Japanese drugmaker urges G7 to fix infectious diseases market

The head of Japanese drugmaker Shionogi has called on G7 governments to lead on fixing the market for infectious disease medicines, or run the risk that more drugmakers will leave the critical field.

Isao Teshirogi, chief executive of the company, which has invested in an antiviral for Covid-19 and novel antibiotics, said infectious disease treatments were a “very challenging business”, despite their importance. 

Teshirogi warned that an increasing number of companies were leaving infectious diseases behind to concentrate on relatively lucrative areas such as oncology or rare diseases. It can be hard to predict demand for infectious disease medicines and each treatment typically uses fewer drugs than are used in the management of a chronic condition. 

“Now’s the time for G7 countries to show leadership, to say, OK we lead the world in supporting the very capable antibiotics and short-term, acute phase antivirals,” Teshirogi said.

He added that, without support from wealthy countries, people in low and middle-income countries were likely to suffer disproportionately from a reduced investment in tackling infectious diseases. Pathogens resistant to existing antibiotics killed about 1.3mn people in 2019, a figure that forecasts suggest could rise to 10mn a year by 2050. 

Shionogi’s call for more global action on infectious diseases comes after the company devoted a large part of its resources and personnel to develop a treatment and vaccine for Covid-19 over the past three years.

Some analysts have questioned the strategy since the group’s outlook is uncertain. It has a thin pipeline of drugs under development and an earnings structure that is heavily dependent on royalty income from HIV drugs. Its shares have declined 1.5 per cent in the last five years, while the Nikkei 225 Index has gained more than 40 per cent over the same period.

For the fiscal year to March next year, the company expects to generate sales of ¥105bn ($720mn) — roughly a quarter of its expected annual revenue — from its Covid franchise. In the first quarter, it reported sales of just ¥6bn from its Covid pill Xocova, prompting analysts to criticise its full-year target as too bullish.

Kazuaki Hashiguchi, analyst at Daiwa Securities, said that, in light of rivals’ withdrawal from infectious disease research, the social value of the company’s activities had increased. But he warned it was proving difficult for the company to turn that into financial returns. 

“Shionogi does have a point and it’s understandable for them to argue that infectious diseases are very important and more resources should be distributed to this area,” Hashiguchi said. “But whether there is a social consensus for that is debatable.” 

Policymakers in the US, EU and UK are looking at ways to increase investment in antibiotics. But Teshirogi said he was “surprised and disappointed” that the US had not yet passed its Pasteur Act. The legislation is designed to encourage investment in new antibiotics and tackle the threat of antimicrobial resistance. 

“To me, the first impression was, what’s wrong with the US?” Teshirogi said.

He added that the US should be willing to lead the world with a so-called “pull incentive” that tackles problems with the financial returns on new antibiotics.

A pull incentive would address the challenges presented by the traditional financial model that rewards drugmakers according to the volume of any newly developed drug sold. That model is problematic because clinicians should use any newly-developed antibiotics as sparingly as possible to manage the risk that new drugs will generate yet more resistant bugs.

However, Teshirogi praised the UK’s “world leading” subscription model for antibiotics, which the country’s health service is planning to expand to pay drugmakers up to £20mn a year per new drug. The scheme pays the same sum no matter how many or few antibiotics are sold. Shionogi participated in the pilot.