As Billions in Blockbuster Drug Revenue Goes Off Patent, Life Sciences Companies are Challenged to Fundamentally Change Future R

Apr 2, 2008 10:20am

NEW YORK, April 2, 2008 /PRNewswire-USNewswire/ -- Pharmaceutical companies currently challenged with replacing the $65 billion worth of product expected to go off patent in the next four years must dramatically rethink their R&D models for future success, according to a new report released by Deloitte today.

According to the report titled The Changing Face of R&D in the Future Pharmaceutical Landscape (www.deloitte.com/us/FuturePharma), current R&D programs focused on developing a small portfolio of high revenue blockbusters will evolve to R&D programs focused on high efficacy treatments developed for smaller patient populations based on specific genotypes. Such treatments, and their higher demonstrated efficacy, may ultimately have the potential for higher per treatment revenues.

This fundamental disruption of today's pharmaceutical industry will create both opportunities and threats for current industry players, and will stimulate the emergence of new industry entrants configured specifically to succeed in the changed pharmaceutical landscape.

"Continuing yesterday's R&D focus on developing blockbusters will not secure success in the future," according to Terri Cooper, Ph.D., a principal in the Life Sciences practice of Deloitte Consulting LLP. "Pharmaceutical companies cannot rest on their laurels. They need to be looking outside of their four walls to develop partnerships and collaborations with a network of companies, scientists and organizations to fuel R&D developments and reduce time to bring new drugs to market."

The R&D model of the future will incorporate:

-- R&D strategies which support the assembly of treatment portfolios for the entire disease life cycle and the various genotype specific patient segments in the life cycle, rather than the traditional one-off "blockbuster"

-- Focused R&D programs based on genotyped patients/subjects and biomarkers

-- Virtual, disease-specific R&D networks, incorporating patients, physicians and the medical treatment infrastructure, which involves extensive partnering and collaboration with all the disease knowledge communities

-- Virtual R&D processes with significant outsourcing to maximize flexibility and manage development risk

"Leading pharmaceutical companies who follow this new R&D approach will be well positioned to reap the benefits of future R&D investments building the development pipelines required to compete in the next five years," said Dr. Cooper.

Additionally, the rise of consumerism in the health care industry further supports the urgency for change as blockbuster drugs go off patent and compete with generics. A recent Deloitte Center for Health Solutions report, 2008 Survey of Health Care Consumers (www.deloitte.com/us/consumerism), found that 84 percent of consumers surveyed prefer generic drugs to name brand drugs if given the choice.

"R&D investments must now more than ever be geared at developing the types of compounds that will have even greater safety and efficacy to establish branded drugs as preferred choices to contend with increasing generic competition," added Dr. Cooper.