Monday, September 15, 2008

Is Big Pharma Ready For Minibusters?

Some things are easier said than done.

That’s the opinion of one biotech CEO commenting on claims by some large drug companies that they are moving towards smaller, more targeted drug products. While the strategy may sound good, they can’t do it, he says.

“Once you’re invested in a big model, you’re invested in it,” the biotech CEO maintains. The biotech CEO based his arguments on two key points:

1) The enormous scale of large pharmaceutical companies invested in R&D through to sales and marketing dictates they must sell large products aimed at broad patient populations.

2) The long and established blockbuster culture of large pharmaceutical companies creates an imposing hurdle to retooling business strategy to focus on smaller, niche products.

On the first point, the biotech CEO compared the total size of an average biotech company to just one product sales force of a big pharma company. On the second point, he said size impedes agility. “Big companies move slowly.”

In addition, he says a culture of assumed successorship—“my father worked there, I work there, my son will work there”—is a challenge to creative thinking and leads to complacency.

We’ve argued that the creation and implementation of FDA’s postmarket powers in the form of risk evaluation and mitigation strategies (REMS) means companies will be pushed more towards well-defined, marketable populations as a result of tighter controls. To read more, click here.

It’s not that the blockbuster drug, one with a billion dollars in annual sales, is dead, but those products will become increasingly rare and will be found in more specialty markets as opposed to primary care.

That means more products with annual sales in the $200 million to $500 million range, or minibusters.

So who is ready for the move towards more targeted, minibuster products? Well, biotech, of course.

The biotech CEO says the size and culture of biotech companies allow them to be more focused and reshape their strategies without scrapping the overall framework of their businesses. In other words, more agile and less exposed to complacency.

That leaves a conundrum for large pharmaceutical companies. It’s not enough to downsize and shed jobs, he maintains. That just reduces your size and cuts costs. The expectations from shareholders will remain the same. The question, he says, is “now what do you do?”

He highlighted blockbuster products as the great “gift” and “curse” of Big Pharma. It brings great long-term success to a company but also conditions management to overly rely on that product, focusing little attention anywhere else.

Can pharma companies make the minibuster model work? The jury is still out, and will be for quite some time. But at least one executive is skeptical.

No comments: