| Today’s pharmaceutical and biotech industry sectors are largely a product of
the late 20th century. In the post-industrial era, manufacture and provision of
pharmaceutical drugs have been organised and have prospered as fully integrated
business units. One of the trends of today is the formation of new enterprises on a
geographically dispersed virtual business model. Historically, there have been the
chemistry-based pharmaceutical companies and the biology-intensive biotech
companies. The distinction between pharma and biotech businesses is becoming
increasingly blurred, as the pharmas build out biotech-focused business units,
either organically, or by mergers and acquisitions (M&A). In fact, all the major
pharmaceutical manufacturers are pursuing biotech products.
The global reach of the pharma and
biotech companies of today – both large
and small enterprises – is enabled by
general advancements in commerce,
technology, and government. Globalisation
of the industry is a double edged sword,
presenting the obvious opportunities for
markets and suppliers, but also placing
increasingly stringent demands on
recognising and exploiting the sources
of competitive advantage.
For the past two decades, the industry buzz
has been about ‘pipeline productivity’. The
well-known graphic showing exponentially
increasing drug R&D expenditures by the
pharmaceutical industry, in parallel with
level or declining new drug approvals,
year-by-year, has been a popular talking
point at industry meetings and conferences.
With many current drugs going off-patent,
competition from generics manufacturers
is increasing. The observation of a
pipeline drought is a harbinger of industry
profitability and competitiveness of the
major players. This recognition has
stimulated the search for new tactical
approaches to discovery and development:
outsourcing, new technology, revision of
regulatory approaches, and appeals to
government protection.
Lagging R&D pipeline productivity is a
legitimate cause for concern because it
reflects an imminent drop in value
creation and return on investment from
the largest industry players. That said,
it is only one indicator of the perfect
storm in which the pharmaceutical and
biotechnology industries are struggling
to navigate in order to continue to
prosper and expand in relation to global
healthcare needs. |
