In this piece by Seeking Alpha's Jason Chew, the economic model of drug introduction is examined. Citing studies done by Tufts Center for the Study of Drug Development (CSDD) and by McKinsey & Co, the article asserts that "fast follower" drug companies who come on to the market later with a "best in class" drug do better than the innovator companies who arrive as "first in class". This may be a bit surprising as marketing dogma tends to emphasize the ultra importance of beignfirst to market.
But, according to these studies, the pace of drug followers has really accelerated. It now takes only 1.3 years on average for the 2nd competitor to show up as compared to more than 5.1 years seen only 30 years earlier. The McKinsey study actually shows that competitors arriving from 2-5 years after the leader actually have done better in the market with significantly higher median sales.
The explanation? "First in Class" doesn't usually translate to "Best in Class". Examples cited include, Viagra (1st) vs Cialis (best), Lovastin (1st) vs Lipitor (best) - Lipitor is of course the World's best selling drug. This implies that it is better to be Best and not necessarily first, and that a following strategy can be very effective means of competition in the drug industry. It may also be one means of competing that offers less risk since you know that your target is good.
Posted by Bruce Lehr august 23rd 2010.