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.