Measuring what matters
?Deloitte

Measuring what matters

Most of this post is to share the interesting paper?here,?The significance of blockbusters in the pharmaceutical industry.?Its main conclusion is that drugs need to sell well to repay their own investment - perhaps obvious, but worth demonstrating, all the same.

Here’s a list of the drugs launched by the ‘top 20’ in the period 2011-2020, that generated mean annual sales over $1bn:

No alt text provided for this image

Note how few drugs of the 168 in this cohort earned over $1bn per year, in mean annual revenue. Only 2 returned over $5bn per year, only 4 over $4bn. Even if you take Novartis’ new idea that they’ll prioritise drugs that?will?generate over $2bn per year, only 10% of this cohort achieved that, none of them from Novartis. (They did manage to get two drugs over $1bn per year, from that decade’s haul of 14 approvals).

And here’s the bottom of this list…

No alt text provided for this image

Now, consider how many companies still look at, and organise against, analyses of ‘productivity’ that take ‘approval’ as the goal. But, as this paper shows, there are a lot of companies who high-fived over an approval, but have had to sit on their hands ever since. R&D ‘Productivity’, even before the Inflation Reduction Act, can’t be divorced from its commercial imperatives.

There’s no perfect measure of ‘success’ in pharma, but the analyses from?places like Deloitte?show the same thing in different ways… Pharma has a ‘return problem’. (They call it ‘Return on Innovation’, but really it is Return on Invention.)

No alt text provided for this image

At the bottom of all of this is the very evident conclusion that the same or similar drugs, in different hands, achieve very different outcomes. There is no average company, in terms of how they add value to their pipelines. (A second glance at that Deloitte chart shows the spread from top to bottom performer in each year is always wide.)

The commercial space may have its own science, and art, but it is hard to claim that pharmaceutical markets are?less?predictable than biology. Knowing which market position a drug is headed towards should lead to a good (not perfect, but good) assessment of business viability. Unfortunately it is often done?after?a decision has been made on?which?market (and with which label, etc.) the drug will hit, so the ‘forecast’ is typically progression seeking, and optimistic. For example, forecasts are typically?not?sought for markets the drug is?not?headed towards, so there is little optionality - little ‘greener grass over there’ provided during the process.

It is entirely possible that costs for Development will continue to rise, for revenue generated by new drugs to decline, and for there to be losers in the wash-out. This is a future that will not be halted without a diagnosis of the real problem, and the only true measure of productivity: drugs that repay their investment, and more.

Duncan Young

Executive Director, Oncology Business Development at AstraZeneca

2 å¹´

i find the paper more telling for the fact that NRDD felt mean annual sales was a meaningful measure of anything. The ranking feels arbitrary, takes no LCM into account, time since launch, time to predicted PYS..... maybe that's the simple way for it to skew to bring out the big hitters, but still feels faux-sophisticated. Note how the only 2020 launch in the top half of table is an antiviral... Feels there are better analyses available to interrogate these data more meaningfully and the really interesting part about how you normalise and cross compare not done

George McNamara

Mumm lab member (through being HPS Core Manager)

2 å¹´

Hi Mike, how about a graph of each drug's profit $ vs number of people cured of serious illness?

Vincent Ling

Helping Molecules become Medicines.

2 å¹´

I have seen the commercial forecast game played out in companies large and small. Small companies pay consulting firms to come up with a scenario where their Drug X will make $3 bn a year, this is ticket to entry in nearly all pitch decks. Large companies have staff that back their executive decisions with rosey forecasts that support scientifically questionable M&A and licensing activities. It is obvious to those skilled in the art when the output of these biased activities are wishful ideations.

Paul Hurst

Global therapy launches, Functional & Commercial Leadership , Strategic Thinker, Collaborative Leader

2 å¹´

A clear, well considered review of TRUE blockbusters as measured by ROI with revenue post development costs. Having been involved in some of these therapeutic markets there was a "sixth sense" of which were going to on to be real winners. I hope that this article is considered by senior executives in companies so they think long and hard before continuing to fund development programmes that will not deliver revenue long term

Note to self: pick winners. This changes everything.... ;)

要查看或添加评论,请登录

Mike Rea的更多文章

  • Biotech is a new, exciting space - they need a new, exciting commercial model...

    Biotech is a new, exciting space - they need a new, exciting commercial model...

    The Virtual Chief Commercial Officer allows input when it matters..

    5 条评论
  • Asymmetric learning: what, why, when...

    Asymmetric learning: what, why, when...

    Better strategy early means better execution later..

  • Warriors vs. Worriers: The Corporate Dynamic That Shapes Success

    Warriors vs. Worriers: The Corporate Dynamic That Shapes Success

    This is a short piece, on two ‘types’ that I see in every pharma company. Are you a warrior or a worrier? In the realm…

    6 条评论
  • Lipitor: good, best, better

    Lipitor: good, best, better

    An old case study, but still an educational one..

    5 条评论
  • How innovation works

    How innovation works

    Why it's important to understand the roles of invention and innovation One theme that needs constant restating is that…

  • Core Values: Skepticism and Unbiased Experimentation

    Core Values: Skepticism and Unbiased Experimentation

    The difference embedded in PureTech I went back to my interview with Daphne Zohar, the founder and CEO of PureTech…

    3 条评论
  • What if our answer is 5 slides, not 200?

    What if our answer is 5 slides, not 200?

    One thing I realized, watching back my interview on the Cures and Capital podcast was how simple some of the solutions…

    2 条评论
  • Which if am I thenning?

    Which if am I thenning?

    Better 'thens' require better 'ifs' If… then… We then ifs every day - if I take route A vs route B, then it will take…

    2 条评论
  • Rules for Pharma Revolutionaries

    Rules for Pharma Revolutionaries

    I always liked this video, but, judging by view count, I was in a small group… I do still believe in the need for…

    10 条评论
  • When is the right time to have a high Index of Suspicion?

    When is the right time to have a high Index of Suspicion?

    Independent, interdependent and in phase I..

    5 条评论

社区洞察

其他会员也浏览了