New Pharma Business Models

Regaining power

Changing patterns of diseases, ageing population, price controls, dry R&D pipelines, patent expirations for many blockbuster drugs and declining global generic market opportunities are a wake-up call for pharma. Moreover, the shift in focus to improved outcomes is pushing pharma companies to rethink on the existing business models for more productive R&D solutions at low costs.

To achieve this, pharma companies need to move from a traditional pharmaceutical company to becoming a fully integrated pharmaceutical network. A fully integrated network focuses on different therapeutic areas covering R&D to sales and marketing, different enabling technologies, such as genomics, proteomics and stem cell research; and management of outcomes.

Increased spending on R&D will help companies to refresh their pipelines. According to Battelle and R&D Magazine, R&D spending in the global life science industry is expected to rise more than 3 per cent to US$201 billion in 2014. The biopharmaceuticals industry will account for about 85 per cent of that total, with top US spenders including Pfizer, Merck, and Johnson & Johnson, as well as European giants Novartis and Roche.

New formulations with shorter patent lives are due to expire very soon causing scarcity in block-buster drugs for patients. Hence, the industry will have to spend exclusively to protect patents and for better patenting patterns.

In addition to this, collaborations, alliances with smaller biotechnology companies and better biotechnology and pharmaceutical outsourcing options will develop effective new medicines more economically.

The cover story in this issue by Patrick Flochel, EY Global Pharmaceutical Sector Leader traces how pricing and regulatory challenges are changing the business model from Pharma 1.0 to Pharma 2.0. The article also highlights how this transformation is impacting pharma companies' operations. Changing incentives are reshaping the healthcare ecosystem and Pharma 3.0's new focus on healthcare outcome is opening doors for non-traditional players.

Employing these strategies and proactively tackling challenges will become decisive for the future of pharma industry in its attempt to regain the power and meet the promises.

-- Issue 20 --

Prasanthi Potluri

Prasanthi Potluri

Editor Pharma Focus Asia.
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