Emerging and smaller pharma are launching more $500M+ products than big pharma

In recent decades, the pharmaceutical and biotech industries have seen a shift toward more products for orphan populations and specialist-treated conditions. The focus on very large product opportunities or blockbusters, traditionally defined as a product with over a billion dollars in peak annual revenue, is giving way to increasing focus on “near blockbusters,” or what we at ZS call “first-runs.” We define first-runs as having between $500 million and $1 billion in annual peak revenue. In this blog, we look both at blockbusters and first-runs that have launched since the beginning of 2021 or that are expected to launch in 2022.

Among new molecular entities (NMEs) and new drug applications (NDAs) that launched in 2021 or are expected to launch in 2022, our analysis identified 42 expected blockbusters and 49 potential first-runs. Over a quarter (27%) of these 91 assets are in oncology, and the next largest segments are central nervous system (CNS) and systemic anti-infectives, with 12% each. More than half of the assets in the systemic anti-infectives therapy area are indicated for COVID-19. We see a mix of ~42% small molecules, ~40% biologics, 10% cell and gene therapies and ~9% vaccines when we look at treatment modalities of these 91 assets.

In our universe of potential blockbusters and first-runs, more than a half (54%) are expected to be marketed by emerging and smaller pharma (which we defined as companies with fewer than 10 products), while 46% are in the portfolios of large pharmaceutical or large biotechnology companies (those with more than 10 marketed products). While some of these emerging and small pharma assets may yet be acquired by large companies prior to launch, increasingly we’re seeing emerging pharma commercialize assets on their own. Among the assets from large pharma, 43% are acquired or in-licensed rather than developed in-house, while emerging companies have in-licensed about 33% of their assets.

Of the 91 assets, 36 (40%) assets are orphan designated, of which ~72% are from emerging and small pharma. 

We classified the potential blockbusters and first-runs into three categories based on their novelty. There are surprisingly few products pioneering new indications. New mechanisms of action (MOA) in existing indications, what we labeled as “established market innovators” in Figure 3, represent the significant majority.

Two-thirds of the potential blockbusters and first-runs are expected to be “established market innovators” with novel MOAs within existing indications; these are particularly concentrated within oncology and immunomodulators (~47%) and CNS (~15%). Of the six pioneers, four are in orphan indications. In the “bandwagoner” category, six assets are for COVID-19 prophylaxis and treatment. Excluding those six products for COVID-19, only 19 bandwagoners (21%) made the list.

Mega blockbusters: Among the 42 blockbusters, 14 of them hold the potential to become mega blockbusters with expected annual sales of >$2 billion. Among these mega blockbusters, we see COVID-19 vaccines, drugs indicated for Alzheimer’s disease and a range of orphan indications.

Blockbuster drugs have always been sweet spots for pharma or biotech companies. But increasingly, there has been and will be more focus on near-blockbuster, albeit still very substantial, first-run opportunities. First-runs are often sizeable enough to be viable for a “first launch” for an emerging pharma or biotech company looking to become a full-fledged commercial-stage company. We anticipate this swing to continue and eventually grow in coming years. Emerging pharma and biotech companies are particularly targeting orphan and specialty indications, where commercialization costs are lower and where there’s still an immense unmet need and room left for innovation. Large pharma companies are also seeing first-runs as an attractive part of their portfolio, particularly in areas where they have existing therapeutic area presence, and are focusing on adding them to their portfolio organically or through licensing or acquisitions.