New Indications
New indications is a term pharmaceutical companies use to refer to new evidence signifying that there may be new applications for an existing drug or procedure. New indications is a term pharmaceutical companies use to refer to new evidence signifying that there may be new applications for an existing drug or procedure. For example, on Aug. 16, 2018, the FDA released a new indication approval 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. Nevertheless, because these drugs have already passed through the FDA’s NDA process, many companies view them as a less risky investment as compared to developing new drugs from scratch. For example, a company that has already obtained regulatory approval for a particular drug would report new indications if their research suggests that additional applications for that drug might be possible.
What Are New Indications?
New indications is a term pharmaceutical companies use to refer to new evidence signifying that there may be new applications for an existing drug or procedure. This type of news is closely followed by investors, who can access such findings through the press releases issued on companies’ investor relations pages.
How New Indications Work
New indications are an early sign that a particular drug or procedure may be worth investing in further. For example, a company that has already obtained regulatory approval for a particular drug would report new indications if their research suggests that additional applications for that drug might be possible. New indications are therefore viewed as a positive development by most investors because they could signify additional revenue-generating opportunities for a company’s existing drugs.
In the United States, companies must go through a rigorous and lengthy process in order to bring new drugs to the market. The Food and Drug Administration (FDA) oversees the development and approval of new drugs through their New Drug Application (NDA) process. The process routinely takes years to complete, with some stretching over a decade. Despite this lengthy process, only about 30% of new applicants have their NDAs approved.
Important
Although repurposing an existing drug can lead to reduced research and development (R&D) costs, there are nevertheless major costs involved in obtaining final FDA approval for such repurposed drugs. Nevertheless, because these drugs have already passed through the FDA’s NDA process, many companies view them as a less risky investment as compared to developing new drugs from scratch.
Real-World Example of a New Indication
New indications often appear in news releases for medical treatments and pharmaceutical companies when referring to drugs or equipment involved. For example, on Aug. 16, 2018, the FDA released a new indication approval 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 it was first approved in December 2014, this drug had a more narrow intended usage, specializing in patients with advanced melanoma that could not be removed with surgery or that no longer responded to other drugs. The new indication therefore represents an opportunity for the drug to be sold into a larger addressable market than previously anticipated.
Related terms:
Biotechnology
Biotechnology is the scientific study using living organisms to develop healthcare products and processes. Learn how to invest in biotech companies. read more
Commercialization
Commercialization is the process by which a new product or service is introduced into the general market. read more
Drug
A drug is a substance used to prevent or cure a disease or ailment or to alleviate its symptoms. In the U.S., drugs may be bought over-the-counter or by doctor's prescription. read more
Expert Network
An expert network is a group of professionals who are paid by outsiders for their specialized information and research services. read more
Food and Drug Administration (FDA)
The Food and Drug Administration is a government agency that regulates certain food, drugs, cosmetics, and medical products. read more
Health Insurance
Health insurance is a type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured. read more
Incidence Rate
The incidence rate describes the frequency of an event occurring over time. Read how incidence rates impact investors in pharmaceutical companies. read more
Investor Relations (IR)
The investor relations (IR) department is a division of a business whose job it is to provide investors with an accurate account of company affairs. read more
Medicare
Medicare is a U.S. government program providing healthcare insurance to individuals 65 and older or those under 65 who meet eligibility requirements. read more
Orange Book
The Orange Book is a list of drugs that the U.S. Food and Drug Administration (FDA) has approved as both safe and effective. read more