materials and finished goods to and from orbital factories and labs.

Astrogenetix: Coming of A New Trend?

2009-11-29T22:11:00.003-05:00

Astrogenetix is the first biotech company to solely use space to conduct life sciences research with the intent of making commercial drugs, sending up new materials in the recent shuttle launch. In an earlier post “The Orbital Industrial Revolution Pt 2” I wrote about how space could be used to shorten research timelines by gaining new insights into how living compounds interact with drugs and vaccines. This company is acting based on this fact. Astrogenetix has lab space on the International Space Station and the Space Shuttle, gotten through agreements with NASA. They are making remarkable progress into diseases currently either incurable, or curable with a very small set of drugs.

Unfortunately, despite Astrogenetix’s remarkable progress of utilizing microgravity for both commercial and human benefit, its business model is difficult to replicate. Most companies do not have the same level of access with NASA as Astrogenetix to get space on any of its launch vehicles. Currently, the only commercial launch company to offer space for life sciences research is SpaceX. Despite offering space, SpaceX is still rocket based, and has a very limited operating envelope, being unable to launch unless conditions are just right. Until access to space is opened up by inexpensive, reliable, flexible, launch services, Astrogenetix will remain a fluke instead of a trendsetter.

Space and Earth's Environment

2009-11-26T22:20:00.002-05:00

Before satellites, industry in space seemed futuristic. The future is now and none too soon for our home planet.

Since ancient times people have been looking up to find out all they can about space. Well, now we need space to look down and give us information about Earth. The MIRAS instrument on the European Space Agency’s SMOS (Soil Moisture and Ocean Salinity) satellite has recently been switched on and will do just that.

So, what does this have to do with us? Let’s look at our biological needs and how nature provides for us. Soil contains nutrients that dissolve in water and then travels through the roots of plants and trees to be part of the fruits and vegetables that give us nutrition. For instance, iron, potassium, magnesium and calcium go from the soil into apples, oranges, tomatoes and carrots. When we eat these fruits and vegetables we are helping our blood cells, heartbeat and bones. Soil moisture is an important step in getting the nutrients into food that feeds our bodies. What agricultural experts learn from the space view of Earth can have a direct and promising impact on our food supply.

The Orbital Industrial Revolution: The Business Reasons for Industrializing Space Pt 2

2009-11-25T17:48:00.002-05:00

Today’s post will be on the pharmaceutical industry. Having its origins in the late nineteenth century, the pharmaceutical industry has been around for more than 100 years. Over that period, as our understanding of biology and chemistry grew, the pharmaceutical industry began to create newer, better drugs. Still, despite the new science, and new technology, drug research is still done the same way now as it was during the early twentieth century, through painstaking trial and error. This methodology was fine until diseases began to evolve, and the drug industry began trying to cure more difficult diseases. Now, it takes nearly ten years and two billion dollars to create a drug. Added to that, with imminent health care legislation forcing head to head drug tests, companies face more competition than ever. This all leads to squeezed margins, and diminishing profits. Fortunately the technology to reduce the costs exists. It was used to detect and map DNA can be used to get chemical structures of complex organic molecules to better understand the reactions it will have with a host minus the long trial and error process. Unfortunately, this technology requires near perfect crystals to be grown. In a gravity environment, this is impossible due to natural convection.

Fortunately, this can be done cheaply and quickly in a microgravity environment. In a zero gravity environment, crystals of large organic molecules grow perfectly, giving perfect samples for X ray crystallography. Also, living organisms grow three times faster than on Earth due to the lower gravity, allowing tests to be done three times faster than possible on Earth. These two advantages can be used to save months and possibly years off research timelines saving millions of dollars.

The Orbital Industrial Revolution: The Business Reasons for Industrializing Space Pt 1

2009-11-17T14:24:00.007-05:00

This is the first post in a series, detailing how specific industries can get enormous dividends by shifting certain operations into space. Each post will focus on a single industry. This post focuses on the semiconductor industry.

The semiconductor industry has its origins in the beginning of the space race during the nineteen fifties. Their original customer was the aerospace industry, as they entered space, needed lighter computers to calculate complex trajectories and orbits. As the space race began to wind down, semiconductors began to permeate everyday life. As the personal computer and internet spread, chips began to get exponentially smaller. This leads to now, where semiconductor companies are require near perfect vacuums to fabricate the progressively smaller chips properly. To do all this on Earth, where dust can penetrate the most perfect vacuums, is expensive and tedious, requiring complex arrays of mechanical pumps and isolated assembly lines. The cost of setting up a microchip fabrication plant now nearly totals $5 billion. To offset this massive cost, the fabrication plant needs to be able produce good chips quickly. Unfortunately, most plants have terrible yields, and only approach optimum yields near the end of their useful lives. As innovation times decrease, this forces companies into a downward spiral of squeezed profits.

Space offers a way out. The base environment in space is a million times cleaner than that of the best clean room on Earth. And, the best part is that it is available for free, without having to manipulate the surrounding environment. All the processes needed to fabricate chips in space are already used on Earth. Setting up an equivalent plant in space, including launch costs, is 50% less than on Earth. Add to that, because of the ambient clean environment, space plants have 33% higher yields than the highest yields possible in terrestrial plants. This adds up to lower costs and higher profits, allowing companies to produce successive generations of chips for no more cost than the previous generation.

Overview

2009-11-13T14:12:00.003-05:00

Well, this is my first post on my blog. I thought it best to give an overview of what horizons is all about. I strongly believe that industrialization of space would benefit business and society, and think that it should be talked about. So, since there were no forums talking about why it should be done now, I decided to create one. This blog is basically all about how business would benefit both society and their bottom lines by transferring their business into space, i.e. widen their horizons. I welcome any and all comments.