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Weekly Insights #29- Drug Repositioning; An Important Tool In Big Pharma R&D Playbook

Developing & bringing new drugs to market is a long-drawn process that costs hundreds of millions of dollars if not a couple of billions; and the success rate is in single digit percentage.

The reason why big pharma companies continue to invest billions of dollars in new drug R&D is because of the relevance of the concept of power law, wherein even if few projects turn out to be blockbusters it takes care of everything else and something more.

(Blockbuster drugs are ones that generates over $1 billion of annual sales)

One interesting phenomena in new drug R&D is that of Drug Repositioning. Drug Repositioning is simply when an existing under development or commercial drug is found to be effective for another disease or ailment other than the one it was originally being developed for.

One of the most significant & interesting examples of Drug Repositioning is that of Thalidomide;

  • Thalidomide as a molecule was first synthesized in 1952.

  • The drug gained significant popularity in that decade and was considered a wonder drug and was being used to treat a host of issues like insomnia, cough & cold and headaches.

  • However, it was later discovered that the drug was causing serious ailments in unborn children when the drug was being consumed during pregnancy. And as a result, the drug was banned in early 1960s across most countries. US never approved the sale of this drug.

  • But overtime some studies indicated that Thalidomide was actually a potent medication for treatment of some of the major diseases like leprosy and multiple myeloma.

  • In 1998, Celgene was able to secure FDA approval for Thalidomide (under the brand name- Thalomid) for treatment of Leprosy.

  • Celgene then later altered the thalidomide molecule to create the current blockbuster- Revlimid (molecule name- lenalidomide) and got an approval for the same in 2006 for treating multiple myeloma (a form of cancer).

  • Celgene also created a 3rd drug called Pomalyst (molecule name- Pomalidomide) for treating multiple myeloma and some AIDS related issues, and the same was approved in the US in 2013.

  • Both Revlimid and Pomalyst are analogs of original molecule- Thalidomide, created by doing some changes to the molecule’s atom structure.

  • Essentially, Celgene was able to reposition an existing molecule which was banned for multiple decades due to safety risks in pregnant women to create three products all of which were huge success.

  • Thalomid had sales of ~$500 million at its peak, Revlimid ~$12 billion in peak sales and Pomalyst currently has sales of ~$3.5 billion.

A lot of times Drug Repositioning is an accidental or unexpected outcome and has led to discovery of some of the biggest blockbusters in the pharma industry.

Some of you would have read this news recently around Novo Nordisk’s market cap becoming bigger than the GDP of its home country Denmark, which has been on account of huge success of its two drugs- Ozempic and Wegovy.

Well, this success is also on account of the Drug Repositioning phenomena; let me give you some background-

  • Ozempic (molecule name: Semaglutide) was 1st approved in the US in 2017 as a drug for treating Type-II diabetes.

  • But one of the common side effects of using this drug came out to be weight loss in patients, which resulted in a situation wherein the drug got more & more being used & prescribed as a medication for weight loss; something it was not originally developed & approved for.

  • On the back of this, Ozempic sales grew from ~$300 million in 2018 to ~$9 billion in 2022.

  • But Ozempic was still a product labeled & approved for treating diabetes; and in order to fully capitalize on this unexpected discovery, Novo Nordisk repurposed the drug as a weight loss medication and got a new approval for the same molecule- Semaglutide in the form a new drug- Wegovy which got approved by FDA in the USA in 2021 with a weight loss medication label (basically they repositioned the drug).

  • Wegovy by itself is now generating revenues of over $2 billion, which is over & above what Ozempic is generating.

Interesting fact- Natco Pharma has a solo FTF for Ozempic in the US market; though it is a distant opportunity given that Ozempic patents runs till the end of this decade. But given the kind of success this drug is witnessing, it could be an even bigger opportunity than Revlimid.

You can read our research on Natco Pharma and some other stocks here-

Also, do sign-up on our website to get access to a free stock idea along with its comprehensive research report-

Another known & popular case study of drug repositioning is that of Pfizer’s Viagra;

  • Viagra (molecule name: Sildenafil) was first developed in 1989 for indications of blood pressure and chest pain.

  • However, during the clinical trials, the drug showed little success in treating these indications.

  • But there was a common side effect being reported by the test patients around erections. And thus, Pfizer repositioned the drug for treating erectile dysfunction.

  • Viagra was launched in the US in 1998 and has been the fastest blockbusters in the pharma industry with sales crossing $1 billion mark in just two years. And the product has generated annual revenues in excess of $1 billion for Pfizer till as recently as 2017, with peak sales of ~$2 billion in 2012.

In summary, Drug Repositioning is one of those neat tools/strategy in big pharma’s R&D playbook and has contributed to some of the major breakthroughs in the Pharma Industry.

That’s it for this week, new insight coming up next week. So stayed tuned!


Surge Capital is a trade/brand name used by Ankush Agrawal (Individual SEBI Registered Research Analyst INH000008941) to provide equity research services in the Indian Equity Markets.

“Registration granted by SEBI, and certification from NISM in no way guarantee performance of the Research Analyst or provide any assurance of returns to investors”

“Investments in securities market are subject to market risks. Read all the related documents carefully before investing.”

“The securities quoted are for illustration only and are not recommendatory”

Stock specific investment disclosure:

Natco Pharma- Not Invested. Not Traded in last 30 days. Not an active recommendation in Research Service


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