Pharma vs. Pharma - Pharmaceutical Executive


Pharma vs. Pharma

Pharmaceutical Executive

Delaying Product Commoditization

The US pharmaceutical industry will remain in the Competitive stage for the foreseeable future. Customer demand will remain high, especially with an aging population, but sales will peak in many established therapeutic areas as competitors and payers drive down prices and volume. While there is little chance of the industry reverting to the high-growth cycle of an earlier era, there are opportunities to delay the next stage, Commoditization. In this end stage, pharmaceutical products become nearly indistinguishable, and customers buy primarily on price. Sales stagnate or decline as multiple competitors fight for shrinking branded markets. At this point, generic products could represent more than 80 percent of total prescription sales in the US.

Slow-growing, price-constrained European markets are closer to this stage than the US market, while high-growth, emerging markets such as China, India, and Brazil remain in the Commercialization stage. One of the best ways for the pharmaceutical industry to stave off Commoditization is by developing new technologies and technology platforms that ensure the development of new, patent-protected products. For example, biotechnology is the driving force behind a wave of novel, high-priced, high-value products. In fact, biologics are growing at a rate of 13 percent—four times the rate of traditional small molecules. There is significant hope that biotechnologies, genomic technologies, nanotechnologies, and other future technologies can help keep the US pharmaceutical industry in the Competitive stage.

Pharmaceutical executives and their companies are at a critical juncture as the industry confronts its Competitive stage. Executives who can recognize these changes, respond strategically, and take preemptive action have an opportunity to win in this new competitive landscape. The most successful companies will be those that can transform as the industry itself transforms.

Stan Bernard, MD, MBA is president of the consulting firm Bernard Associates, LLC. He can be reached at


blog comments powered by Disqus

Source: Pharmaceutical Executive,
Click here