The New Building Blocks for Blockbusters

Sep 01, 2004

The blockbuster is dead. Long live the blockbuster! The industry is experiencing cognitive dissonance. Many of today's leading pharma and biotech companies reached their positions by discovering or acquiring drugs with the ability to generate multibillion-dollar sales in a single indication. But the new consensus seems to be that although single-indication blockbusters may still occur, the single-minded pursuit of them is a bust as a strategy. So the question is: How to replace the revenues generated by the big drugs of yesteryear?

The answer is that it is still possible to generate blockbusterlike revenues. But doing so requires a different approach. Future moneymakers will be built from the ground up, using one of the three strategies that combine scientific and market perspectives to identify untapped opportunities. Their successful implementation will require steadfast stewardship and purposeful coordination between R&D and commercial operations. Like any significant change, at times it may make pharma companies uncomfortable, but in the long run it will also be rewarding.

Alternative Approaches Although they lack the simple elegance and ease of implementation of the traditional blockbuster model, the new strategies address the issues of today's multifaceted healthcare environment. They are complementary, and companies with the where-withal should pursue all three in parallel:

  • diagnostic-led
  • single-pill
  • treatment-platform.

The Single Pill-Solution
The diagnostic-led strategy is based on the observation that even when there are well-established treatments for a condition, significant numbers of patients are either not diagnosed in a timely manner or not diagnosed at all. The single-pill strategy combines (into a single administration) multiple therapies for a single indication or for multiple co-morbid conditions. The treatment-platform strategy entails developing therapeutics or therapeutic approaches that affect multiple medical conditions, possibly in different therapeutic areas, based on a shared mechanism of action.

These approaches represent different levels of investment, risks, and potential rewards. Each also raises its own organizational issues. What they have in common is the potential to reduce the industry's dependence on fickle, single-indication blockbusters. The single pill represents the lowest risk and is closest to the industry's traditional paradigm; the treatment platform is the highest riskā€”and has the highest potential reward.

Develop Diagnostics The promise of genomics has raised expectations for the ability to detect, diagnose, and ultimately cure disease. Yet many common medical conditions continue to go undiagnosed, resulting in serious health issues for individuals and significant loss of revenue for the industry. It is estimated that 40 percent of those with mental illnesses and one-third of those with high blood pressure go undiagnosed and untreated.

Selecting a Platform
The ease and reliability of diagnosis varies by disease, but overall, the number of people getting diagnosed could be significantly improved with better diagnostics and physician education. The effort can be quite simple. For instance, questionnaires completed by primary-care physicians during regular patient exams and analyzed by sophisticated algorithms have proven to be highly accurate in diagnosing mental illnesses. Their adoption, however, has been stymied by the refusal of health insurers to reimburse these services. Pharma companies, which would benefit financially from the additional prescriptions generated, have also been tepid in their support. As a rising tide will lift all boats, this strategy probably makes the most sense for market leaders who can expect to gain the bulk of the scripts.

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