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Aug 11, 2008

The Death of the Blockbuster

  • The rumors of my death have been greatly exaggerated. It remains to see if Mark Twain's quote is applicable to the blockbuster development model of drug companies, many drug developers hope the FDA's reticence to approve new drugs in the wake of recent safety scandals will fade over time, but I rather think the tougher line and standards are here to stay.

    Blockbusters as we know them are a dying breed, instead, there will be much larger number of therapeutics that target smaller subpopulations, but with higher efficacy, thereby warranting a higher per-treatment price tag.

    A recent report by Deloitte (PDF) sees a major shakeup going on in clinical research strategies at the large pharma companies. Instead of focusing on the development of a small portfolio of blockbusters, pharma pipelines are shifting to create a host of new therapies that will have higher efficacy in smaller groups, i.e. the genotype-basing approach that's been hyped so much.

    This change in R&D strategies is coming hot on the heels of the industry posting mixed results from outsourcing and other efforts aimed at improving efficiency. Couple that with the lowest FDA approval percentage in years and you have a full blown business model crisis at hand.

    I predict the big pharma companies will more and more tilt towards big production and marketing companies, while the R&D is being outsourced to a myriad of academic or early-stage biotech companies. Effectively the pharma companies will change from being vertically integrated into a bowtie architecture for process and distribution.

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