Life cycle management is key to success, report says

Pharmaceutical companies are missing vital opportunities to maximise lifetime product values, says new report from consultants Capgemini.

The fourth annual Vision & Reality report claims that product life cycle management is one of the most important priorities for the pharmaceutical industry today. More than 90% of senior executives believe that product lifecycle management is important for their future prosperity, with 60% saying its importance will increase significantly in their organisations over the next five years.

However, despite the recognition of the importance of product lifecycle management, only 19% of executives believed their companies were currently doing an excellent job in successfully implementing lifecycle management strategies. A further 35% of respondents believe their companies' efforts rate no better than average, while more than 15% believe they do a poor or very poor job.

This increased focus stems from concern over growing generic competition and the failure of r&d activities to maintain a steady stream of new block-buster drugs, says the report. This leaves pharmaceutical organisations facing a dangerous combination of high costs and falling revenues as drugs fall out of patent protection. Capgemini analysis reveals that approaching 150 new chemical entities will be required in the US alone by 2007 to plug the drug pipeline shortfall.

'The importance of this issue should not be underestimated,' said Paul Nannetti, global life sciences leader at Capgemini. 'The pharmaceutical industry's success to date has been built on a consistent flow of high earning innovative products. However, as the industry faces up to the challenge of weaker r& pipelines, and likely reduced returns from new products, there is an imperative to drive greater value from existing portfolios.

'It is therefore not surprising that this year's research reveals that product lifecycle management is an important, if not the single most important priority for the industry.'

In terms of strategies for lifecycle management, indication expansion has been clearly favoured in the recent past with 63% of executives citing it as having had a strong impact on profitability for their companies. Looking to the future, indication expansion will continue to be an important factor (with 31% of executives stating they expect it to become increasingly important), but executives expect in-licensing and alliances to become the leading strategies with 45% stressing their increasing importance.

'A rigorous and focused approach to lifecycle management is in its infancy in the pharmaceutical industry, and there is much to learn from more consumer-oriented industries,' said Terry Hisey, Capgemini's US leader for life sciences. 'To move forward, companies need to take a more integrated approach to lifecycle management that has a strategic view across the organisation, rather than taking a tactical view from individual business units such as r&d and marketing.'