The Future of the Pharmaseutical Industry 2020

At the Rotterdam School of Management MBA students Luis Angel Arguello, Marianne de Backe, Erwin van Rijssen and Gerben Wierda have has part of their assignment for the course New Global Business Environment looked at the future of the pharmaceutical industry. To download their full report please click Media:here.

Introduction

The pharmaceutical industry is suffering from a lack of genuine innovation and is expecting what they call “A Perfect Storm”. Of the 57 marketed blockbuster drugs in 2002, more than 30 are expected to lose patent protection between 2003 and 2008. R&D cost will continue to rise. Sales growth is decreasing. There is an increased competition from generic (patent-free) drugs.

The regulatory environment is also changing. Increased revenues are met by legislation and/or insurance firm strategies trying to limit the rise of health care cost (e.g. by direct pricing controls or stimulus on the use of generic drugs). Clinical trials become more and more expensive because of government regulation.

The financial sector still demands a double-digit revenue growth from the Pharma industry with healthy profits.

Lifestyle drugs like may take over the role of the big cash cows. The pressure on the regulators to tolerate "off-label" use of substances to offset the huge research investments and shrinking returns from genuine lifesaving products will certainly grow. What has begun with Viagra is now continuing with substances like Modafinil (developed for narcoleptics, keeps healthy people awake for days without significant side effects) and new cognitive and memory enhancing products that are about to hit the market.