Why does a startup pharmaceutal
company need niche markets?

I
t is just because they can't compete with big, well-established pharmaceutical
companies for most markets. Here is an example:

When the patent of a medicine expires, generic companies are permitted to
market their bio-equivalent or generic (ANDA) drug products. A lot of generic
products may "appear" the market, if the generic product development work is
simple and straight-forward, for instance, conventional immediate/delayed release
tablets. One example is Glucophage which is formulated in conventional
immediate-release dosage form.The branded product, i.e. Glucophage, was
launched in 1995, and its sales were $1.7 billion in 2001. However, 15 generic
products of Glucophage were approved when Glucophage's patent expired.
Consequently., Glucophage faced a keen competition from these 15 generic
products, its sales dropped down to 14 million dollars in the 1st half of 2002.

Other examples are Lodine (13 generic versions), Glucotrol (12 generic versions)
and Voltaren DR (13 generic versions). And, they all are formulated in conventional
immediate/delayed release dosage forms.

To get into this type of market, strong marketing-force and high production efficiency
are needed. Therefore, this type of market is not for small start-up pharmaceutical
companies which usually do not have strong marketing capabilities.

Therefore, it is wise for start-up pharmaceutical companies to develop generic
versions for brands with complicated formulation design, such as levothyroxine
tablets.
Examples of Niche Markets

(1) POTENTIAL MARKET FOR ORAL PROTEIN DRUG PRODUCTS

Why there is no oral protein drug product? Actually, they present a huge market to the
drug companies, if they have the technology.

(2) ORPHAN

Orphan drugs are products that treat diseases affecting 200,000 or fewer people.
Thus, the incentive for drug companies to develop orpharn drugs is not attractive.
However, the sales grows rapidly. Orphan drugs may reach $43 billion by 2008.

(3) UNSTABLE DRUG PRODUCT (EXAMPLE: LEVOTHYROXINE TABLET)
         
Levothyroxine degrades rapidly at high humidity, while the total sales of levothyroxine
tablets exceed $1 billion in 2002.


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updated on April 26, 2005                    email zhion@zhion.com
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