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Creating
a best-selling pharmaceutical has never been easy, but doing
so just once or twice used to be able to catapult a company
into the major leagues.
No more.
To meet stockholders' expectations, pharma industry majors
must outperform the market, which is expected by IMS to
grow globally at around 10% per year over the next five
years. This translates into total top-line growth of over
$113 billion for the ten leading pharma companies, of which
at least $40 billion will have to be supplied by new brands.
Blockbusters,
or brands achieving global sales of more than $500 million,
have been fundamental to pharma industry growth for the
past decade. Their number has more than doubled since 1998,
with $1 billion brands growing at an even faster rate. A
key question is whether this increase in blockbuster-driven
growth can continue. A number of commentators think it can’t,
proposing alternative models for growth based on groups
of smaller brands or a segmented market driven by tailored
medicines and pharmacogenomics.
Blockbusters
deliver results
But
growth requirements require the kind of sales and profits
only blockbusters
have consistently delivered. Blockbusters are simply a more
efficient use of sales and marketing resources than large
numbers of smaller brands.
And,
indeed, it will remain possible to develop blockbusters
as long as companies concentrate on identifying and building
areas conducive to their creation. While it is true that
many of the best areas for blockbusters are large GP-oriented
chronic-care markets, specialist franchises - thanks to
higher unit pricing - are also generating a large numbers
of blockbusters relative to their size. These include antipsychotics,
dementia treatments, immunosuppressants and interferons.
In terms of the number of blockbusters they have generated,
hyperlipidaemia, depression and peptic
ulcers are the current leading therapy franchises.
Companies
need to nurture growth...
Yet raw
environmental ingredients - market size and pricing, for
example - are not sufficient in themselves to create fertile
blockbuster ground. Instead, the difference between high-
and low-performing therapy franchises in many cases is driven
by company activities to develop the environment of the
therapy franchise - in particular, the ability of companies
to develop the therapy area to be receptive to the blockbuster’s
clinical story.
Vital
to blockbuster-area fertility is the ability to make sure
a class of therapies is accepted by all the key stakeholders:
clinicians, healthcare payors and patients. For instance,
Type
II diabetes could theoretically be a perfect area for
blockbusters, possessing high patient numbers, chronicity,
unmet need and primary care treatment. And yet, in Europe
the glitazones have been unable to gain crucial support,
while post-prandial glucose regulators have also disappointed.
The two glitazones, Avandia and Actos,
only gained a positive regulatory opinion for use as monotherapy
in Europe in May 2003, almost two years after their initial
launch.
Criteria
for blockbuster-fertile therapy franchises
(most criteria fulfilled by most blockbuster fertile therapy
franchises)
| 1. |
Chronic
disease state |
| 2. |
High
prevalence disease state |
| 3. |
Well
defined disease area, with diagnosis that is also
well defined and widely accepted by clinicians |
| 4. |
Well
defined and widely accepted pharmacotherapy options |
| 5. |
Limited
number of well accepted therapy classes present at
any one time |
| 6. |
Pivotal
clinical trials that have demonstrated significant
therapy advantages for the dominant therapy class
(specifically, mortality or morbidity improvements
over previous therapies) |
| 7. |
Heavy
promotional investment in the franchise by a number
of major companies over a period of years |
|
8. |
Effectiveness
of a combination of clinical and promotional investment
in gaining widespread acceptance of payor, clinical
and patients communities for dominant classes |
Source:
IMS
Global Consulting
In
contrast, makers of treatments for peptic ulcer/GERD,
hyperlipidaemia and depression
have found remarkably rich ground for growing new blockbusters.
Players in these areas got all key stakeholders to buy into
the message. Most importantly, perhaps, they did this with
massive multi-company investment in clinical trials and education
of doctors and patients. Even more significantly, this investment
did not always help the investor per se, but allowed followers
to benefit. For blockbusters, pioneering can be lucrative.
But building on what the pioneers have created can be even
more so. ...with
significant marketing investment
High
levels of investment in major trials are a virtual requirement
for any blockbuster in any category. An overall marketing
investment of $450 million to $1 billion is reported to
be required for new blockbusters during the first two years
of launch.
Much of this spend has to be directed to convincing new
groups of stakeholders of a treatment’s value and
efficacy. In the US, for instance, pharmaceutical companies
can form a close relationship with patients through activities
such as partnership activities, compliance programmes and
direct-to-consumer promotion. These practices are still
virtually forbidden in Europe and Japan. Pharmaceutical
companies, therefore, must find new ways to mobilise patients
to overcome health care payor reticence to accept new treatments.
Geographic creativity is particularly important because
the US is increasingly, and dangerously, the major territory
for blockbusters. Companies will have to figure out how
Europe and Japan - which underperform relative to their
populations on sales from blockbuster products - can contribute
more.
Areas
with potential
Two fertile
mass market areas that, if developed correctly, have the
capacity to support high numbers of blockbuster brands are
osteoporosis and chronic obstructive pulmonary disease (COPD).
In osteoporosis, selective oestrogen receptor modulators
(SERMS) will be a key blockbuster class, with a number of
companies currently investing in blockbuster-building clinical
trial work and promotion. By 2010, the osteoporosis
therapy franchise could be as valuable and blockbuster-generative
as hyperlipidaemia is now.
COPD
has been a long-neglected sub-division of the asthma market,
but the advent of new treatments, such as Spiriva and roflumilast,
bringing increased definition of the disease, should shape
it into a separate therapy franchise, and one fertile for
blockbusters.
Multiple
companies are pursuing both these areas - a virtual prerequisite
for creating a blockbuster class. It remains to be seen
whether the leaders of these franchises will be pioneers,
or followers that base their success on the clinical groundwork
of predecessors and take much of the leader's market share
in the process.
This
is the executive summary of an article by IMS Consultants
Sarah Rickwood and Guy Bate, which originally appeared in
the June 2003 edition of IN VIVO: The Business and Medicine
Report. If you are interested in additional information
about this topic, contact Sarah
Rickwood or Guy
Bate. For more information on IN VIVO, please visit
windhover.com
Copyright IMS HEALTH, 27 June 2003
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