The best of times, the worst of times for new drug launches

The FDA would be quick to point out that 2011 was a very good year for drug approvals—at least compared with the last decade. Not only did drugmakers manage to get a goodly number of new products through the approval process, but delivered some bona fide blockbuster material. Consider Bayer and Johnson & Johnson's ($JNJ) Xarelto, which Bayer CEO Marijn Dekkers (photo) can't stop bragging about: He's expecting sales to top $2.5 billion. Or Xalkori, Pfizer's ($PFE) targeted lung cancer med; it's expected to grow to blockbuster sales levels. Or Vertex Pharmaceuticals' ($VRTX) Incivek, which is well on its way to $1 billion already.

But if 2011 was marked by promising drug approvals, it was also marred by drug launches that just didn't pan out as expected. When GlaxoSmithKline ($GSK) and Human Genome Sciences ($HGSI) got their new lupus treatment through the FDA, patients were waiting. After all, it was the first new treatment in 50 years. But sales haven't exactly ballooned; for the third quarter, the drug brought in just $18.8 million, and analysts are looking at $30 million-plus for the fourth quarter. It doesn't help that U.K. cost-effectiveness gatekeepers decided not to recommend Benlysta for use by the National Health Service.

Benlysta's slow ramp-up is far from the only example. Savient Pharmaceuticals' ($SVNT) gout drug Krystexxa generated just $1.4 million over the first 6 months of the year; the company was hoping new study data might help with a promotional push in the primary-care market. Merck's ($MRK) hepatitis C drug Victrelis was trounced by Incivek in early sales, with $31 million in May-to-October sales versus Incivek's $420 million.

KV Pharmaceuticals ($KV.A) stumbled with its new preterm-labor preventive Makena—an FDA-approved version of a years-old hormone injection—by setting a $1,500-per-dose price, and then writing compounding pharmacists to warn them away from selling the old unapproved versions. Patient groups and doctors recoiled; the FDA stepped in; at press time, the company was trying to convince the agency that compounded versions weren't consistent or pure enough to stay on the market.

And then there's Dendreon ($DNDN). The company's cancer vaccine Provenge fell so far short of its early expectations, Dendreon was forced to lay off 500 people. A new Johnson & Johnson ($JNJ) pill, Zytiga, proved a more formidable competitor than anticipated. Before long, the disappointing launch had turned Dendreon into a buzzword. Investors started shorting drugmakers that were preparing for drug launches, figuring early sales would fall short—a trend market-watchers dubbed the "Dendreon Effect."