Whether a large, medium, small or emerging company, the vast majority of biopharma launches are not products with blockbuster potential. Our research shows that launches of products with expected peak sales under $500 million are the most common. In fact, only 23% of launches we reviewed over a six-year period have expected peak sales of greater than $1 billion.
Of the roughly 337 new molecular entities (NMEs) launched in the U.S. in the six years between 2017 and 2022, we analyzed 265 NME launches that had sales data available. We segmented products by their U.S. peak sales (actual or expected) and then placed them into one of the following three categories based on expected peak sales potential:
- Nano-launches (<$200 million) and micro-launches ($200 million─$500 million)
- First-runs ($500 million─$1 billion)
- Blockbusters ($1 billion─$5 billion) and mega-blockbusters (>$5 billion)
For companies of all sizes, the proportion of biopharma launches of assets with less than $500 million in expected peak sales was the most common scenario across the six-year timeframe (see Figure 1). It may surprise some large pharma industry veterans to see these micro- and nano-launches being the largest category for big pharma in four out of the six years reviewed and representing more than half of all the big pharma launches in three out of the six years. More than twenty years on now, the Orphan Drug Act appears to have had a transformational impact.
Emerging and small pharma split almost equally with large pharma the pool of “first-runs” with potential for $500 billion to $1 billion in revenue.
Nearly 77% of all the products launched included in our analysis had revenue potential of less than $1 billion. And what would have been unimaginable twenty years ago, half of these assets were launched by emerging and smaller pharma companies. We looked in detail at emerging biopharma first launches earlier this year.
In the last six years, around 17% of launches in our sample were first-in-indication launches. We refer to these as “pioneers.” Approximately 33% have novel mechanisms of action in proven indications served by existing products, what we call “disruptors.” Half of the products launched were me-too products or “bandwagoners.”
A full 84% of the pioneering assets are not expected to reach blockbuster status (about 66% of these pioneers are micro- or nano-products and roughly 18% of them are first-runs). About 69% of pioneers are orphan designated. We see a similar trend in the disruptors group wherein around 55% of the assets are micro- or nano-products and around 20% of them are first-runs. Approximately 25% of bandwagoners are expected to become blockbusters or mega-blockbusters, and about 15% are first-runs.
In the top therapeutic areas (TA), for example, oncology (including rare oncology), the majority are bandwagoners (53%), whereas pioneers are only 11%. Among all the pioneers, the majority are in the non-oncology rare category and the oncology TA—the majority of these are in the micro- and nano-product potential (66%), and only a small (16%) of products have blockbuster or mega-blockbuster potential.
In non-oncology rare indications, pioneers are the most common (at about 38%), followed by disruptors (37%). Among systemic anti-infectives and CNS products, bandwagoners represent about 61%, with a third showing potential of greater than $1 billion.
Label expansion as a driver to greater product potential: Nearly 42% of products expand into new indications or new patient segments after their initial launch—irrespective of therapeutic area. Blockbusters and mega-blockbusters are about twice as likely as either of the other two categories (73%) to have follow-on indications or label expansions post launch (see Figure 4 below). Products expanding into a greater number of indications have a higher potential of becoming a blockbuster or mega-blockbuster.
Of the 111 products with label expansions, 63% of the products expanded into new indications and remaining into other types of expansions including line extensions, expansion into new age groups or genders and into new patient segments through new formulations. Products that had only one indication expansion were primarily micro-launches or nano-launches (63%).
Based on forecasted and actual revenue for the 62 blockbuster or mega-blockbuster assets in our sample, we expect an average time to reach an annual revenue of greater than $1 billion is around five years, with a typical range of four to eight years. Notably, oncology assets are likely to be at the longer end of the range. In the future, the Inflation Reduction Act may create an incentive to accelerate life cycle management investment in parallel indication development for small molecules, given a shorter time to asset loss of exclusivity. This incentive for greater parallel investment of small molecule indications may favor larger biopharma companies over smaller biotech.
Indication expansion appears a key driver of blockbuster potential. Products with more than three indication expansions (i.e., at least four) were all blockbusters or mega-blockbusters (100% of those in our review sample). And, of all the products that did not expand indications only around 11% became blockbusters and mega-blockbusters.