The Death of the Blockbuster Has Been Greatly Exaggerated
Over the past few years, a number of critics of biopharmaceutical companies have predicted the demise of the industry because of its dependence on blockbusters. A blockbuster is defined as a branded prescription drug that generates annual revenues of $1 billion or more. Discovering a blockbuster should be a good thing as it is a medicine that is prescribed to millions of people because of its beneficial effects on disease and suffering. However, many major blockbusters, like Zoloft, Lipitor and Fosamax, have already lost or are about to lose their patent protection and it is thought that there is a dearth of new compounds in the drug makers’ pipelines with blockbuster potential to take the place of older products.
A few years ago, no less than the former head of the FDA, Dr. David Kessler, slammed the blockbuster mentality saying: “The model that we’ve based pharmaceutical development on the past ten years is simply not sustainable. The notion that there are going to be drugs that millions of people can take safely, the whole notion of the blockbuster, is what has gotten us into trouble.” Melody Petersen was even more strident in an opinion piece titled “A Bitter Pill” that appeared in The Los Angeles Times in 2008: “For 25 years, the drug industry has imitated the basic business model of Hollywood. Pharmaceutical executives, like movie moguls, have focused on creating blockbusters. They introduce products that they hope will appeal to the masses, and then they promote them like mad.”
Sorry. It’s hard for me to envision my old boss, former Pfizer CEO, Hank McKinnell “taking a lunch” to discuss strategy with the heads of Paramount and Twentieth Century Fox.
First, it must be pointed out that a company doesn’t set its research priorities based on whether or not a program can eventually yield a blockbuster. Such predictions are difficult, if not impossible. For a new medicine to be successful, it must be safe, effective and meet a major medical need. Assuming that 15 years after starting a new R&D program, the new compound finally gets approved, it then needs to get a favorable label from the FDA, reasonable pricing from those who reimburse drug costs, and acceptance by physicians and patients. A great example in the difficulty of predicting blockbusters, interestingly enough, is Lipitor. When Warner-Lambert was seeking a partner to help sell and market what proved to be the biggest selling drug of all time, the company approached Pfizer. The Pfizer marketing team’s analysis said that the peak sales potential of this medicine would be $800 million – a significant amount, but not exactly blockbuster territory. However, the actual peak in worldwide sales for Lipitor was in excess of $13 billion. What the marketing team did not anticipate were the results of the long-term studies with Lipitor, completed some years later, which showed the importance of the value of this compound in preventing heart attacks and strokes.
Nevertheless, one might think this point is moot. Based on the pronouncements of the doomsayers, one would think that the industry has lost the capability to produce major new products. However, two reports that appeared last week indicate that this is not the case and further, suggest that the strategy of working on projects meant to discover compounds that meet major medical needs can still lead to blockbusters. This was evident in two reports last week. The first came from Jonathan Rockoff and Ron Winslow in The Wall Street Journal, an article highlighted in this blog last week. Although Rockoff and Winslow focused on the increase in FDA approvals likely to occur over the coming years, they had a table which highlighted a dozen exciting new medicines that have either been recently approved or are in late-stage development. They also included predicted peak sales of these compounds, which ranged from $1.1 – $4.3 billion, annually – blockbusters all.
A second paper, “The New Face of Blockbuster Drugs” by Elizabeth Schwarzbach, Ilan Oren and Pierre Jacquet in “IN VIVO: The Business and Medicine Report” more than affirms the views in The Wall Street Journal article. Their detailed analysis shows that there will be more blockbusters in 2015 than there had been 10 years earlier (132 vs. 101). Furthermore, these will bring in on average 15% more revenue apiece.
This is very encouraging news. Yet, when many of these programs started, it wasn’t clear if the compounds that were discovered would even work in the clinic, much less emerge as blockbusters. So what has happened to create these potential blockbusters? In the late 90s, industry leaders realized that for new products to be successful in the future, they had to address major medical needs or at least be highly improved over existing therapy. R&D priorities were altered to reflect the needs of the future and
the products now emerging from R&D pipelines meet these needs. Dr. Janet Woodcock, the FDA’s drug
division director, recently celebrated this revamped strategy: “ We’re seeing a lot of innovation, much more than in recent memory.”
There are still many diseases where new treatments are needed: obesity, Alzheimer’s disease, antibiotic resistant infections, etc. The number of people affected by these diseases is so great that any new medicines that are shown to be safe and effective in the treatment of these diseases won’t just be a great benefit to patients around the world, they will also be blockbusters.