Pharmaceutical market research must consider changes in policy and technology, as well as market changes.
If you look at the sixteen biggest commercial drug launches of all time, you’ll notice a couple of important trends.
First, the oldest drugs on this list, all of which were introduced at least 20 years ago, were for common conditions that ensured large markets for the drugs. Second, the newer drugs on the list are for less common conditions, ones with much smaller patient populations that cost more to treat.
Here are the top 16 drug launches, organized from oldest to newest:
| Year Introduced | Drug | What Drug Is For |
| 1997 | Lipitor | Heart disease |
| 1999 | Celebrex | Arthritis pain |
| 1999 | Vioxx | Arthritis pain |
| 2002 | Neulasta | Neutropenia |
| 2006 | Lucentis | Macular degeneration |
| 2011 | Incivek | Hepatitis C |
| 2011 | Eylea | Macular degeneration |
| 2013 | Sovaldi | Hepatitis C |
| 2013 | Olysio | Hepatitis C |
| 2013 | Tecfidera | Multiple sclerosis |
| 2014 | Harvoni | Hepatitis C |
| 2014 | Opdivo | Cancer |
| 2015 | Genvoya | HIV |
| 2015 | Ibrance | Cancer |
| 2016 | Epclusa | Hepatitis C |
| 2017 | Ocrevus | Multiple sclerosis |
What do these trends say about successful drug launches today and in the future, and what effect might they have on pharmaceutical R&D?
Old Paradigm: Market Size Is King
In the Lipitor era, the success of a drug launch depended on both the quality of the drug and on the potential market size. It was at this time that drugs for common conditions like heart disease, diabetes, depression, and arthritis prevailed. They were relatively inexpensive, but were prescribed to millions of people. Drug companies backed these drugs with big sales forces to encourage doctors to prescribe them, and as a result, brought in billions of dollars in sales revenues.
Some pharmaceutical experts believe that the era of the blockbuster drug is over, a sentiment that has been brewing for years. Technological advances, government incentives, and patient advocacy have made the pursuit of drugs for rare diseases more profitable in recent years. A 2016 analysis of 86 pharmaceutical companies by the University of Liverpool found that firms with marketing authorization for so-called “orphan disease” products were more profitable than those without them – by 9.6%!
Pharmaceutical research is trending toward treating rarer diseases where few to no treatment options exist.
New Paradigm: Targeted Markets, Smaller Patient Populations
The three biggest drug launches in history have been for hepatitis C drugs, which in aggregate took in nearly $23 billion in U.S. sales over their first four quarters. A combination of pent-up demand for hepatitis C treatments and high drug prices were the drivers for these sales figures.
But something else interesting is happening. The fact that next-generation drugs are entering the market at a faster pace mean that issues like patent expiration and generic entry into market competition are lesser concerns with these highly specialized new drugs. What this means is that a great first year in sales doesn’t guarantee longer-term success, because technology is allowing faster development of new drugs and shortening drug life cycles.
Effects of These Changes on R&D
A trend toward development of higher-priced drugs with smaller, more targeted patient populations has had several effects on R&D. Clinical trials are smaller. Old school drugs for treating common diseases like diabetes require huge clinical trials, but that’s not possible with some new drugs, because they target small patient populations.
And once these niche drugs are developed, they don’t require the large pharmaceutical sales forces that old blockbuster drugs did, because a much smaller physician population will prescribe them. Pfizer is an example of a drug company that started out making drugs (like antibiotics and statins) with huge markets, but is now turning its attention to more specialized drugs in the fields of oncology and immunology. The markets are smaller, but the drugs themselves carry much higher prices.
From the point of view of pharmaceutical manufacturers, market conditions are favorable for higher-priced drugs targeted at smaller patient populations. Shorter drug life-cycle dynamics, the effects of patent expiration and generic entry into the market, and the growth of orphan drug programs are driving these market conditions. Thus, investors must understand that decisions that worked in the now-waning blockbuster drug era may need to be reconsidered.
