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What Is a Blockbuster Drug?

What Is a Blockbuster Drug?

“Blockbuster drugs are those that generate at least $1 billion of revenue per year for the pharmaceutical companies that produce them.

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While it is true that many pharmaceutical companies are extremely profitable, there is also a lot of time, work and money involved in the development of new drugs.

That’s why some breakthrough drugs are a real reason for pharmaceutical companies and their investors to celebrate—especially those who end up being blockbusters.

The problem, however, is that the success of blockbuster drugs is often short-lived due to patent laws.

What are the Characteristics of blockbuster drugs?

  • A blockbuster drug is a very popular drug that generates annual sales of $1 billion or more for the company that sells it.

  • Blockbuster drugs are those typically used to treat chronic or long-term medical problems, as opposed to acute or short-term conditions. Because short term illness may not require long duration of treatment and can not contribute much in total sell of drug. But this is not a rule.
  • Cimetidine (marketed as Tagamet), heartburn and stomach acid treatment, was the first drug that generate more than $1 billion a year in revenues and, as such, has gone down in history as the first ever blockbuster drug on the market.

  • Common blockbuster drugs are Vioxx, Lipitor, and Zoloft.

  • Blockbuster drugs are used for common ailments, such as diabetes, cholesterol, high blood pressure, and cancer, that many individuals face.

  • Pharmaceutical companies spend a lot of money on research and development (R&D) and sell a successful drug at a high price to recoup losses and earn a profit.

  • When a drug’s patent expires, the market is flooded with generic drugs, negatively impacting sales of the blockbuster drug.

What are the Limitations of blockbuster drugs?

Pharmaceutical companies depend on blockbuster drugs to generate profits.

The problem is that when the patent for the blockbuster drug expires, the company behind it can begin to see a significant dip in the revenue.

In order to retain exclusive rights for the sale of a drug, a pharmaceutical company must obtain a patent.

However, as drug companies need to file patents while their products are still in development, patents only offer them a limited window of exclusivity in the practice.

Patents are valid for 20 years from the date of submission (in US), which may sound like a decent window, but given that it may take a decade or more to actually bring a new drug onto the market, pharmaceutical companies do not actually have enough time to recover the money and resources they put into researching and developing their products.

Once a drug patent has expired, competitors can market generic versions at lower prices, leading to a significant loss of market share for the original developer.

Pfizer is one such example. When its blockbuster drug Lipitor lost its patent protection in the year 2011, sales was decreased by more than 90%, and Pfizer has not recovered since then.

Another problem with blockbuster drugs is that companies depend primarily on them in order to generate revenue, so that when a blockbuster product fails, it can lead to disaster.

If a blockbuster drug is found to have major side effects or is subject to recall, financial losses may be catastrophic.

In fact, any type of blockbuster drug scandal can cause pharmaceutical companies and their investors to lose billions of dollars overnight.

For this purpose, pharmaceutical companies often aim to develop a diverse and successful array of products rather than rely on one or two blockbuster drugs to make themselves profitable.”

Biggest Blockbuster Drugs

“Some of the biggest blockbuster drugs of all time, with lifetime sales of over $100 billion as of 2019, are as follows:

Lipitor

Company: Pfizer

Used for: High cholesterol

Total sales: $164 billion

in 1997, Warner-Lambert originally developed Lipitor and was approved in U.S.

In 2000, Pfizer acquired Warner-Lambert to become the sole owner of the drug; a wise investment.

In the end, Lipitor would account for one-fourth of Pfizer’s total sales.

The patent expired in 2011, but Lipitor still lives as a blockbuster drug for Pfizer, with most of its sales coming from China and overseas markets.

In 2019, Lipitor generated $2 billion in sales to Pfizer. However, this is a significant decrease when compared to sales in 2011, the last year of which Pfizer had a patent.

Sales for Lipitor amounted to slightly more than $9 billion that year.

Humira

Company: AbbVie

Used for: Ankylosing spondylitis, arthritis, Crohn’s disease, plaque psoriasis, ulcerative colitis

Total sales: $137 billion

Humira is owned by AbbVie, a 2013 spin-off from Abbott Labs.

Doctors like Humira’s ability in order to counteract inflammation caused by several diseases.

The drug lost patent protection in the year 2018 and the FDA has approved five generic versions.

Moreover, this has not impacted Humira sales as yet, which brought in $15 billion in the revenues in 2019 for AbbVie.

AbbVie has also been constantly raising the price of Humira.

Advair

Company: GlaxoSmithKline

Used for: Chronic obstructive pulmonary disease, asthma

Total sales: $104 billion

Advair is used to treat asthma and other lung diseases by breathing.

Advair was approved in 2001 and has been a major seller since the beginning.

The US drug patent expired in 2010 and its inhaler pattern expired in 2016, but no successful generic competitor emerged until 2019.

The issue was not the drug, but rather the device, which was difficult to reproduce in the context of the FDA’s strict drug-device patent laws.

Generic drugs are made by Mylan and cost 70 per cent less than Advair.

Advair’s sales are expected to decrease significantly.

Eliquis (apixaban)

Company:  jointly developed and commercialised by BMS and Pfizer.

Used for: reducing stroke and systemic embolism risk in patients with non-valvular atrial fibrillation.

Total sales: $9.8 billion

Eliquis is one of BMS’ strong and growing franchises, with net sales growth of 32% in 2018.

It was jointly developed and marketed by BMS and Pfizer, which contributed between 50% and 60% of drug development costs.

Pfizer reported a 36% increase in net drug sales worldwide. Initially launched in 2012, the drug is an anticoagulant inhibitor of Xa, approved to reduce the risk of stroke and systemic embolism in patients with non-valvular atrial fibrillation.

Increased adoption of non-valvular atrial fibrillation and oral anticoagulant is the driving force behind the growing market share of the drug worldwide.

The US drug patent is due to expire in 2023.”

https://www.investopedia.com/terms/b/blockbuster-drug.asp#:~:text=What%20Is%20a%20Blockbuster%20Drug,the%20company%20that%20sells%20it.

https://www.fool.com/knowledge-center/what-is-a-blockbuster-drug.aspx

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