Everyone who's ever analyzed a drug stock has probably put together an Excel spreadsheet, made a list of existing drugs on the market (for a given company) and added in a few from the pipeline, followed by some predictions about sales for each one. If you're lazy, you can just enter in a growth rate. and then drag and drop the formula across a few columns, but really, that's just lazy. Unfortunately, it's really hard to predict the future. Derek Lowe takes a look back:
Looking through my files, I found a chart which I clipped out of Genetic Engineering News back in late 2004 or so. It's a table of expected drug launches and sales potentials, based on data from Mehta Partners (a well-known and often-quoted pharmaceutical-sector investment and consulting firm).
Now that we're in the last quarter of 2006, this little document has gone from looking hopeful to looking downright creepy. The Y axis is sales potential, divided into eight tiers, and the X axis is a timeline, quarter-by-quarter. Let's take it from the upper left corner and look at the expected big winners from 2005 and 2006:
Macugen: Expected launch 1Q 05, sales potential 1.25 to 1.5 billion. The reality: the launch went off pretty much as expected, but the sales, well. . .they're running at about 10% of that peak estimate. OSI bought the drug's developer, Eyetech, and people wondered at the time what they were thinking. Maybe they're wondering now, too. . .
Indiplon: Expected launch 4Q 05, sales potential 1.25 to 1.5 billion. The reality: oh, dear. Neurocrine is trying to go it alone until they find a new partner, and they're still in there pitching, but this has been a real development disaster.
Let's pause a moment to note that both of these were printed in green type, which the chart helpfully informs us were considered "low risk" at the time.
Kinda makes your drag 'n' drop method for extrapolating drug sales look pretty good.