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Decline of the Blockbuster Drug
Pharmaceutical companies that continue to focus their business strategies predominantly on 'blockbuster drugs' for low-severity conditions will lose market share over the next decade, according to a report just published by US management consultants Easton Associates, LLC.
Drugs for high-severity conditions such as cancer, HIV, congestive heart failure, asthma, diabetes, and neurodegenerative diseases, will have almost twice the growth rate of low-severity drugs and will account for more than 60% of the industry's dollar growth over the next decade, producing an overall rebound in the industry's revenue growth.
The report, Pharma 2012: Strategies for Winning in a Transformed Pharmaceutical Industry, is the result of a year-long study including interviews with industry executives and thought leaders and in-depth quantitative analysis of the industry's growth, pricing, regulation, patents, marketing, and R&D.
'In 2000, we calculated that drugs for low-severity conditions, such as high cholesterol, gastric reflux, arthritis, mild depression and hypertension, had a 62% share of worldwide sales of the Top 500 drugs', says Brian Buxton, partner and co-founder of Easton Associates. 'By 2012, worldwide sales for drugs that target these conditions will decline to 42% of the total.
'A bias, even a mythology, has grown around blockbuster drugs as the ideal source of growth, one that the facts simply don't justify. Our analysis shows disease severity is driving revenue growth, not peak sales... Yet we find discovery researchers tell us they would shelve a compound if it had projected peak sales of 'only $400 million' '. Buxton adds that with the blockbuster business model 'fading fast' there is a deep uncertainty about where to focus R&D and how to assess development portfolios. Biotech companies are better positioned to prosper in the next decade than the major pharmaceutical companies, according to the report, because they have greater discovery expertise and are far more flexible.
Easton Associates, LLC is based in New York City and works exclusively for companies and investors in the pharmaceutical and medical products industries. More information is available via www.eastonassociates.com
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