What's Driving the Concentration of Blockbuster Drugs

A recent report shows that US prescription drug spending is expected to surpass $1 trillion this year. This increase in spending is largely attributed to the increasing popularity of GLP-1 prescriptions.

The report details that prominent GLP-1s, such as Tirzepatide and semaglutide, are hitting about $60 billion in spending. This number more than doubles the spending on the third highest drug, apixaban.

Pharmaceutical Executive recently spoke with Kevin Dondarski, a partner at Deloitte Consulting, life sciences strategy practice. He recently participated in the company’s annual report “Measuring the Return on Pharmaceutical Innovation.” According to the report, GLP-1s account for a significant percentage of projected commercial inflows.

This is occurring at a time when the industry appears to be consolidating around drugs that Deloitte describes as “mega blockbusters,” with less than 10% of these drugs expected to generate about 70% of sales.

Pharmaceutical Executive: What's driving the concentration of blockbuster drugs?
Kevin Dondarksi: If we look at effectively where the overall value, and we can define value either as the risk adjusted view of forward-looking peak sales or just the aggregate risk adjusted peak inflow, the cumulative revenue projected.

Historically, we've seen that divided amongst many assets the Pareto Principle always applies. There tends to be a handful of high value assets that drive a disproportionate majority of the value in the broader pipeline.

Given what we just discussed around GLP-1s with the patient population being so large. There's a higher amount of value with some of those specific programs in the pipeline compared to years past, when you could have said the same thing about PD ones, as an example.

That's a large part of it, but then there's some encouraging programs in broader development within the oncology space and other therapeutic areas that hopefully can make the outsized patient impact that analysts are projecting.