The business model for large
You target a huge population, like people with heart disease, find and patent a drug that's at least marginally better than current treatments, and make billions. It's worked pretty well for a long time.
Now, many blockbusters are losing patent protection, huge companies are losing billions in sales to generic competitors, and despite massive research spending, have few new
Companies used to be able to slightly tweak blockbusters and sell them as a new treatment, extending their lifetime by years. The Affordable Care Act has made that strategy more difficult, as new drugs that don't significantly outperform what's already available won't be reimbursed by insurance.
In an interview with Fortune,
His solution? Hopefully, to produce more new drugs for smaller segments rather than chasing big markets.
The company plans to do that by attacking disease pathways, the biological processes. That way, you get a drug that, while designed for kidney cancer, is also helpful to patients with certain lung or breast cancers.
That's what happened with Novartis' Afintor. As a kidney cancer treatment alone, sales don't hit $1 billion. But across all its uses, the drug is something of a blockbuster in its own right.
Finding multiple uses for one drug isn't new, but those discoveries were often accidents. Specifically targeting research at pathways could lead to a different types of blockbuster in the future. Still, getting one drug approved is a near miracle, and getting something approved for multiple diseases requires a new battery of trials.
The hope is that this will be good for patients, in that more varied medicines will be released, and it will be good for the company because losing a single drug won't kill the company's sales.
The concern is that investors, used to the blockbuster model, will be skeptical and won't give companies the time they need.
It's a difficult shift for a business that's gotten so used to living off of wildly profitable mega-hits, but it may be necessary for those companies that want to be around in the long run.