IS THE FUTURE OF PHARMA “NICHE BUSTERS”?

Is the Future of Pharma “Niche Busters”?

Blockbusters have been ruling the world of Pharma for the last 20 years. Primary Care drugs such as Lipitor, Plavix, Prilosec and many others reached multi-billion dollar status thanks to thousands of reps detailing them to doctors and hundreds of million of dollars of Direct To Consumer Advertising. However patent expirations, black box warnings, and the inability of the industry to renew its pipeline may bring this era to an end. New drugs approval by the FDA reached a 20-year low of 16 in 2007. The same year black box label changes reached 69, up from only 15 in 2000. (see graph from Associated Press).
Matthew Perrone writes an interesting article “Analyst Foresee more Boutique Drugs” in the December 30, 2007 Sunday edition of the Washington Post. Perrone quotes WBB Securities analyst Steve Brozak about these alarming trends for the industry: “”No pharmaceutical executive has ever lost his job for saying no to a new drug project, and no FDA employee has ever lost his job for saying no to a new drug application. Christopher Milne, of the Tufts Center for the Study of Drug Development, says “The pendulum at FDA is going to be stuck at the conservative end”.

Is there a remedy for Pharma? Yes, and it is already a proven business model. 20 years ago, Sandoz Pharma (before it became Novartis), flourished with “niche busters” such as Sandimmune for Transplant, Parlodel for Parkinson’s Disease and Infertility and Sandostatin for Acromegaly and GI Tumors. It is likely that Dr Daniel Vasela, CEO of Novartis AG (NYSE:NVS), remembered his days as Sandostatin Brand Manager, when he championed Gleevec against all the “no sayers”. Gleevec has since saved thousands of lives and grown into a Billion Dollar brand. Roche (Swiss:RO.SW), under the leadership of CEO Dr Franz Humer, has increasingly focused on areas of specialty, such as Oncology and Infectious Diseases, regaining its position as one of the most successful of the top 10 Pharma. It is also Roche that had the wisdom to take a majority stake in Genentech, while allowing its management to operate autonomously. Genentech has developed and commercialized several “niche busters” such as Herceptin and Avastin.

So, will 2008 be the year where Big Pharma considers “niche busters” not just as serendipity but as a true Strategic Intent?