Market Report Source

Overview

Introduction

For 25 years, blockbusters have played a key role in driving strong drug market growth. However, pressure on blockbusters is increasing, as both regulators and payers are shifting away from me-too drugs, which in the past have been fertile ground for blockbusters. Furthermore, blockbusters attract significant generic competition and may also stifle R&D innovation.

Scope

Overview of the role that blockbusters have played in shaping and driving market growth

Identification of which niche disease markets to target, to maximize value from the nichebuster model

Examination of how a range of different drivers such as regulatory initiatives are incentivizing the nichebuster model

Identification of trends underlying R&D collaborations or licensing deal activity in allowing Big Pharma to access novel technologies and markets

Report Highlights

To successfully capitalize on the nichebuster model, drugs companies should focus on characterizing the target market, and use targeted marketing spend to access specialist physicians to drive clinical trial progression, approval and successful uptake

Dependence on blockbuster-generated revenue is set to fall from 2004-2010 as the industry turns to a nichebuster strategy, utilizing increased licensing activity, R&D collaborations and small-scale M&A deals to harness innovation and provide access to niche markets with a high unmet need

The shift into niche markets is helping drive a more personalized approach to therapy. Central to the development of the nichebuster model is the raised importance of personalized therapies, which is being driven by increased used of diagnostics. This trend is helping to clarify market segmentation and will boost the size of the total drug industry

Reasons to Purchase

Identify why blockbusters have played such an important role in pharma/biotech market development

Understand why it is no longer optimal for this strategy to play a central role in driving future growth

Gain insight into how the transition towards the nichebuster model will change overall market dynamics in the future

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY

Introduction

Scope and coverage of this report

Key findings from this report

CHAPTER 2 IS THE CHANGING R&D LANDSCAPE HASTENING THE END OF THE BLOCKBUSTER?

The R&D landscape is changing

Does a blockbuster-driven growth strategy stifle innovation?

Return on R&D investment plummets while drug sales soar

But is R&D productivity really falling?

Big Pharma’s R&D spending clout can shape the industry’s R&D focus

Why has the drug industry relied on blockbuster growth strategies?

Investors require double-digit growth

Blockbuster revenues are needed to help fund soaring drug development costs

The blockbuster growth model has weakened

Blockbuster-driven companies are open to significant risk

The market disincentivizes me-too development

Blockbusters face significant generic threat

Blockbusters have a tougher time when they reach the market

Is there a relationship between company size and R&D productivity?

There is still a role for blockbusters, but only as one of a drugs company’s growth strategies

CHAPTER 3 MARKET CHARACTERISTICS AND THE REGULATORY ENVIRONMENT IMPACT THE SUCCESS OF THE NICHEBUSTER

Approval pathways are accelerated for innovative therapies

The US provides a fertile market for innovator drugs

The US regulatory environment supports innovation

Effective use of the ‘Orphan Drug Act’ drives nichebuster development

The oncology market is the archetypal niche market target

There are a range of strategies that are important in gaining a foothold in the selected niche market

CHAPTER 4 NICHEBUSTERS CHANGE DRUG MARKET DYNAMICS

Drugs companies turn to licensing to capture innovation and avoid stagnation

Dependence on blockbusters falls

Drugs companies turn to licensing, R&D collaborations and small-scale M&A to gain access to external sources of innovative technology and drugs

Dependence on licensing to drive future sales is set to rise

Targeting niche markets also encourages greater small-scale M&A activity

A study of recent collaborations shows that big Pharma is using early-stage R&D collaborations for capturing innovation

A greater number of drugs need to be approved to support revenue generation: the pressure on regulatory bodies grows

Nichebusters help to drive the emergence of targeted therapies

A burst of targets and the emergence of technologies that accelerate lead drug development are driving targeted therapies

Nichebuster development impacts the dominance of specific therapy areas

Targeted therapies have fewer side effects than traditional therapies

The use of diagnostics drives clearer market segmentation, which has a number of advantages

Personalized medicine requires greater health informatics

Business model evolution is required to capitalize on the nichebuster model

Different sales and marketing strategies are required for nichebusters: prioritizing cost-effective targeting of specialist physicians is needed for successful niche sales and marketing

The switch towards making marketing strategies customer-focused will help niche drug marketing

Fully-integrated pharma companies move into niche targeting: a case study on Baxter’s strategy to penetrate the haemophilia market

Companies developing nichebusters also need to modify R&D strategies

Big Pharma is adopting a range of strategies to harness innovation to support the transition towards the nichebuster model

CHAPTER 5 APPENDIX : BIBLIOGRAPHY

References

Publications and online articles

Datamonitor resources

Conference information

List of Figures

Figure 1: The bias towards a blockbuster growth strategy contributes to the inverse correlation between R&D productivity and sales

Figure 2: The number of priority approvals has risen consistently over the last 40 years

Figure 3: Merck has gone from needing no blockbusters in 1991 to maintain double-digit sales growth to needing the equivalent of more than two by 2005

Figure 4: A variety of different studies have shown that the cost of R&D has increased over time

Figure 5: There is an inverse correlation between company size (defined by sales) and R&D productivity

Figure 6: Early-stage collaboration type split by therapeutic focus, October 2002 – September 2004

Figure 7: Dependence on blockbusters generated by top-5 drugs companies is set to fall significantly from 2004-2010

Figure 8: Discovery-stage licensing by both top-5 and top-55 companies is set to generate a greater percentage of forecast sales than later-stage licensing

Figure 9: Early-stage collaboration deals are focused on lead product and/or target identification and/or validation, October 2002-September 2004

Figure 10: Therapy areas dominated by targeted therapies are the leading market growth drivers

Figure 11: Immune disorders and inflammation dominate R&D focus, based on a snapshot of the current patent situation

Figure 12: Advate successfully becomes market leader in France

Figure 13: GSKs CEDD model is designed to mimic smaller-scale biotech companies

Figure 14: Roche has a strong ‘Networked Pharma’ model