Monday, August 1, 2011

Is the death of blockbusters greatly exaggerated?

John LaMattina, former head of R&D for Pfizer, has a provocative post that argues that “The Death of the Blockbuster Has Been Greatly Exaggerated.”

He lists some contrary evidence including a recent WSJ article on potential blockbusters in the pipeline. And of course the title is a deliberate allusion to the famous Mark Twain line.

It’s hard to argue with his credentials and experience, and he makes some important points about the problems about why it’s hard to make predictions about the future. Some drugs will do worse than expected, and some will do better: Lipitor was predicted to peak at $0.8b/year but peaked at $13b/year.

He also argues that there are some major diseases left to be cured, and these cures will be lucrative by any measure.

I can't say I’m complete convinced. Even if such blockbusters remain, on the recent trajectory the cost of getting those blockbusters is getting higher — at some point firms may no longer try.

Perhaps the more serious problem is that the returns from the losers may also be lower, since incremental therapies are having trouble commanding a higher price than established off-patent drugs. (As an allergy sufferer, I can say that the generic versions of Claritin and Flonase are pretty good compared to what was available 20 years ago.)

So the glass is not entirely empty even if it’s not quite half full. The boom times of the old paradigm are clearly in the past. Perhaps some new paradigm (computational biology? personalized medicine?) will enjoy its own boom, but we haven’t seen it.

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