Pharmaceutical companies across the globe face unprecedented challenges as revenue streams come under pressure. This is a consequence of pricing pressures caused by healthcare reforms and government austerity measures. At the same time, companies face increased competition and the difficulty of bringing new drugs and products to market. They have to embrace technological innovation and look at cross-industry best practices to achieve long-term sustainability.
This paper discusses the major trends in the pharmaceutical and biotechnology industries and the resultant considerations for senior executives. It looks at how companies are seeking inorganic growth through mergers and acquisition. It considers forays into new market segments and the importance of operational efficiency. It also discusses the impact of technology, including mobile and social media and considers the significance of changing regulation and the growth of the biotechnology and generics sectors.
Each trend is accompanied by examples and commentary. The author identifies the types of advice and interventions that senior executives will be interested in as they seek growth against a backdrop of changing regulation, informed consumers and competition from rising stars in the biotechnology sector.
The pharmaceutical industry is at a crossroads. Ageing pharmaceutical firms face a perfect storm of fierce competition, shorter time-to-market, expiring patents, slowing sales growth and declining profitability in developed markets. Pressures on cost are increasing and the regulatory environment is complex. There is an increase in chronic lifestyle diseases such as diabetes and hypertension. As a result, the demand for and use of preventive drugs and medical devices is expanding. The rapid growth of the biotechnology sector introduces other disruptive dynamics to the industry. Within many pharma companies, the presence of a multitude of disparate systems hinders effective capture and flow of information.
Pharmaceutical industry leaders worldwide need to find solutions to these challenges if they are to generate revenues in a difficult business environment. These solutions, if they are to be sustainable, need to be based on evidence, focused on outcomes and driven by an understanding of customer behavior.
In that context we have identified nine high impact topics. They include significant developments during the past year as well as possible interesting ones in the year ahead. We do not expect these trends to change on a yearly basis. Challenges and opportunities from each of these areas can be both global and market-specific.
- Inorganic Growth (Mergers and Acquisitions, Collaborations, and Alliances)
- New Business Segments and More Flexible Operating Models
- Operational Efficiency across the Value Chain
- Expiring Patents and Generics Growth
- Growth of Biotechnology/Biosimilars
- Changes in the Regulatory Environment
- Market and Treatment Changes
- Enterprise Risk Management Programs and Processes
- Emerging Technologies and Trends
The pharmaceutical industry is experiencing a period of profound transformation. Established companies face unprecedented challenges as well as new opportunities as several forces combine to disrupt the way the industry operates.
Emerging markets are opening up and contributing a growing share of global medical spend. Patent expiries, the growth of generics markets and innovations in biosimilars and biotechnology are turning old orders upside down. Social media is transforming the sector and empowering patients. Regulation is extending and tightening in many markets. Leaders across the industry are experiencing competition from new, agile market entrants. They are being forced to rethink their current manufacturing and research models, development processes and technologies in order to stay relevant. Some companies are responding by looking for inorganic growth, others for efficiencies and new operating models.
Executives are seeking answers to questions that may not yet be fully formed. As they enter this unchartered territory they will seek strategic counsel to identify suitable responses and sustainable models of growth. For some the challenge will be too great; for others, this period of change will mark the beginning of a new journey of growth.
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