But things work differently in practice. How do executives see the issues facing their companies? And how do they organize them into a handful of high-impact "pressure points"? We set out to discover the answer by means of a statistical analysis of the opinions of more than 70 pharma execs.
What we uncovered is, of course, neither the best nor the only way to map pharma's world, but it provides a reality check on how executives actually see the industry and its challenges.RANKING THE BIG ISSUES
Our study has two phases: In the first, we asked executives to rank important industry issues; in the second, we used statistical analyses to discover links among these issues.
We provided the panel with a list of major issues facing the industry over the next five years—a list we developed by reviewing industry publications and conducting open-ended interviews with experts. Our panel filled out a questionnaire, indicating the relative importance of the issues to them. Then, as part of the Delphi process, they reviewed the survey results, comparing their own rankings with those of the other participants.
A key step in our research was to focus on those participants whose answers differed substantially from the average. Did they know something others didn't? Outliers were asked why they believed their answers differed from those of other participants. We shared this information with the other participants, then asked everyone to evaluate the issues a second time. (See "Pharma's Top 15,", for the list of items and the final rankings.)
Though all 15 issues are important, six stood out:
Industry image Not surprisingly, public perception of pharma is a major source of unease among executives. In many developed areas outside the United States, market-based healthcare remains controversial and unsettling. Yet even in a more market-based economy like the United States', opinion polls point to a declining industry image. And in developed and developing areas alike, this declining view makes Big Pharma an attractive target.
Cost of drug development To both commercial and R&D execs, the cost of drug development is of particular consequence. Costs are soaring mainly due to larger and more complex studies. Some of the study complexity is a consequence of increasing regulatory demands. But much seems to be the result of treating more difficult medical conditions. Voicing a general fear, the head of development in one major company said, "My CEO says we must think of major changes in the way we develop drugs—not just to stop the growth in costs but to reduce them by 50 percent."