Industry Forecast 2013

Jan 25, 2013

Photo: Thinkstock
2013 is the industry's year of respite, a brief intermission that gives the C-suite extra time to adjust the reel on that slow motion movie with the payer voiceover that says: "how's that hopey changey thing working for you?" For Big Pharma, time moves in small increments, set by the minute hand of the patent clock. It is unique among sectors in being able to predict precisely when market dominance fades to loss. Nevertheless, all that certainty about the endpoints of the product lifecycle has done little to force company cultures to move faster in reinventing their business models to keep pace with disruptive change.

This year provides one more trial run to the future. Management can still hedge their answers about what it takes to succeed in markets that face relentless pressures of commoditization, where drug companies have to fight not just among themselves but with every other health provider, for every incremental dollar of revenue. The question, for every company, is more or less the same: I've scrutinized my assets, sold off and restructured operations, slashed my SG&A/income ratio to single digits, but now what? Where is my Act II, the forward plan that positions us to achieve real top-line growth?

Multiply and differentiate

C-suite executives know that the cloistered, country club approach to market evaluation is gone forever. The massive global restructuring in the way healthcare is financed and delivered also suggests there is no one path forward; every company is putting itself under a microscope to identify what offerings will make it distinguishable from others in a crowded, "show me the money" marketplace.

All that hopey stuff aside, there are some real positives, including fresh evidence of disease relevance and depth in the pipeline, particularly at the crucial late Phase II level; a slow realignment of the clinical trial process to anticipate payer expectations and obtain better terms for reimbursement; and technology advances that, properly leveraged, can bring marketers much closer to untapped sources of market growth, ranging from the non-adhering patient in the United States to the rural poor in India. IMS data suggests that US companies may be leaving as much as $30 billion in annual revenues off the table due to poor rates of prescription compliance, while just one of those backwater Indian states, Uttar Pradesh, has more potential patients than the entire population of Brazil. And poor countries, as a group, do have disposable income to spend on drugs.

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