The Future Of Big Pharma – How New Challenges and Generic Competition is Shaping the Future of the Pharmaceutical Industry
The future looks uncertain for the leading pharmaceutical companies in today’s market. There has been considerable speculation made on how the industry is developing and what course it is taking. The only aspect that looks clear is that generic companies are no longer in the shadows of their brand-name counterparts. As a result of patents expiring and the worldwide demand for cheaper medications, these companies have transformed past threats into real opportunities by creating a competitive advantage over their rivals.
Barcelona, SPAIN (PRWEB) May 26, 2006
A way of analysing this shift in market share and the rise in generic competition is by looking at what “Big Pharma” is currently focusing on and where it may be failing. Many of the industry’s professionals would share the opinion that their activity and business strategies have remained the same for the past decade. Disappointingly, the focus for discussion and growth appear to be limited to corporate restructuring, redefining product portfolios, and looking out for the interests of the shareholder. As if that was the be-all and end-all.
Launching new blockbuster drugs has always drawn positive results for a company with regards to increasing market share and capitalizing on huge margins. Take Pfizer, for example: its new anti-smoking drug Chantix is the fourth drug to received FDA clearance this year. But the launch of a blockbuster drug (that which exceeds the $1 bn barrier, so as to cover the supposed costs of R&D, marketing and sales) is proving to be an almost impossible feat. The reality is that no more new and innovative drugs in the majority of the therapeutic categories are left to be discovered. This drawback has led the way to pharma companies developing existing medications and subsequently marketing them as a “improved and revolutionary” new products to the uninformed end user. (It comes as no surprise then that a recent study claims that the super drug Lipitor - with 2005 sales of $12.2 bn - cuts risk of repeat stroke by 16%, just when its patent is due to expire this year.) The brutal fact is that in the last decade almost 65% of all approved drugs are simply modified versions of medications that already exist on the market.
Moreover, further uncertainties are brought to light surrounding the business strategies adopted by Big Pharma in the face of changing trends within the market place. Greater emphasis has been directed at playing out competition, drawing big question marks over their competitive practice and the ever-present moral debate that arises over the production of cheaper drugs for developing countries. Not only is it creating an unnecessary delay for those patients who urgently need life-saving medications, but many would agree that the effects are simply devastating and irrational.
By and large, increasing market share and product portfolios through mergers and acquisitions is also proving insufficient in the long term, caused by patient medical programs, hospitals, health services, physicians and consumers who continue looking for cheaper alternatives. Additionally, the rise in law suits over patent disputes is only diverting attention away from the research and development of new drugs. And if these so-called competitive practices were not enough, the situation goes from the sublime to the ridiculous, evident through the practice of unethical pharmaceutical marketing. If it isn’t drug makers of sleeping pills paying doctors to publish bad press about competing drugs from generic manufacturers (numerous news articles recently came to light regarding this), it’s big drug companies coming under fire for paying off generic competition to delay market entry of their products. It appears that the common practice that had previously riddled the industry with of reaching key prescribing physicians with incentives is now just a thing of the past. Today, the only certainty is that more than 55% of all prescriptions made in the US are for generic medications, and this is expected to rise to 70% by 2010.
So what does the future hold for each side of the industry coin? Despite the clear changes within the market, the future is by no means lost for the big brand-name powerhouses of old, who only a decade ago would bad-mouth generic medicine as inferior. These days, they have joined the bandwagon including the giant brand-name manufacturer Novartis, who is now also striving to become a major player in the generics field. More so, Swiss-based Roche announced only last week that it has reached an agreement with the South African company Aspen for the production of a generic version of oseltamivir for Africa, as part of continued efforts to increase and speed up availability of the medicine for influenza pandemic planning world wide.
A very significant, but also much overlooked method of addressing the challenges of the pharmaceutical industry’s weakening pipelines is through the creation of partnerships and building effective collaborations across the industry with innovative pharmaceutical companies, generic players and healthcare communication providers.
On the other hand, what is also evident is that segmentation and targeting have taken on a new importance, which additionally does not require increasing sales & marketing forces.
But it’s not only Big Pharma that are seeing hard times ahead. Generic manufacturers are also being faced with strong market pressures caused by weak product pipelines, limited growth possibilities, and increasing numbers of generic competitors fighting over pricing. Avantis, Ranbaxy and Dr. Reddy are fine examples of companies that are directing huge capital on takeovers in the EU block, and further a field in the US, as a means of fighting for their survival and corporate growth.
An increasing number of health communication companies are concentrating their efforts at co-promotion. These not only offers generic players but also Big Pharma companies the chance to work at further promoting a product, increase the visibility of a particular drug and also share the marketing costs between them. It gives the originator company the opportunity to save on marketing efforts that could otherwise be intended at promoting more promising, new medication. The effective implementation of co-marketing – where companies promote the same molecule under different brand names – and reaching licensing agreements is offering generic companies and their partners a chance to boost their image and consumer reach. Regardless of the objectives that have been set, it seems like a combination of these opportunities and a coherent business strategy is the clear winner in the fight for pharmaceutical supremacy…or survival depending on how one looks at it.
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