Monday, February 3, 2014

Inside Outsourcing: Is the blockbuster model dead?

Today, speaker John LaMattina, Ph.D., Senior Partner, PureTech Ventures, Forbes Contributor andAuthor of “Drug Truths: Dispelling the Myths about R&D” in addition to “Devalued and Distrusted: Can the Pharmaceutical Industry Restore its Broken Image?” and the Former President, Global R&D, Pfizer.  In our last post with the series on John LaMattina, we ask the question everyone still thinks about today.

Is the blockbuster model dead?
John: It depends. Certainly critics of big pharma would say the blockbuster model is dead because a company like Pfizer got into trouble when Lipitor went off patent. Lipitor, in its own right, sold at its peak close to $13 billion a year worldwide. It’s the biggest selling drug of all time. You really can’t plan to build your business around discovering one of these every few years. That would be ludicrous. In fact, internal projections for peak Lipitor sales back in 1998 or so were about $800 million a year. So, it was not something that was necessarily planned for. 
But certainly, when you talk about doing some of these outcome studies that are three or four hundred million dollars for just those one set of studies, you’re not going to do it for a compound that’s projected to have peak sales of a billion dollars. You really have to do it for a compound that you think is going to be a three- or four-billion-dollar-a-year program. 
Blockbuster’s come in different shapes and sizes. There is a small company here in Connecticut called Alexion and they make a drug for a rare orphan disease—a certain type of blood disorder—and I think they charge about $420,000 for a year of therapy. Before this drug came onto the market it would cost healthcare systems over a billion dollars a year for patients. So, this is a relative bargain for the healthcare payer in terms of lowering their cost. Having said that, even though this is a rare orphan disease with maybe 7,000 or 10,000 patients in the United States, obviously at that price you’re going to have sales in excess of a billion dollars. So, that’s a pretty good blockbuster for a drug that didn’t require more than a few hundred patients in its clinical trials to study because there aren’t that many more in the country. 
So, blockbusters come in different shapes and sizes. My definition of a blockbuster is a drug that brings a real value in terms of meeting a major medical or healthcare need and that you can get good pricing for. That compound could be a drug that maybe had less than a thousand patients in its clinical trials and makes a billion dollars a year. Or a drug that had 20,000 patients and many years in clinical trials, but gets six billion dollars a year. So, it really depends on the situation and the disease and pricing and all those things.

Download the rest of John's podcast here.

John LaMattina will be the moderator for the Wall Street State of the Industry Address: Mergers
& Acquisitions in the Industry — Near Term Solution to a Long Term Problem? featuring panelists including  Colin Shannon, President, CEO and Director, PRA International; Michael Martorelli, Director, Fairmount Partners; Eric Coldwell, Managing Director, Robert W. Baird & Co.; and Douglas Tsao, MPH, U.S. Specialty Pharmaceuticals & CROs, Barclays Equity Research.  Would you like to join John for this panel at Partnerships in Clinical Trials this coming March 30-April 2, 2014?  As a reader of this blog, when you register to join us and mention code XP1900BLOG, you're eligible to save $100 off the current rate!

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