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Pharma’s Blockbuster Habit

Genomics will make possible the kind of customization that undermines the drug industry’s blockbuster mentality. But can Big Pharma kick the habit?

About 15 years ago, I traveled to Nutley, N.J., to interview a molecular biologist at Hoffmann-La Roche. I vividly recall my host waving at an impressive little skyline of buildings worthy of a college quadrangle and proudly saying, “Valium built all this.” As recently as a month ago, when I visited the gleaming research and development complex of SmithKline Beecham just outside Philadelphia, my scientific host waved at an expanse of tinted-glass buildings and explained, “Tagamet paid for all of this.”

I’m sure they say the same thing in Indianapolis about Prozac, and in various townships of New Jersey about Claritin and Lipitor, each of which racked up annual worldwide sales in excess of $2 billion in recent years. For many years, Big Pharma has had a bottom-line love affair with Big Drugs-blockbusters that generate billions of dollars in sales each year.

Part of the reason is history. Discovering and developing drugs has always cost a bundle, although one could argue that hyperbole as well as inflation has contributed to the steadily rising estimates for the cost of developing a new drug. Little more than a decade ago, the standard figure was $50 million to $75 million to bring a new drug to market, but the pharmaceutical industry now likes to float a figure of $500 million. (It’s a rickety number that conveniently includes the costs of drugs that died on the way to the market, including ones that should have been abandoned but weren’t.) But let’s stipulate: There’s no question drug development is a dicey business, where bad luck, unanticipated side effects and unexpected lack of efficacy can blow holes
in any company’s pipeline.

Perhaps a more compelling reason is the view ahead: After a quarter-century of molecular biology and the first early returns from genomics, the industry is confronted with what Big Pharma R&D chiefs routinely describe as a “cornucopia” of possible gene-based drug targets. It’s going to cost big money to place a lot of chips on the genomics game board. Moreover, a lot of these genes do not come with operating instructions and an owner’s manual, so companies will have to do the kind of basic biology traditionally pursued by academia.With future R&D budgets projected to be between $4 billion and $5 billion, companies need
enormous revenue streams to feed the development beast.

But what if the blockbuster strategy represents yesterday’s wisdom? If the philosophy behind genomics is correct, companies may face what might be called “the allele gap”-or, to invoke a popular phrase from my college years, a kind of “polymorphic perversity.”As each new gene is identified and characterized, drug developers have a potential target for therapy.

Yet the ultimate message of genomics is that one size (of drug) does not fit all, which contradicts the basic philosophy that drives blockbusterdom. The fact is that each gene has polymorphisms-variations (or alleles) on the standard-issue gene.Many of those variations are expected to correlate with disease states, but even so, not all the variations are likely to respond to the same drug. The irony of genomics is that the more precise the science, the smaller the potential market may be.

You don’t have to be a Bolshevik to understand that “customized medicine” are fighting words in the traditional economy of drugs. They take the mass out of mass market, and remove scale from economies of scale. I have seen biotech executives recoil at the prospect of developing a drug that would benefit “too few” people.

In the long run, a company that develops a broad portfolio of “modest” drugs-as in annual revenues of $300 million to $500 million-may do just as well as a company that continually searches for a blockbuster. Lip service is already being paid to the argument that customized, genomics-based drugs will be more effective and come with fewer side effects, and therefore will be able to attract a significantly higher price.

That may be. But here is a modest cautionary note: For 10 years, scientists have been selling the genome project to the public on the basis of the way it will revolutionize medicine. If, because of the blockbuster mentality, a lot of genomically based drugs do not get developed simply because the market looks too small, or if these new drugs are even more stratospherically priced for consumers, you may hear a public outcry that will make the current debate over the cost of prescription drugs sound like the balcony scene between Romeo and Juliet.

It will be fascinating to see how the pharmaceutical industry handles the glut of possibility in the era of the genome. After you’ve seen a single drug literally transform the landscape of your R&D campus, it’s easy to understand the allure of the blockbuster syndrome. To mix drug metaphors here, it may be hard for Big Pharma to kick the habit.

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