Healthy Skepticism Library item: 13933

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Jack A.
Drug groups prescribe for future growth
The Financial Times 2008 Jul 6
http://www.ft.com/cms/s/0/496df09a-4b84-11dd-a490-000077b07658.html?nclick_check=1

Full text:

Nearly a quarter of the world’s leading pharmaceutical companies consider that diversifying away from selling medicines while expanding sales in emerging markets are the most promising ways to sustain growth, a survey has found.

These fresh strategies meet intensifying industry and investor concerns about patent expiry, pressure on pricing and reimbursement, and difficulties in launching drugs.

“They are shifting … from selling pills to selling health outcomes,” said Stephan Danner, healthcare partner at Roland Berger, the German management consultancy that carried out the poll of managers from 30 of the world’s largest drug companies.

Mr Danner emphasised a shift by pharmaceutical companies into development of diagnostic devices and vaccines, but also initiatives to raise patients’ long-term use of medicines as prescribed, to link payment for medical services to performance, and to offer broader “wellness” health-promotion programmes.

The Roland Berger report cites Fresenius Medical Care, the US-based group that offers dialysis and drug development but has also expanded into hospital care.

Other companies, including Roche of Switzerland, have long emphasised diagnostics to identify groups of patients who will benefit from treatments. Pfizer of the US has formed a “health solutions” division to work with health systems for prevention.

Executives in the survey highlighted “novel commercial models”; the increasing importance of emerging markets; and mergers and alliances as their greatest opportunities.

Expansion in the fast-growing Bric economies of Brazil, Russia, India and China, with high income groups paying for their own healthcare, offered a chance to “learn about environments which are consumer-driven”, said Mr Danner.

“The industry is as yet too conservative to reap the significant potential which the out-of-pocket sector provides,” the survey concludes.

These opportunities reflect efforts to offset their most pressing concerns, which the survey highlighted as market access and reimbursement, cost-containment and R&D productivity problems.

An executive cited by the survey said: “For the first time in history, it is evident that this industry will have winners and losers.” The diversity of responses shows companies are adopting divergent responses.

Despite wide-ranging job cuts and economies made by most companies in past months, most executives saw more restructuring ahead. Two-fifths identified “cost-cutting potential” in sales, and nearly as many in marketing.Distribution, manufacturing and clinical development were other divisions where savings were thought likely to persist.