바이오인

 

Driving future value
 
The pharmaceutical industry faces an irreversible loss of market capitalization in the near future. Over the next 10 years, patent protection on today’s blockbuster drugs will disappear, and with that, the profits on which large pharmaceutical companies (large pharma) have come to depend. At the same time, an industry-wide, mid-stage research and development (R&D) pipeline gap means the next blockbuster isn’t just around the corner, and marketable compounds will be scarce. The current blockbuster model cannot accommodate the proliferation of products or the growing demand for personal, customized health care. These pressures are straining the traditional, vertically integrated business model of large pharma.

 

Historically, large pharma has reacted to market pressures with cost-cutting. However, cost-cutting is a temporary and incremental activity that does not address the fundamental shift in the landscape - the very effectiveness of the current business model is in doubt. Only a transformation of the business model will position large pharma for future growth.

 

Large pharma has a limited window of opportunity in which to react to the changing landscape. Companies will find it difficult to sustain margins of the past as competition increases and pricing pressure intensifies. The legacy cost structure, coupled with slowing blockbuster innovation, dictates an increasingly broad product portfolio for most large pharma companies. It will, however, be difficult for them to adopt effective research platforms across multiple therapeutic areas. These companies need to reconsider their investment in early R&D and redirect investment dollars toward commercial activities. We believe that by building upon commercial capabilities, large pharma can establish a position as a bridge in the emerging landscape linking an increased number of specialized products with more targeted patient segments.

 

This paper is a call to action for large pharma. It provides an assessment of large pharma’s business model in light of industry trends and an envisioned future landscape. This paper also explores the opportunities for large pharma to drive future value through its commercial (i.e., late-stage development, deal-making/alliance, sales and marketing) capabilities. While we recognize that every large pharma company will approach the outlined challenges in a different fashion given its own competencies and market position, the intent of this paper is to suggest a series of opportunities likely to benefit most large pharma companies. In addition, although the analysis and recommendations center on large pharma, we believe the implications also are relevant for biotech and mid-tier pharma companies.