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Blockbuster Ecosystems: Sustainable Development?

Executive Summary

Blockbusters-despite protests to the contrary-are still vital to the growth of Big Pharma. A therapy area, once established as a blockbuster-fertile franchise, can remain so through the patent expiration of successions of therapy classes, allowing companies that add the right investment to build and sustain new generations of blockbusters. But how to find such areas? High prices and large numbers of available patients can help a therapy area become blockbuster-fertile but are by no means the most important drivers building and sustaining blockbusters. One major prerequisite: big clinical and marketing spending by multiple companies. That means that early investors could end up disproportionately benefiting follow-on competitors.

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The New Face Of Blockbuster Drugs

Blockbuster drugs are not going away but as science and market conditions continue to evolve and unmet needs shift to new territories, their profile is likely to change again. Companies can use strategies to offset the potential shortcomings of the new blockbuster model and improve their chances of becoming the successful players of tomorrow.

Rebuilding Big Pharma's Business Model

The blockbuster business model that underpinned Big Pharma's success is now irreparably broken: the costs of commercialization are too high and likely returns below the cost of capital. The industry needs a new approach, constructed from four inter-related building blocks--focused R&D; partnerships; customer solutions, not products; and a business unit, not functional, organizational model.

Blockbusters to New-Engine Drugs: The Key Industry Shift

Over the next ten years, blockbuster drugs will underperform industry-wide growth and fail to reverse the growth crisis. In their place, new-engines drugs, products for more severe conditions with a higher margin of therapeutic efficacy, will emerge as the leading force in industry growth, accounting for over 60% of industry dollar growth. They'll be more commonly discovered, less susceptible to generic competition and payor price pressures, and more compelling for prescribers. Companies should immediately begin to reassess their portfolios and refocus their discovery and development efforts. Key actions include giving new-engine drugs a more accurate weighting and letting go of the blockbuster model.

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