They Need to Cash in Fast

The pharmaceutical market is coming to resemble the movie business, with a few blockbusters yielding a disproportionate share of total industry revenues. In 1992, says a report from IMS Health, just four brands had achieved “megabrand” status by recording $1 billion in sales. Last year, 55 pharmaceutical products reached the $1 billion mark, accounting for 45 percent of the industry’s revenues. Pharmaceutical firms are now under pressure to create what IMS terms “mega blockbusters”—products that generate $1 billion in sales during their first year on the market. A couple of factors are at work here. New drugs now enjoy a shorter “exclusivity period”—i.e., the time in which no other brand competes directly against them. And generic drugs are getting better at taking market share away from branded franchises. During the 1980s, notes IMS, “a drug could expect to lose 40 percent of its peak sales some 12 months following the launch of a generic.” By the 1990s, that figure had risen to 60 percent.