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Trail-blazing innovation – Seeking the new blockbuster

Posted on April 11th, 2016 by in Pharma R&D

blockbuster drugs

The Holy Grail of the 21st century, at least for pharmaceutical companies, is the one blockbuster drug that will reap rewards of $1Billion+ in peak sales. A success of such magnitude would address a significant need in a large patient population, provide longed-for returns for stockholders and enable the company to put back considerable investment into new research.

Developing this elusive high-reward drug requires highly innovative approaches in the discovery phase of the project. The pursuit of early, substantial innovation to deliver a high-reward medicine and address an unmet medical need is, in my opinion, primarily driven by two factors. First, there are still many diseases without any therapy or with therapy that is clearly inadequate (due either to lack of efficacy or to an unacceptable adverse event profile), meaning there is a significant medical need to be addressed. Second, this has been the precept on which many highly successful pharmaceutical companies have thrived.

It is true that the rewards for success in this trail-blazing innovation approach are great. But it is also the case that failure is very costly. Failure can come at any stage of the process, with the level of sunk investment becoming higher in the clinical phase of development compared to the pre-human phase (1).

The potential risks come from various areas:

  1. In drug developments where innovation in the drug discovery phase of development is high, the small knowledge base means that there is significant scientific uncertainty.
  2. For areas without an established therapy, there is substantial regulatory uncertainty and the cost of generating the required data package for drug registration is likely to be particularly high due to the sheer volume of necessary data. The lack of a precedented regulatory pathway means that eventual approval is always at greater risk than for drugs where others have gone before.
  3. Once the developer has been successful in generating the required data, there are still more risks ahead. Insurance coverage for new high-cost therapies is uncertain, and further outcomes data may have to be generated.
  4. Additional uncertainties exist in several countries, such as the UK, where NICE (National Institute for Health and Care Excellence) is another hurdle to getting a new medicine available through the UK National Health System (2).

Ground-breaking innovation early in the drug development process is still attractive to pharma companies, although business models to support finding these compounds are changing. Whereas 10 or more years ago, early development innovation was largely being done by big pharma companies, the successes now appear to be coming from smaller companies (3). Likewise, in the past, companies tended to have fingers in many therapeutic areas for their early discovery research, while now, consistent focus on a specific therapy area is driving success and returns (3). This is not illogical, as a single-minded approach enables the minimization of some scientific risk purely through the depth of focus. Increasingly, large pharma companies are forming alliances with smaller companies to capitalize on these strengths.

The benefits and returns of a new blockbuster drug are undeniably huge, but the risks are also very high. Key questions are whether the potential benefits outweigh the risks, and what business model gives the best chance of success? Over the last few years, pharma business models have changed to spread risk – for example, by the inclusion of a generics business – so that they no longer rely solely on developing blockbuster drugs (4).

If development of these high-risk, high-return medicines remains part of the strategy, then the business model needs to provide a strong science foundation to reduce the risk of later failure. It must also ensure early and frequent engagement with the regulatory agencies in countries targeted for registration, and it needs to facilitate the collection of data to address the needs of insurers and agencies. Furthermore, the business model must be diverse enough to ensure cash-flow in the absence of new, high revenue generating drugs.


  1. DiMasi JA, Grabowski HG, Hansen RA. Innovation in the pharmaceutical industry: new estimates of R&D costs. Journal of Health Economics 2016;47:20-33
  3. Terry C, Stockbridge M, Young K, Whight O, Dondarski K. Measuring the return from pharmaceutical innovation 2015. Deloitte.
  4. Goodbye blockbuster medicines; hello new pharmaceutical business models. The Pharmaceutical Journal, Vol. 282, p681 | URl:10966185 June 2009.

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