The Federal Drug Administration's groundbreaking decision this month to readmit Lotronex to store shelves, after it was removed for safety reasons, underscores what consumers have known for a while: One size usually does not fit all.

That's especially true when it comes to drugs. Although Lotronex, a drug for irritable-bowel syndrome, was linked to severe intestinal problems and some deaths, thousands of patients for whom Lotronex was a godsend protested when it was taken off the market in November 2000. Their pleas persuaded the FDA and Glaxo SmithKline, the drug's manufacturer, to bring back Lotronex, with patient and prescriber restrictions.

The Lotronex story strengthens the case for a new field of drug customization called pharmacogenomics, or PGx. Pharmacogenomics uses genetic information to tailor drugs to smaller pools of patients, thereby making them safer and more effective for the target group. Today, at least 30 drugs on the market are known to have their therapeutic outcome determined by genetic variations. The trick now is to persuade the pharmacy industry, long married to a "blockbuster" business model, to put more resources into developing customized drugs.

So far, Big Pharma has moved cautiously into PGx. Because the new drugs target slimmer segments of patients, the profit potential looks uncertain. At a time when Big Pharma is grasping for profitable growth, the business value in a new approach such as PGx carries a lot of weight. Indeed, tailored therapies are more complex to bring to market. For one, companies have to cover the cost of screening patients using genotyping, a necessary step to relate the genetic characteristics of an individual to the efficacy and safety of a drug. In addition, segmenting patients more narrowly could erode demand for a blockbuster drug already on the market or in development and, at the same time, require drug makers to develop variations of compounds to fend off niche players.

But Bain & Co. research finds a good case for long-term, profitable growth in pharmacogenomics, which can breathe new life into compounds shelved under the blockbuster model. In the near term, a conventional drug on average will reap $50 million more revenue per year than a PGx drug. But when you run discovery and development costs out over the typical 30-year lifetime of a drug, the net present value of PGx therapies works out to $85 million more than conventional drugs. That's more than spare change in an industry whose margins are shrinking.

Primary cancers will probably be among the first targets, based on the cost of treating those diseases and high rates of adverse drug reactions. Genentech's PGx drug Herceptin has been an early success, designed exclusively for patients who have multiple copies of the HER-2/neu gene - about 25 percent of patients. PGx drugs will also begin to show up where drug response monitoring is difficult or expensive, as it is for Alzheimer's, or where the outcomes of chronic conditions are acute and expensive, as in cardiovascular diseases and obesity.

The strategy chosen by Glaxo SmithKline to test the safety of its anti-HIV drug, Ziagen, demonstrates how drug companies can use pharmacogenomics cost-effectively. The test is intended to identify the 5 percent of patients treated by Ziagen who are developing severe, potentially fatal hypersensitivity reactions. The company expects to submit the test for FDA approval within the next three to five years.

With so much of its business in flux, the industry needs to begin structuring to take advantage of the emerging technology. A shift to more targeted drugs, such as Lotronex, will require patients and physicians to take more responsibility for ensuring that the consumers of the drugs are in the target group. The blockbuster model eventually will be supplanted by a "portfolio view" of a given condition. In the near term, PGx may hold potential for new or modified patents on expiring blockbusters, by bringing more targeted and effective versions to market as follow-on therapies. In the longer term, PGx offers a strategy for market laggards to find new life for failed drug candidates and affirm, for specific sub-classes of patients, that one size does not fit all.