The sobering news from a recent IMS Health analysis that the US prescription pharmaceutical market grew only 3.8% in 2007, its lowest growth rate since 1961, raises a fundamental question, “What will the pharmaceutical industry do?”

Sidney Taurel, retiring CEO and chairman of Eli Lilly, recently offered his vision of the future of pharmaceutical industry, including the value of “tailored therapeutics” as not only a targeted medicinal approach, but also a means to create a more focused and efficient model for drug development and commercialization.

A common perception is that the erosion of the blockbuster-drug model and a new business case based on personalized medicine bodes ominously for the pharmaceutical industry. But is this the case? Such a transformation represents a shift from earning a relatively small market share of a very large pie under the blockbuster model to gaining a relatively large share of a more segmented pie with a tailored therapeutic. Given improved efficacy of a tailored therapeutic, the rate of repeat prescribing and patient compliance may also increase, further creating economic value. The cost of drug development could decrease as a result of smaller, more focused clinical trials, the ability, in some cases, to eliminate unpromising drug candidates earlier in clinical development, overall shorter development times, and the opportunity to develop secondary indications earlier: all a byproduct of more targeted drug development.

What do you think? Is personalized medicine a viable solution for rescuing the pharmaceutical industry from its current economic situation?