Tuesday, February 12, 2008

The Blockbuster Model is Dead, Sort Of

The numbers are in, and it’s not a pretty picture.

No, we’re not talking about today’s Potomac presidential primary. We’re referring to the latest IMS Health figures on the state of the pharmaceutical industry, and as Diana Conmy, corporate director of market insights put it, they are “sobering and possibly a little alarming.” Conmy was kind enough to preview the 2007 numbers for the Health Industry Group Purchasing Organization’s National Pharmacy Forum; the official data won’t be released for a couple more weeks.

Unfortunately for industry, Conmy’s numbers don’t leave much to cheer about. The US market growth for pharmaceuticals and biotech products slowed to 3.8% in 2007—the worst growth rate since 1961.

Part of that is a result of tough comparisons against the big pay-off pharma received from Medicare Part D in 2006. But a lot is simply due to a general market slowdown for the drug industry. While some of the latter months of 2006 saw market growth approaching 12%, by December 2007, month-over-month growth was in the negative range, Conmy reported.

And if you’re thinking the next big launch will turn around that trajectory, think again. New chemical entities aren’t contributing as much to market growth as they have in the past. In fact, if you look at the average launch curves for the top 10 new chemical entities over the past several years, 2007 had the weakest results since 2003. “Fewer of these NCEs are top-performing, contributing much less to growth,” Conmy said.

So what does this mean for the blockbuster model? Well, as Conmy put it—and Windhover publisher Roger Longman keeps driving into our heads—“the blockbuster model isn’t dead, but perhaps the primary care-driven market is.”

And it sure seems that way: 2007 marked the first time that industry saw a decline in the number of primary care blockbusters (29 in 2007 versus 33 in 2006), IMS data show. At the same time, there was an increase in specialty care blockbusters (30 in 2007 versus 25 in 2006).

That’s evidenced by the fact that the primary care market declined over the last seven months of 2007, contributing a negative 18% to overall market growth for the year, while specialty care contributed a positive 118%. The growth rates per therapeutic area tell the same story: specialty care grew 10.5%, while “branded products” grew 2.9%--a rate almost a full percentage point below the total market.

In fact, of the four launches for 2008 that Conmy believes have blockbuster potential, three are specialty products: UCB’s certolizumab (Cimzia) for Crohn’s disease, Bristol-Myers Squibb’s ipilimumab for melanoma and Wyeth’s desvenlafaxine (Pristiq) for depression. (The fourth potential blockbuster on Conmy’s list is MedImmune’s respiratory syncytial virus antibody Numax.)

So is there any good news in all these doom and gloom? Luckily for pharma, there are lessons to be learned. Here’s the bottom line: specialty care is increasingly where pharma needs to be. And given the generally slower uptake of specialty care products, executives may have to adjust their expectations when it comes to launch curves.

That kind of “slow and low” attitude has another benefit in today’s increasingly risk-averse environment. “You might hear manufacturers say that ‘our strategy is more lower octane, so we can have a more controlled environment, we can make sure it’s safe, and we don’t have any major incidents,’” Conmy says.

That’s quite a departure from the “fast and furious” model of the DTC-infused primary care market. My, how far we’ve come.


Anonymous said...

The running theme amongst our team of amateur graduate students is that panacea therapeutics capable of being administered by primary care physicians are going to become necessarily more difficult to develop, at least until the diagnostic technology catches up. We feel that this is simply because the science of understanding disease is not only too vast for individual MDs, but in many cases for PhDs outside their specialized field.
Well its probably wishful thinking, but we like to prognosticate that in the future the current surplus of PhDs will find a place in the industry as technocrat liaisons between healthcare providers and therapeutic engineers.

Anonymous said...

Are you saying it is cheaper to develop an non-block buster than it is to develop a blockbuster?

Kate Rawson said...

Cheaper? No -- I'm saying (or more accurately IMS is saying, and I agree) that the real growth in the pharma market is coming from specialty care products, not the big primary care blockbusters of the past.