Companion Tests

It used to be that Pharmaceutical companies wouldn't touch a drug unless they could make billions of dollars selling it.  The economics of drug development (expensive R&D, and Sales & Marketing costs) required blockbuster sales.  This led the companies to cancel many of their internal drug discovery programs when it became clear the drugs would only make $400 million or so, not covering the high development costs.

However, the science is rapidly changing, requiring a new business model.  So-called "biomarkers" used during drug development can now be developed into diagnostic tests ("companion tests"), to determine which patients best respond to drug treatment.  Since only a fraction of patients will pass the companion test, the total revenue from drug sales may now only be in the millions, not billions, of dollars.  The days of blockbuster drug sales are over.

So the economics of drug development must drive changes to the drug companies.  Sales forces will be reorganized along therapeutic lines, and there will be more differentiated drugs to understand, market and sell.

The R&D process itself must change.  The most expensive aspect of R&D, human clinical trials, will require substantial innovation in their design (early results, adaptive trials, microdosing) to save costs.  Only then will it become cost-effective to develop more, lower-margin drugs (with associated "companion tests") at a faster pace.