The blockbuster drug model of targeting single large indications is becoming less viable as a strategy. However, it is still possible to generate blockbuster revenues through alternative approaches such as diagnostic-led strategies, single-pill combination therapies, and treatment platforms that affect multiple conditions. These new strategies require greater coordination between pharmaceutical R&D and commercialization efforts from an early stage.

1. he blockbuster is dead. Long live the block-
buster! The industry is experiencing cogni-
tive dissonance. Many of today’s leading
pharma and biotech companies reached
their positions by discovering or acquiring
drugs with the ability to generate multibil-
lion-dollar sales in a single indication. But the new consensus seems
to be that although single-indication blockbusters may still occur,
the single-minded pursuit of them is a bust as a strategy. So the
question is: How to replace the revenues generated by the big drugs
of yesteryear?
The answer is that it is still possible to generate blockbusterlike
revenues. But doing so requires a different approach. Future
moneymakers will be built from the ground up, using one of the three
strategies that combine scientific and market perspectives to identify
untapped opportunities. Their successful implementation will require
steadfast stewardship and purposeful coordination between R&D and
commercial operations. Like any significant change, at times it may
make pharma companies uncomfortable, but in the long run it will
also be rewarding.
Single drugs for
single indications
are hard to find.
Here’s how to get
around that.
BY JAN MALEK
Jan Malek is a leader in PA Consulting’s life science practice. He advises compa-
nies on R&D management, commercialization, and strategy. He can be reached
at (617) 460-0200.
T
New
BuildingBlocks
Blockbusters
The
for
New
BuildingBlocks
Blockbusters
The
for
FOR GLOBAL BUSINESS AND MARKETING LEADERS

2. 2
Alternative Approaches
Although they lack the simple elegance and ease of implementation
of the traditional blockbuster model, the new strategies address the
issues of today’s multifaceted healthcare environment. They are
complementary, and companies with the wherewithal should pursue
all three in parallel:
» diagnostic-led
» single-pill
» treatment-platform.
The diagnostic-led strategy is based on
the observation that even when there
are well-established treatments for a
condition, significant numbers of patients
are either not diagnosed in a timely
manner or not diagnosed at all. The
single-pill strategy combines (into a single
administration) multiple therapies for
a single indication or for multiple
co-morbid conditions. The treatment-platform strat-
egy entails developing therapeutics or therapeutic
approaches that affect multiple medical conditions,
possibly in different therapeutic areas, based on a
shared mechanism of action.
These approaches represent different levels of investment, risks,
and potential rewards. Each also raises its own organizational issues.
What they have in common is the potential to reduce the industry’s
dependence on fickle, single-indication blockbusters. The single pill
represents the lowest risk and is closest to the industry’s traditional par-
adigm; the treatment platform is the highest risk—and has the highest
potential reward.
Develop Diagnostics
The promise of genomics has raised expectations for the ability to
detect, diagnose, and ultimately cure disease. Yet many common
medical conditions continue to go undiagnosed, resulting in serious
health issues for individuals and significant loss of revenue for the
industry. It is estimated that 40 percent of those with mental illnesses
and one-third of those with high blood pressure go undiagnosed and
untreated.
The ease and reliability of diagnosis varies by disease, but overall,
the number of people getting diagnosed could be significantly
improved with better diagnostics and physician education. The effort
can be quite simple. For instance, questionnaires completed by
primary-care physicians during regular patient exams and
analyzed by sophisticated algorithms have proven to
be highly accurate in diagnosing mental illnesses. Their
adoption, however, has been stymied by the refusal of health
insurers to reimburse these services. Pharma companies,
which would benefit financially from the
additional prescriptions generated, have also
been tepid in their support. As a rising tide will
lift all boats, this strategy probably makes the
most sense for market leaders who can expect to
gain the bulk of the scripts.
Pharma companies that adopt diagnostics-
led strategies need to address three issues. First,
they need to shift marketing resources from
promoting specific products to promoting
diagnostic testing. Second, they must time the development of
the diagnostic to coincide optimally with the development of the
therapeutic. And third, they must develop business models that will
motivate physicians and diagnostics providers to participate. Of
these three, shifting promotional resources should be the easiest,
because it is fully within the company’s control.
Timing the diagnostic investment is slightly more complicated.
Companies can delay developing the diagnostic until the therapeutic is
approved, or close to being approved, or they can choose to develop
the diagnostic in parallel with the therapeutics. The decision about
when to begin diagnostic work requires weighing its risks, rewards,
and complexity. A decision to delay development of the diagnostic can
A PharmExec Graphic
The Single-Pill Solution By combining epidemiological and market data,
pharmaceutical companies can determine the commercial potential of combination therapies.
Conditions
Here’s where marketers must fill in the elements.
AB
AC
ABC
BD
CD
ACD
Population
Size
(millions)
Importance
to
Physicians
Importance
to Patients
R&D
Feasibility
Market Segment AssessmentDisease Relationship Map
Condition D
Condition G
Condition C
Condition E
Condition F
Condition A
Condition B
SOURCE: Jan Malek, PA Consulting
Ideally, the public-
health benefits
of additional
testing will be so readily
apparent that
payers will find it
difficult to refuse
reimbursement.

3. 3
reduce the risk that the diagnostic will have to be abandoned because
of failure of the therapeutic. But it increases the risk that the diagnos-
tic will not be available during product launch, which would have a
negative effect on the drug’s revenues. Developing a diagnostic to
be launched in parallel with a drug therapy requires R&D and
commercial units to come together at an early stage to formulate
and execute a dual development strategy.
Reimbursement is the trickiest issue. Ideally, the public-health
benefits of additional testing will be so readily apparent that private
and government payers will find it difficult to refuse reimbursement.
Absent such a compelling argument, the industry will need to find
alternative funding mechanisms without running afoul of fraud
and antikickback statutes. The disease-management efforts some
companies are exploring may be useful in this regard. Cost
reductions resulting from new “lab on a chip” technologies may
also aid this effort.
To date, the industry has been amply rewarded for dispensing
therapies and has not needed to devote much effort to developing
and promoting diagnostics as a way of promoting therapeutics. But
as blockbusters become harder to find, undiagnosed populations
represent significant untapped revenues. A subset of them may never
become an attractive market, but many are good potential
customers. The industry can no longer afford to ignore them.
Keep It Simple
The single-pill strategy seeks to simplify the lives of those who are
already taking multiple medications. Specifically, it seeks to address
the needs of millions of patients who have been diagnosed with
multiple concurrent conditions and take multiple drug therapies,
as well as the needs of those who take multiple drugs for a single
condition. Today, physicians mix and match products from different
companies to arrive at “combination” therapies, one patient at a
time. Although the benefit of such an approach is that it results in
therapies tailored to the needs of individuals, the downside is that it
requires thousands of physicians to experiment with their patients to
determine which combination of drugs delivers the best results. It
also requires patients to take several drugs, possibly at different
times during the day, which reduces patient compliance.
The solution is a single-pill therapy in which several drugs,
previously independently marketed, are combined into one. This
approach may not be economical for all possible combinations of
diseases, but many diseases coexist frequently enough to make it
worthwhile. Areas that may be worth investing in include high
blood pressure and high LDL (low density lipoproteins) or
high blood pressure and low HDL (high density lipoproteins)
or dyslipidemia, which is also characterized by elevated glucose
and triglycerides. A systematic review of co-morbidities, patient
demographics, the preferences of prescribing physicians, and other
related data, within and across therapeutic areas, will reveal many
interesting and attractive patient segments for the single-pill
approach. (See “The Single-Pill Solution,” page 136.)
The single-pill strategy raises many interesting possibilities and
a whole raft of questions for marketers: Could a company increase
revenues by combining a second-tier product with a market leader?
Would two market leaders completely knock out the competition if
combined in a single pill? What about a combination of two strong
number-two or -three products in their respective indications? How
can market leaders and underdogs, respectively, exploit this strategy,
and whom will it favor?
The concept of a single pill is not new. FDA recently approved
Vytorin, a cardiovascular therapy
composed of Schering-Plough’s Zetia
(ezetimibe) and Merck’s Zocor (simvas-
tatin), which reduce cholesterol in
different ways. In the HIV area, in which
combination therapies are prevalent,
single-pill efforts are now under way,
including Gilead’s recently approved
Truvada, which combines Emtriva
(emtricitabine) and Viread (tenofovir).
Gilead is also working with Bristol-
Myers Squibb/Merck to combine
Sustiva/Stocrin (efavirenz) with Viread
into a single once-daily, fixed-dose HIV
pill. Undoubtedly, there is more to
come as companies start to explore
the potential of the single-pill approach
to both expand and defend their
franchises.
One Drug, Many Indications
Of the three new strategies, the
treatment platform is the most
demanding. It is based on the assump-
tion that various medical conditions
share common denominators and can
be treated using the same therapeutic
approach. It requires extensive effort to identify—or at least establish
credible, testable hypotheses about—similarities in mechanisms of
action that cause different medical conditions. In the oncology area,
for example, it is anticipated that specific platform technologies
will be able to treat many types of cancers. And Allergan’s Botox
(botulinum toxin), which has shown potential to treat everything
from excessive perspiration to migraines, has been approved for
four indications. The scientific challenges to successfully develop
new treatment platforms are significant, but the potential rewards
are equally tantalizing. (See “Selecting a Platform.”)
The treatment-platform strategy raises its own set of issues.
In the past, most companies preferred to test therapeutics one
indication at a time. Such an approach makes sense from the point
A PharmExec Graphic
The selection of which
platform to invest in
needs to take into
account both R&D
feasibility and the
commercial
attractiveness
of the market
segments.
A B C D E
A
B
C
D
E
Technological
feasibility
Treatment-
platform
strategy
Go Maybe No-Go
Market Segments (indications)
Selecting a Platform
PlatformTechnologies
Market
attractiveness
SOURCE: Jan Malek, PA Consulting

4. 4
of view of risk mitigation, but companies that develop treatment
platforms will need to quickly investigate their drug in multiple
indications to maximize financial potential. They may need to
investigate several indications in parallel, thus increasing both
financial investment and risk.
Second, a robust platform technology that stretches across
therapeutic areas could challenge a company’s ability to commer-
cialize it, especially if the platform shows promise in areas in which
the company has a weak franchise or none at all. This is a good
problem to have, but to reap the
greatest economic benefits, such
companies must be willing to license
out the indication that they are unpre-
pared to bring to market. That may be
easier said than done.
Commercial Push
Until now, the pharmaceutical industry
has been largely technology driven—decisions about
which R&D efforts to pursue were based
primarily on scientific considerations. Marketing has
frequently been an afterthought, once there was a
product to sell. The strategies suggested here require
a shift to an exploration of medical needs and a greater voice for
commercial input earlier in the R&D process.
All three strategies require greater interaction between R&D and
sales/marketing, but the nature and extent of these interactions
differ significantly. The diagnostic-led, market-expansion strategy
requires the least interaction. In the extreme, if a product is
already on the market, the commercial team could hire an external
diagnostics lab to develop the appropriate diagnostic test and
physician training materials. Preferably, however, the diagnostic
development would occur before the product is launched, which
requires sales/marketing and R&D to communicate regarding
progress and launch dates.
On the other hand, the single-pill strategy is driven by an
assessment of market needs and opportunities. It requires commer-
cial and R&D units to reach agreement regarding the priority of
these projects relative to other opportunities and to allocate
resources accordingly. The therapeutic-platform strategy is the most
difficult to conceive and execute, because it requires full integration
of R&D and commercial perspectives at the levels of strategy
planning and portfolio management.
An important issue for companies is how to make new product
development strategies fit within existing organizational structures. In
most companies, both R&D and sales/marketing are organized
along therapeutic area (TA) lines. Many commercial organizations
also have strong product teams that manage products with signifi-
cant independence. Single-pill and multi-indication blockbusters
don’t easily fit within these structures, because they cross indication
and TA lines.
The pursuit of both single-pill products and multi-indica-
tion blockbusters can therefore easily cause confusion and
conflicts about who is in charge. Management has to
establish clear lines of responsibility and con-
flict-resolution mechanisms to avoid prolonged
disagreements and ensuing product development
delays. The most effective way to resolve issues
may be to require single-pill and multi-indication
efforts to report outside of the established TA
hierarchy, with access to TA experts as needed.
R&D and commercial organizations don’t
have a history of successful collaboration. For
these long-standing differences not to derail
the pursuit of new strategies requires senior-
management involvement to ensure effective information sharing
and coordination. In doing so, executives need to acknowledge that
the two units need to focus on different issues and that the number of
meaningful interface points between the two is limited.
Management’s task is therefore to keep both organizations headed in
the same direction on parallel tracks rather than striving
to make them work hand-in-hand on a daily basis. (See “Who
Calls the Shots?”)
Pharmaceutical companies will have to create mechanisms
through which commercial and R&D groups can share informa-
tion, engage in a dialog, and make joint decisions. They must
develop coordinating mechanisms that enable the new projects to
benefit from existing TAs’ expertise without being delayed, or worse
still, derailed by potential conflicts for control. But the effort will
pay off. The new strategies, although more complex and more effort
intensive than the old blockbuster approach, point to the future.
And companies that want to be successful need to aggressively
embrace them and make them work.
Who Calls the Shots?
Diagnostic Led Single Pill Treatment Platform
Purpose Expand the market Grow market share Focus research efforts [based on
of own product combined R&D/commercial perspective]
Led by Commercial Commercial Joint R&D and commercial
Interface points Marketed products: none Prioritization of Development of a joint R&D and
between R&D Products in development: development resources commercial strategy
and commercial joint drug-diagnostics development Ongoing portfolio management
Coordination Periodic pipeline reviews Project prioritization and Strategy development and
mechanism resource allocation process portfolio management
Global companies need to pursue all three strategies
and must reshape their organizations accordingly.
The pursuit of both
single-pill and multi-
indication blockbusters could
easily cause confusion and
conflicts about
which R&D group
is in charge.
SOURCE: Jan Malek, PA Consulting
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© Reprinted from PHARMACEUTICAL EXECUTIVE, September 2004 Printed in U.S.A.