Innovation in the Pharmaceutical Industry: The Process of Drug Discovery and Development - Innovation and Marketing in the Pharmaceutical Industry - page 35

convenience, or weaker side effects, as done by Zocor ® , Lipitor ® , Symbicort ® , and
Xyzal ® in their respective markets (Stremersch and van Dyck 2009 ). Still, the size
of the market is essential as evidenced by the fact that late-market entry is less com-
mon for orphan drugs. The markets for orphan drugs are typically quite small and
cannot support multiple treatments of a generally similar nature.
In some cases the opportunities for incremental changes (e.g., altered formula-
tions, new combinations, different dosage, or novel administration routes) are well-
known to the manufacturer of the breakthrough drug. If there are no compelling
reasons to delay the launch, the fi rm can press on with the market release while
simultaneously undertaking the development of improved follow-on versions to be
launched soon thereafter.
It has been suggested that these two strategies—breakthrough invention with
relatively short-lived fi rst-mover advantages, and late entry with differentiated or
incremental innovations—can be equally effective when examined over a 10-year
horizon from their respective market introductions. Over time, breakthrough drug
innovations are known to undergo drastic changes in market share—they tend to
start with a systematic above-average growth, may even create a new market that
they can effectively dominate for a while, but will experience a steep decline not too
long after their release as other alternatives emerge. In contrast, the sales of their
follow-on counterparts can be more stable overall and may quickly reach their long-
term market position (Bottazzi et al. 2001 ). In Sect. 2.3.6.3 , we outline additional
fi ndings from recent academic research on the benefi ts accruable to fi rst and late
market entrants.
If me-too drugs are suffi ciently well-differentiated, and if follow-on drugs
present incremental innovations, they can cumulatively raise the standard of
patient care in the category, yield substantive treatment benefi ts, and enhance the
value to patients. 10 The presence of multiple drugs in a category may not only
address the increasing price sensitivity in the market, but can enable greater choice
and thus, foster intense rivalry. The availability of alternatives can also provide
leverage to health insurance companies to extract higher rebates from the drug
manufacturers.
To branded drug manufacturers, though, a considerable downside of operating in
a therapeutic category populated with me-too drugs is that collectively, they all
become more vulnerable to each other's fate: the loss of patent protection or market
exclusivity by one member in the category can have a ripple effect on all competi-
tors if their brands are close substitutes in terms of indications, applications, side
effects, and dosage. These dynamics are discussed in more detail in Sect. 2.2.7 .
10 There is an ongoing argument about raising the standards for late entrants so that a demonstration
of performance superiority, or at least, non-inferiority compared to existing therapies is demanded
before obtaining market approval (Angell 2004 ; Hollis 2004 ). However, such changes might con-
siderably complicate and prolong the development process, and are likely to be fervently opposed
by the industry. Essentially, adopting them will place the innovation race contenders in a position
to chase after a moving target. The front-runner will be the only exception as it is competing
against a placebo, or in some cases, against the conventional treatment.