Chasing blockbusters: Does pharma need to change its success strategy?
The consulting group Numerof and Associates is out with a new book centered on bringing value to the healthcare sector.
That's a pretty hot topic which encompasses a wide range of the hospital, insurance, and drugmaker industries. But the tome also highlights a number of specific issues to address within the biopharma industry, including those within the existing model which encourages chasing mass market, blockbuster drugs.
Here's a roundup of what the authors think biopharma needs to keep an eye on.
Market breadth vs. market depth
As the authors point out, the current model of drug development still, in many ways, focuses on the development and production of blockbuster drugs which can hit as much of the market as possible.
But that comes with a number of challenges. With more (potential) customers, drug developers also face more potential competition and an increasingly challenging (and costly) landscape in reaching out to physicians and patients.
Furthermore, this type of drug development means that follow-on indications become a real necessity for pharma companies. While that can extend patent life and exclusivity, it also necessitates costly future trials that not all innovators may be able to afford.
A potential shift in emphasis?
So what can a biopharma that doesn't have the resources of, say, a Pfizer or a GlaxoSmithKline do to maintain a market-based advantage, especially as hot new technologies may push R&D costs higher?
According to the authors, the answer is a patient-driven, rather than a product-driven, approach.
"This market-driven model rests on the assunmption that successful companies of the future will determine what therapeutic areas they will 'own,' which in turn will drive investments," write the authors.
"[T]he new model will be patient centric and take a continuum of care versus episodic care approach. What this will mean is a core focus on prevention, diagnosis, and treatment of the range of conditions within a therapeutic area, taking into account the needs of specific markets around the globe."
Is a change already in the works?
These arguments suggest that biopharma may be best served by focusing on unmet medical needs and therapeutic spaces where an innovative player, no matter how small, may be able to swoop in and claim an impressive stake (and perhaps be bought out by a major firm).
And there's some evidence that this trend is playing out in the sector. As BioPharma Dive has previously reported, there have been notable changes to where biopharma venture funding is headed in recent years which underscore this paradigm.
"The big takeaway for me, which we didn't expect going in to this [study of venture funding], was the drastic drop in the large population diseases," said David Thomas, CFA and one of the two co-authors of a 2015 BIO trade group analysis of biopharma VC, in an interview last year. "So, the diabetes, endocrinology, gastrointestinal, respiratory, and cardiovascular areas.
"When we looked at before the financial crisis and after, for those numbers to be down 50% or more for a lot of them, was very surprising. We instinctively knew there was a lot more interest in rare disease companies and platform companies, etc. But the degree to which there's been a decrease [for those major therapeutic areas] was pretty staggering."
The book, "Bringing Value to Healthcare: Practical Steps for Getting to a Market-Based Model," is being published by CRC Press.