Epoch 41: Building Billion-Dollar Drugs

Secrets to Success & Which Pharma’s Deliver Them Best

Hello Avatar! Welcome back for another week of biotech analysis. Today is Sunday, which means this is our Building Biotech newsletter that is focused on discussing biopharma strategy topics. Today we delve into the lifecycle of blockbuster drugs, exploring how these high-revenue products are developed or acquired and the strategies companies employ to turn them into major commercial successes. We’ll discuss the growing trend of mega-blockbusters that surpass $5 billion in annual sales and highlight the top-selling drugs forecasted for the coming years. We’ll also examine how big pharma companies balance between building blockbusters internally and acquiring them through dealmaking, and analyze key case studies, such as Keytruda and Ozempic, to illustrate different routes to success. Finally, we’ll look at the most successful companies in recent years and their blockbuster strategies, including insights into the therapeutic areas driving the largest revenues.

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Enough shilling for the day, lots to cover this week, let's get started!

LIFE OF A BLOCKBUSTER

Developing blockbuster drugs is the prime commercial goal of biopharmaceutical manufacturers, offering the chance to recoup years of investment in drug development and lay a solid financial foundation for the company’s long-term future. Building blockbuster brands has never been easy and it has only become harder as competitive dynamics have intensified, as certain therapeutic areas have become saturated and as market access headwinds have strengthened. Nonetheless, new drugs reach the market and grow into new blockbuster brands and sometimes even "mega-blockbuster"-sized sellers.

For decades a blockbuster has been loosely defined as a drug that generates more than $1B in annual sales. But increasingly, drug makers – and their investors – have set sights on bigger and bigger commercial brands, such as drugs that generate $5B or more in annual sales and can serve as a solid anchor for their pharmaceutical portfolios.

Of the 487 drugs approved by the US Food and Drug Administration from 2014-2023, 193 are forecast by Evaluate Pharma to generate peak-year sales over $1B. That means about 39% of new drugs are projected to reach blockbuster status.

Among those, the biggest sellers are 17 drugs that are forecast to reach peak-year sales of more than $10B, while 42 are expected to post peak-year sales of more than $5B and 114 are expected to bring in peak-year sales of more than $2B, according to Evaluate data.

Excluding COVID-related products, the five drugs forecast by Evaluate Pharma to generate the most revenue in a single year at their peak are Merck’s cancer drug Keytruda ($31B), Novo Nordisk’s Ozempic GLP-1 obesity drug.

Today, we will explore everything about blockbuster products, starting with a survey of the biggest projected blockbusters and their key features. Next, we'll explore indication stacking and label expansion strategies and how they shape blockbuster profiles. We’ll also examine whether certain therapeutic areas are more likely to result in blockbuster products, as well as the average time it takes for drugs to reach blockbuster status. From there, the discussion will shift to the business side: is it better to build or buy blockbuster products? Finally, we’ll explore the different paths to market and highlight the pharmaceutical companies that consistently excel at creating blockbusters.