CHAPTER 1 EXECUTIVE SUMMARY

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Introduction

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Scope and coverage of this report

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Key findings from this report

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CHAPTER 2 IS THE CHANGING R&D LANDSCAPE HASTENING THE END OF THE BLOCKBUSTER?

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The R&D landscape is changing

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Does a blockbuster-driven growth strategy stifle innovation?

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Return on R&D investment plummets while drug sales soar

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But is R&D productivity really falling?

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Big Pharma's R&D spending clout can shape the industry's R&D focus

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Why has the drug industry relied on blockbuster growth strategies?

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Investors require double-digit growth

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Blockbuster revenues are needed to help fund soaring drug development costs

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The blockbuster growth model has weakened

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Blockbuster-driven companies are open to significant risk

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The market disincentivizes me-too development

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Blockbusters face significant generic threat

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Blockbusters have a tougher time when they reach the market

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Is there a relationship between company size and R&D productivity?

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There is still a role for blockbusters, but only as one of a drugs company's growth strategies

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CHAPTER 3 MARKET CHARACTERISTICS AND THE REGULATORY ENVIRONMENT IMPACT THE SUCCESS OF THE NICHEBUSTER

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Approval pathways are accelerated for innovative therapies

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The US provides a fertile market for innovator drugs

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The US regulatory environment supports innovation

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Effective use of the 'Orphan Drug Act' drives nichebuster development

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The oncology market is the archetypal niche market target

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There are a range of strategies that are important in gaining a foothold in the selected niche market

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CHAPTER 4 NICHEBUSTERS CHANGE DRUG MARKET DYNAMICS

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Drugs companies turn to licensing to capture innovation and avoid stagnation

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Dependence on blockbusters falls

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Drugs companies turn to licensing, R&D collaborations and small-scale M&A to gain access to external sources of innovative technology and drugs

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Dependence on licensing to drive future sales is set to rise

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Targeting niche markets also encourages greater small-scale M&A activity

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A study of recent collaborations shows that big Pharma is using early-stage R&D collaborations for capturing innovation

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A greater number of drugs need to be approved to support revenue generation: the pressure on regulatory bodies grows

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Nichebusters help to drive the emergence of targeted therapies

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A burst of targets and the emergence of technologies that accelerate lead drug development are driving targeted therapies

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Nichebuster development impacts the dominance of specific therapy areas

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Targeted therapies have fewer side effects than traditional therapies

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The use of diagnostics drives clearer market segmentation, which has a number of advantages

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Personalized medicine requires greater health informatics

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Business model evolution is required to capitalize on the nichebuster model

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Different sales and marketing strategies are required for nichebusters: prioritizing cost-effective targeting of specialist physicians is needed for successful niche sales and marketing

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The switch towards making marketing strategies customer-focused will help niche drug marketing

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Fully-integrated pharma companies move into niche targeting: a case study on Baxter's strategy to penetrate the haemophilia market

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Companies developing nichebusters also need to modify R&D strategies

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Big Pharma is adopting a range of strategies to harness innovation to support the transition towards the nichebuster model

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CHAPTER 5 APPENDIX : BIBLIOGRAPHY

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References

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Publications and online articles

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Datamonitor resources

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Conference information

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List of Figures

Figure 1: The bias towards a blockbuster growth strategy contributes to the inverse correlation between R&D productivity and sales

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Figure 2: The number of priority approvals has risen consistently over the last 40 years

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Figure 3: Merck has gone from needing no blockbusters in 1991 to maintain double-digit sales growth to needing the equivalent of more than two by 2005

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Figure 4: A variety of different studies have shown that the cost of R&D has increased over time

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Figure 5: There is an inverse correlation between company size (defined by sales) and R&D productivity

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Figure 6: Early-stage collaboration type split by therapeutic focus, October 2002 - September 2004

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Figure 7: Dependence on blockbusters generated by top-5 drugs companies is set to fall significantly from 2004-2010

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Figure 8: Discovery-stage licensing by both top-5 and top-55 companies is set to generate a greater percentage of forecast sales than later-stage licensing

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Figure 9: Early-stage collaboration deals are focused on lead product and/or target identification and/or validation, October 2002-September 2004

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Figure 10: Therapy areas dominated by targeted therapies are the leading market growth drivers

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Figure 11: Immune disorders and inflammation dominate R&D focus, based on a snapshot of the current patent situation

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Figure 12: Advate successfully becomes market leader in France

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Figure 13: GSKs CEDD model is designed to mimic smaller-scale biotech companies

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Figure 14: Roche has a strong 'Networked Pharma' model

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