Can targeted drugs save Big Pharma?

Pfizer's ($PFE) new Xalkori cancer treatment becomes the poster child for pharma's post-mega-blockbuster strategy in a Wall Street Journal analysis of targeted treatments. Together with Roche and Daiichi Sankyo's newly minted Zelboraf treatment for melanoma, Xalkori is poised to prove--or at least test--the theory that payers will cover really expensive drugs, so long as they're restricted to those patients who are most likely to benefit.

It's the rifle-versus-shotgun approach pioneered by Genentech and its cancer drug Herceptin, targeted at patients who test positive for the HER2 genetic abnormality. Now owned by Roche, Genentech proved that a $50,400 drug for a subset of patients could achieve $6.8 billion in sales, the WSJ points out.

Since then, other cancer drugs have found their matches in subsets of patients. One genetic mutation affecting the KRAS gene all but took over discussion at the American Society of Clinical Oncology meeting three years ago, as Amgen ($AMGN) sought FDA approval to add the distinction to its Vectibix drug, and Bristol-Myers Squibb ($BMY) did the same for Erbitux. With drug/diagnostic pairs now getting simultaneous approval, the idea is that targeted drugs will not only take over treatment, but also help wean pharma off huge, mass-market meds like Pfizer's own Lipitor.

"There's been a change of paradigm," Pfizer's James Christensen told the WSJ. "The new school of thought is, 'If you find the patients that the drug will work in, and if you see enough benefit, we will find a way to get this to market."'

- read the WSJ piece