Boston, MA – July 13, 2011 – L.E.K. Consulting today announced new findings that reveal how the blockbuster drug market is changing, project continued blockbuster shifts through 2015 and outline ramifications for biopharma and life sciences companies in the future.


Blockbusters, defined as branded prescription drugs that generate more than $1 billion annually, have served as catalysts for driving value within the global drug market during the past 15 years. In the early 2000s, reports began to emerge predicting the demise of the blockbuster model, with expectations that the future pharmaceutical winners would follow a strategy in which blockbusters play a much less important role.


Despite these industry concerns, the number of branded drugs that reached blockbuster status has increased six-fold in the past 15 years – from 21 in 1995 to an estimated 123 in 2010. According to L.E.K. estimates, blockbusters have become the centerpiece of the biopharma industry, growing from 16% of global drug revenue in 1995 to 35% in 2010. L.E.K. findings indicate that blockbusters have disproportionally impacted the growth of top-10 pharma, with revenue contribution of blockbusters rising from 26% in 1995 to more than 60% of their revenues today. 


In addition, the revenue profile of blockbusters has dramatically changed during the past 15 years. In 1995, the average blockbuster revenue was $1.6 billion annually, and grew to $2.5 billion in 2010. One of the main drivers of this sharp revenue increase has been the emergence of “mega-blockbusters” (branded prescription drugs that eclipse $5 billion each in annual global sales) that today account for 28% of all blockbuster revenues. Beyond 2010, L.E.K. analysis also indicates that the average blockbuster revenue is expected to stay flat or slightly decrease for the first time in 20 years.  


As share of global biopharma revenues from blockbuster drugs is expected to reach a plateau, the blockbuster business model is evolving dramatically and may be at a pivot point. “Understanding emerging trends in blockbuster formation will enable biopharma executives to apply the best strategies for unlocking new opportunities for long-term success,” said Pierre Jacquet, Vice President and Global Co-Head of L.E.K. Consulting’s Biopharma & Life Sciences practice. He suggests that the nature, origination and disease indication of the new generation of blockbusters is shifting rapidly, with an increasing share of blockbuster revenue generated in specialty diseases, in therapeutic areas beyond the footprint of large pharma, and outside of the U.S. core market. 


Given that future blockbuster overall dollar value will likely suffer shrinkage, growth prospects of large pharma companies will be tested as revenue must be made up by having a greater number of blockbusters or relying on mid-size products. The “ideal size” of these companies may also need to be reset, with a leaner model being more appropriate based on the estimated revenue scale. Almost certainly, biopharma companies will need to make significant improvements in their R&D productivity, commercial effectiveness and business development creativity to offset the limitations of the new blockbuster model and ensure success moving forward. Specifically, the boundaries for exploring these blockbuster-rich environments will need to be expanded and opportunism will become more prevalent in the search of blockbusters. R&D and business development functions of large pharmas will be more balanced between organic R&D groups advancing a company’s footprint in core biology pathways, and scouting units exploring unknown territories where new blockbusters will likely emerge.


Finally, large pharma companies will need to maximize the value of their externally sourced blockbusters by rethinking business development structures that emphasize higher retained ownership for partnered products. The goal there will be to design new partnership structures that avoid or shave off over time royalties and partial regional ownerships from the biotech innovators.


Additional L.E.K. findings are detailed in the “New Face of Blockbuster Drugs,” article in IN VIVO magazine.


About L.E.K. Consulting

L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and analytical rigor to help clients solve their most critical business problems. Founded more than 25 years ago, L.E.K. employs more than 900 professionals in 20 offices across Europe, the Americas and Asia-Pacific. L.E.K. advises and supports global companies that are leaders in their industries – including the largest private and public sector organizations, private equity firms and emerging entrepreneurial businesses. L.E.K. helps business leaders consistently make better decisions, deliver improved business performance and create greater shareholder returns. For more information, go to


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