Case Study Of The Blockbuster Model Cracks?

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The blockbuster model cracks?

The blockbuster model has been a successful strategy for many companies in the 90s and 00s, bringing billions in annual sales for the lucky ones. The model is however being challenged by rising R&D costs, longer development periods, higher project failure rates, and more.

Defining old and new
Initially, we have to differentiate the blockbuster drug - brands achieving more than $1 billion in sales - from the blockbuster model - a strategy for the whole business to focus on finding and exploiting blockbuster drugs for massive returns (1). The blockbuster drugs are and will always be pursued, but centralizing the business around finding and capitalizing on one or two blockbuster drugs is no longer considered to be a sustainable strategy.

Blockbuster model
The blockbuster era began in 1979 with SmithKline’s drug Targamet, bringing in $1 Billion of sales, and was followed by the next blockbuster drug Prozac in 1987 by Lilly (1, 2) During that time, a shift occurred in strategy and companies were then
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This is obviously associated with higher risk-taking, as we could see for Pfizer going into the diabetes area with Exubera (in addition to a new delivery mechanism) which ultimately failed (4). This was however not the case for Pfizer’s Viagra, which luckily resulted in a huge success after being initiated as a heart medication.
However, this strategy is no longer ideal in line with increased competition (new drugs are often not “first in class” anymore) and costs associated with the more complex development (3). It has also been shown that almost 50% of all blockbuster drugs have been developed by companies with high presence in the same therapeutic area (1). This shows that companies have to narrow down their R&D scope.

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