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Getting "personalized": sure, there are reasons why personalized medicine hasn't taken off yet--but they're not the ones you might expect. Stop worrying about shrinking the market for your drug, and start figuring out how the "test and treat" business model works.

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After a decade of hype and expectancy, personalized medicine is still in the process of "becoming." The science is there, but it's still in the process of being perfected. With new entrants such as Pfizer's Selzentry for CCR5 trophic HIV, and the relabeling of Warfarin to include genomic-dosing data, the industry is moving beyond the mere promise of targeted therapies--and thankfully, moving the discussion beyond oncology and the over-hyped Herceptin case.

New York Times columnist Olivia Judson recently asked: So why hasn't personalized medicine yet hit it big? In part, it may be a simple matter of timing. In a Spectrum report, one industry commentator estimated that "[i]n 10 years, about 20 to 25 percent of new products in the pipeline will depend to some degree on a related test."

The greater problem, and perhaps the biggest barrier to realizing the promise of personalized medicine, might be perceptions about the potential of these drugs held by the pharma industry itself. Most companies have a difficult time seeing therapies targeted toward specific genotypes--which depend on diagnostics to guide prescribing decisions--as anything more than a way to enhance R&D productivity within the currently challenged "one-size-fits-all" model of drug development.

Somewhere along the way, the pharmaceutical industry decided that the market segmentation implicit in targeted therapies necessarily translates into fewer patients and, therefore, reduced returns. But in reality, personalized medicine has far greater potential and much broader applicability than just an R&D enhancement. The industry needs to overcome the divergent business models between pharma and the diagnostic industry, and learn how to harness the marketing dynamics embedded and largely unexplored within personalized medicine.

Pharma companies can go beyond viewing personalized medicine as just an R&D productivity tool to understanding how it can reshape market dynamics, alter a drug's marketing trajectory, and drive sales--possibly even in the face of generics competition. In fact, if managed and positioned correctly, tailored therapeutics can even offer a return on investment (ROI) equal to drugs developed under the one-size-fits-all model.

Convergence: Mind the Gap

While many of the leading pharma and diagnostic companies have outwardly embraced the idea of personalized medicine, how to get such therapies translated into practice is a very different question. The two industries have developed very different business models, which are culturally, strategically, and financially distinct, and their junction during co-development and clinical decision-making is a much more difficult and complex prospect than simply working side-by-side.

The difficulty in working together is particularly exacerbated when dealing with personalized medicine, which requires the diagnostic and pharma industries to overcome not only a cultural and strategic divergence, but also a technological divergence...

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