Report predicts troubled future for pharma industry
Fundamental change in the pharmaceutical industry is inevitable to meet society's changing healthcare expectations, warns a report by a new joint industry-investor project, Pharma Futures.
The report, sponsored by three major pension funds - ABP (Netherlands), the Ohio Public Employees Retirement System (US), and the Universities Superannuation Scheme (UK) - argues that both investors and companies must adapt if the pharma sector is to be profitable, remain competitive and meet health needs.
The non profit-seeking Pharma Futures project brought together leading pharmaceutical companies and major worldwide investors. It is also funded by the UK Government Department for International Development, The Rockefeller Foundation, the Nathan Cummings Foundation, GSK and Novo Nordisk. The working group included senior pharmaceutical executives from brand name and generic companies from Brazil, Denmark, India, Japan, the UK, and the US; pension fund, investment analysts from the Netherlands, the UK and the US; healthcare providers in pension funds, and industry experts from the consultancy world.
The report (available at www.pharmafutures.org/PharmaFuturesWeb.pdf) considers the opportunities and threats facing the industry between now and 2015 and concludes that the current response of fire-fighting each separately will not work. It warns that simply 'muddling through' with the current pharma business model is not an option because of the scale of challenges.
These include: a lack of trust in a highly-regulated market; a wave of patent expiries; demographic changes; pressure to reduce healthcare inflation and health insurance expenditures; calls for prescription drug price reductions and greater access to affordable healthcare; unmet health needs in developing countries; challenges to existing intellectual property rights and the impact of increasingly influential patient lobby groups.
'The industry faces a period of transition that requires a step change to more adaptive, flexible and open-minded leadership,' says the report. 'There is an erosion of investor confidence in the sector's ability to deliver sustainable long-term shareholder value. All stakeholders need to work to re-establish equilibrium and acknowledge mutual interdependence.'
The report stresses that new drugs are critical for the future of the industry and argues that 'if new science does not bring innovative therapies to market quickly, the continued downward pressure on valuation of the industry and societal pressure for change are likely to continue.'