New indications is a term often embraced by pharmaceutical companies to denote emerging evidence suggesting new applications for an existing drug or procedure. This development garners considerable attention from investors, who monitor these findings closely through companies’ press releases and investor relations communications.
Key Takeaways
- New indications refer to signals indicating that an existing drug might have broader medical applications.
- Repurposing drugs in this context can be more cost-effective than developing new drugs from scratch.
- Investors often see new indications as a positive sign, hinting at new revenue streams at a relatively low cost.
How New Indications Work
New indications provide an early indication that a particular drug or procedure may warrant additional investment. For instance, a company that already has regulatory approval for a specific drug will report new indications if ongoing research suggests possible further applications for that drug. Generally, investors view new indications favorably because they can indicate additional revenue-generating opportunities for a company’s existing products.
In the United States, companies must navigate an extensive process to bring new drugs to market. The Food and Drug Administration (FDA) oversees the development and approval process through the New Drug Application (NDA) system, a process that can take several years, sometimes exceeding a decade. Despite the rigorous process, only about 30% of new applicants receive FDA approval for their NDAs.
Important Factors to Consider
Although repurposing existing drugs can reduce research and development (R&D) costs, significant expenses accompany obtaining final FDA approval for these repurposed drugs. However, since these drugs have already passed through the NDA process, companies frequently view them as a less risky investment compared to developing entirely new drugs.
Given these advantages, one of the most strategic ways for pharmaceutical companies to expand into new markets is by identifying new or expanded applications for products that already have FDA approval. Some companies even specialize in repurposing approved drugs to facilitate the faster commercialization of new therapies.
Real-World Example of a New Indication
New indications commonly surface in announcements related to medical treatments and pharmaceutical companies. For instance, on August 16, 2018, the FDA approved a new indication for the drug Opdivo (nivolumab), which treats cancers such as advanced melanoma, advanced renal cell carcinoma, and advanced squamous cell carcinoma of the head and neck.
When Opdivo was first approved in December 2014, it had a more limited application, targeting patients with advanced melanoma that couldn’t be treated surgically or was unresponsive to other medications. The new indication thus presented an opportunity for the drug to be marketed to a larger audience than initially anticipated.
Related Terms: Regulatory Approval, New Drug Application, Commercialization, Investor Relations, Food and Drug Administration.
References
- U.S. Food and Drug Administration. “Step 3: Clinical Research”.
- U.S. Food and Drug Administration. “FDA Grants Nivolumab Accelerated Approval for Third-Line Treatment of Metastatic Small Cell Lung Cancer”.
- Opdivo. “Opdivo”.
- National Institutes of Health. “Opdivo (Nivolumab): Second PD-1 Inhibitor Receives FDA Approval for Unresectable or Metastatic Melanoma”.
