Innovation in the Pharmaceutical Industry: The Process of Drug Discovery and Development - Innovation and Marketing in the Pharmaceutical Industry - page 33

can make an incursion, essentially curtailing the uncontested reign of the pioneer
drug over the market.
Me - too drugs . Typically, me-too drugs are minor variations of the original drug as
they employ the same or similar action mechanisms, or have a related (although not
identical) chemical structure. Compared to the pioneer drug, a me-too brand is a
market follower, a late entrant offering a therapeutic solution that is very close to
that of the pioneer drug. These drugs either replicate or provide a minor improve-
ment over the breakthrough products in their class. Typically, they are priced at
levels close to, or slightly lower than the price of the pioneer drug (reports place
them in the range of 14 % below the price of the pioneer drug).
In reality, the vast majority of me-too drugs are not the product of brazen, delib-
erate imitation. Most of them have been in clinical development prior to the approval
of the pioneer drug (DiMasi and Paquette 2004 ). By providing numerous viable
leads, biomedical sciences create new opportunities for drug development. It stands
to reason that different avenues can be simultaneously pursued by multiple fi rms.
The pharmaceutical industry is attractive to entrepreneurs because of its open
access to fundamental knowledge, rapid information dissemination, opportunities
for specialization, and connectedness to scientifi c networks. With the industry's
shift away from heuristics and random screening, and owing to the capabilities
offered by targeted rational drug design, the discovery process has become more
systematic. As a result, lots of new ventures, drawn by the alluring rewards and
undaunted by the inherent risks, choose to enter. Inevitably, they engage in a race
with a slew of competitors who are already working on compounds targeting an
essentially fi nite set of publicly known diseases. As rivals get to work in parallel on
similar targets, often applying the same fundamental knowledge sourced from open
science, the solutions they come up with may not be all that different. Inevitably,
when one of them is the fi rst to obtain market approval, the successful rival products
are going to fall in the me-too category as their market entry will be subsequent to
that of the pioneer drug.
Vigorous efforts to win the innovation race are the norm as the fi rst drug to reach
the market will not only induce a signifi cant reputation boost for the fi rm, but, in the
absence of other alternatives, will be poised to dominate the market. For late entrants
that are not well differentiated from the pioneer drug, this is no longer the case. While
desperately needing to recoup their huge R&D costs, they can be left with a diffi cult
choice: switch patients away from the pioneer drug, uncover new niches to tap into, or
resort to an overall market expansion. To be lucrative, me-too brands need suffi cient
differentiation (actual or perceived) from existing alternatives in the market. If their
market launch is at a price lower than that of the pioneer drug, price competition will
ensue. Barring that, there is little reason why a patient happy with their treatment
would want to switch to a me-too brand if it offers no extra therapeutic value. Moreover,
prescription inertia may persist if physicians fail to perceive differential value in the
me-too product, or are reluctant to interfere with an already successful therapy. Thus,
marketing to physicians and direct to consumer advertising (DTC) tend to become the
main battleground for share of mind and share of market for the me-too brands.