In 1982 a young chemist called Bruce Roth was hired by American pharmaceutical company Warner-Lambert to develop a medicine for lowering bad blood cholesterol. At this time he was probably unaware that his work would become the best-selling drug of all time. Eventually known as Lipitor, in 2006 it generated peak annual sales of $13.7bn for its ultimate owner, Pfizer (US: PFE).
The launch of such a successful drug - known as a blockbuster - is a major score for any pharmaceutical company; for Pfizer, Lipitor was at one time generating almost a quarter of the company's overall turnover. But the nature of healthcare intellectual property laws ensures blockbusters don't remain dominant forever. In fact patent protection for branded products normally only lasts between 10 and 20 years and, once it is lost, cheaper generic versions flood the market. For Lipitor the arrival of competitive products in 2011 shook annual sales which, by 2015, had fallen to $1.8bn.
Lipitor isn't the only former blockbuster to face competition from unbranded products recently. However, unlike in years gone by, pharma companies have failed to launch new big-selling drugs to make up lost revenue. That's because, after a wave of new drug launches at the turn of the millennium, many companies saw fit to invest more in marketing than in scientific development, which left gaping holes in their drug pipelines. For pharma investment that's created something of a problem as many former gems of the market have suffered diminished earnings and cash flows, causing investors to fall out of love with the sector.