Is the Age of the Blockbuster Over?

For pharmaceutical companies, the 90's and early 2000's were the age of the blockbuster drug. Pharmaceutical companies developed drugs that could be used by huge patient populations and could rake in revenue from their respective drug patents. According to the New York Times, it is no secret that these patents are beginning to expire; but what is alarming for the industry is that there isn't much in the pipeline to replace them.

As patents begin to expire, major pharmaceutical companies will see significant erosion to their revenues from competition of generic brands. Add to this problem the lack of new drug discoveries, pressure from the government to lower drug prices and a series of heavy fines against pharmaceutical companies. This perfect storm of factors spells trouble for the pharmaceutical industry.

Why do you think drug innovation has slowed? Should the government still be  putting pressure on industry giants to lower their prices? Does pressure on price discourage innovation?

What strategy would work best moving forward? : focusing on branded generics, acquiring companies with near market ready drugs or concentrating only on health areas of need?

Obviously this article has a number of business, health and policy implications. It would be great to explore all of the different angles so feel free to comment.

Government Drugs

No one is discovering new drugs and the U.S. government has something to say about it. The New York Times wrote an article in January about the NIH breaking into the business of drug discovery. In October of 2011 the NIH will launch its "National Center for Advancing Translational Sciences."

The center will use screening to find chemicals that act on enzymes to create new drugs and cures. Once these chemicals are discovered, the center will also be responsible for animal testing and clinical trials---all functions usually undertaken by pharmaceutical & biotech companies in the private sector. All of this will happen with an initial investment of one billion dollars.

So why would the NIH start doing something its never done before? Because someone has to do it. The past decade has been marked by minimal drug discovery in the private sector. Add this to the fact that pharmaceutical companies are cutting research and you have a medical community that is desperate for new answers.


 Issues I Foresee:

1) The Learning Curve: The drug discovery process is long and extremely involved. Major pharmaceutical companies have been working on the process for years; they know it. The time from initial discovery to market is often 15-20 years (See Diagram Below). Jumping head first into a process which takes that long could prove frustrating.

2) The Funding: The center is starting out with an initial investment of one billion dollars. A single drug can cost up to a billion dollars to discover. It begs the question: will there be more funding eventually? Because they will need it.

Is drug discovery something the government is obligated to undertake? Will the NIH's attempt at drug discovery flourish or flop with the rest of the pharmaceutical companies? Let's hear what you think.