Strategic trends in the Pharmaceutical industry
Here at Icarus, we get a lot of interesting, varied and strategic projects but imagine getting a request from a client to come up with a big picture analysis of the global pharmaceutical market and also the oncology area with no budget for commercially available reports.
This is fun and meaty stuff, and in any case, most of the run of the mill reports are not particularly helpful despite being hundreds of pages long and costing several thousand dollars apiece. They sadly suffer from analysis by paralysis syndrome without offering any real insights.
A lot of the legwork into answering a landscape question like this comes down to common sense. Let's take a look at the US market, which is the largest single region and one of the most profitable, until recently. What's happening there?
Here's a basic snapshot of what we all know:
- Increased mergers and acquisitions (with Roche-Genentech, Pfizer-Wyeth, Merck-Schering etc)
- Increased focus on cost containment (see the Obama administration stand)
- Loss of major blockbuster patents in the next 2 years (too many to mention)
- Increase in the number of generic Rx's and hence share of the market
- Reduced pipeline success (several drugs have failed spectacularly in phase III recently)
- Increased focus on personalised medicine (target the right drug to the right patient)
All of these factors essentially combine to produce a near perfect storm in the US (and EU) markets, with the result of this being:
- Increased layoffs
- Reduction in the number of sales reps
- Hospitals are reducing access to doctors
- Reduction in profits as branded Rx share and value declines
However, baby boomers are getting older and retiring, placing an increased focus on:
- Chronic health conditions eg hypertension, diabetes, dementia
- Cancer (largely a disease of aging)
- Cost containment
- Health and lifestyle
All of these factors force the pharma companies to regroup and either re-trench as a specialty player in niche markets (eg BMS) or expand more aggressively in emerging markets (eg sanofi-aventis, Pfizer, Novartis, GSK and Merck).
The BRIC countries (Brazil, Russia, India and China) are all becoming more industrialised and as the middle class grows, so does demand for quality healthcare. That presents new opportunities for smart companies with resources and infrastructure. These trends are seen across the board, not just in sales and marketing, but also in R&D as companies seek to reduce development costs and speed time to market by going to emerging markets where there is a much larger, untapped pool of newly diagnosed patients available. This is especially true in the oncology market, where even registration trials in various cancers are now being undertaken in China, India, Eastern Europe and the Latam region. An increased focus on partnerships and open science is also beginning to emerge.
All in all, what we are seeing here is slow adaptive change to the external environment, but the trends are already showing clear signs of these shifts, which also mirror the economic change in direction in general.
My suspicion is that the more nimble and diversified a company is, the better they will be able to weather the extended downturn over the next 5-10 years. Change is sometimes a good thing.
6 Responses to “Strategic trends in the Pharmaceutical industry”
Sally
You right- you don’t need an expensive study- you live and breath pharma! I agree that being nimble is going to be increasingly important for successful pharma companies!
One trend I would add to your list- which may seem obvious- is the increasing power of the consumer and their desire to generally be more involved in their healthcare learning and decisions, and that of their family…that coupled with the explosion of the web, web 2.0 and social media platforms, including mobile and video, is also having significant impact on pharma stategy and influencers…
Ellen
Hi Ellen,
Yes, I do believe that mobile apps will be a big deal in 2010 across the board but will Pharma take up that challenge? We’ve seen a few limited forays into iPhone apps so far, for example, but not a wholesale move across to listening more to consumers and patients voices. For many in Pharma, the ‘customer’ is still viewed as the physician and hence the majority of resources and budget are focused on that element of the marketing mix.
I wish more would venture out of their comfort zones rather than spend more dollars on push marketing and DTC.
My own experience is that listening to patients in your niche can be very rewarding and helpful to both a brand and a company.
Sally
So agree…I find listening to patients and caregivers invaluable…but it’s nothing if pharma and brand managers don’t DO something with the learning…I hope next year, more pharma brands listen and ACT on learning, spreading patient insights thru out organization beyond marketing and PR…Ellen
Ellen,
I think the challenge is that many Pharma companies are bogged down in politics, SOP’s, guidelines, AE’s and fear on social media.
There is little to stop a brand team listening and observing… crumbs, I was doing that actively way back in 1999/2000 but here’s the rub: some (not all, some) review committees will forbid even listening and monitoring on the grounds of what do they do if you see an AE? Until guidelines from the FDA emerge and company policies are in place, paralysis and frustration will be the order of the day.
Still, things are changing slowly. I’m getting specific requests now to help teams find information and sentiments in the oncology arena that they cannot find elsewhere, so if this is an early trend, it’s very encouraging!
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Hi,
It has long been assumed that VCs have to tolerate a tortuous route to exit for biotech deals, which often require successive funding rounds, but can console themselves with billion-dollar realisations if they manage to find a home for the assets.
biotechnology industry organization
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