Forecast 2007: Connecting the Dots - Pharmaceutical Executive

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Forecast 2007: Connecting the Dots
How do execs rank the issues facing the industry? And what are the links they see between them? A new study, conducted for Pharm Exec by researchers at the University of the Sciences in Philadelphia, reveals the industry's mental map of today's challenges.


Pharmaceutical Executive


But some participants' comments suggest what may be a more general view that regulation to ensure safety, efficacy, and proven therapeutic value is a way of life for pharma. Self-regulation by individual companies and the high costs related to this action should not go overlooked, particularly given Pfizer's recent decision to cease development of torcetrapib.

While the Sarbanes-Oxley Act affects all industries, additional compliance issues and investigations by the Office of the Inspector General have prompted a number of changes within pharma regarding the promotion of drugs to physicians as well as to consumers. Restrictions on detail calls continue to reduce access to prescribing professionals, prompting alternative methods, such as electronic, to reach customers. Stepped-up administrative enforcement increasingly stretches limited resources.

Pressure Point 5: New Drug Discovery, Development & Adoption Executives see this pressure point as a key concern for a viable future. As expected, the issues closely associated with this pressure point are the potential lack of blockbusters and of innovative new drugs in coming years, and the overall effectiveness of drug marketing.

Not only did executives emphasize the escalating investment to bring new drugs to market, but they recognize that multiple blockbuster drugs in the portfolio are likely to be scarce. On the flip side, there is no shortage of compounds available for development by, for example, in-licensing. As Scott Gottlieb, FDA's departing deputy commissioner of medical and scientific affairs, recently noted, the past year has seen a significant increase in the number of Investigational New Drug filings.

Adoption of new drugs depends on efficacy and affordability. Execs are increasingly concerned about how to make new therapies accessible to patients without payer refusal or high co-pays. One participant put it flatly: "The need for greater innovation with spiraling costs and lack of blockbusters will require a change in the pharma business model." Whether this change will come about as a result of evolution or revolution is up for speculation.

Pressure Point 6: Global Financial Results The issues linked to this pressure point are generic drug usage, drug profits outside the United States, and the lack of intellectual property protection in key markets such as China and India. It is significant that this factor ranked last among pressure points—one might deduce that executive focus is shifting from stockholder to stakeholder.

The industry's overall rate of financial growth has, of course, slowed in recent years. While all 15 issues in this study predictably have some impact on this growth, the degree to which each influences the industry is directly related to how it is addressed in the short term. One participant provided this insight: "The largest problem is [pharma's] inability to document the value of its innovative products to third party payers, who are critical to the industry's future prosperity; increasingly the customer is the payer."

A final comment hints at a deeper frustration: "One can only hope that America soon realizes that no profits equal no new drugs...it's that simple."

THE TAKE-HOME

The ranking of responses, together with the commentary, indicate that the future of the pharmaceutical industry can best be characterized as more uncertain than ever. The research, discovery, and development of medicines are by nature a risky business. But couple those stakes with the growing unknowns of the political, economic, and social environments, and the pressures faced by industry leaders rise ever higher.

The future success of the industry depends on the direction of legislation and the improved perception of the industry. Industry can have only minimal control over the first. The second will require a concerted effort to develop and communicate the value that prescription therapy brings to people in terms of extended and quality lives.

Harold Glass is a professor of the Graduate Program in Pharmaceutical Business at the University of the Sciences in Philadelphia. He can be reached at
Laurence Poli is co-founder and director of the Center for Performance Excellence. He can be reached at


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