Fourth, the strong economic growth platform provided by the emerging country markets are helping to differentiate revenues
for those companies with a solid commitment to establishing a local presence (Figure 4). Not all the top 50 are playing in
the emerging markets; the sales performance of those who are competing in these markets has been in the double-digits. Many
of the top 50 are selling both original and branded generic products since growth in both of these sectors has been exceptionally
strong in the past five years. However, despite the promise of continued double digit sales growth in many emerging markets,
the gains have not been able to offset weaker performance in the United States and Europe.
Figure 4: The performance of the companies within the top 50 compared with performance of all the other companies selling
in emerging markets.
In Figure 4, we see the performance of the companies within the top 50 compared with performance of all the other companies
selling in emerging markets. The top 50 companies primarily are selling innovative brands along with branded generics and
annual growth in these two segments has been close to 10 percent over the past five years. Companies outside of the top 50
are primarily selling branded generics (non-original brands that have some unique branding and where the company marketing
the products is not the originator) and regular generics. The "other products" category includes OTC medicines as well as
products like homeopathic or traditional Chinese medicines as well as vaccines. For companies outside of the top 50, the growth
in all these segments has been incredibly strong, although the innovative brand growth is off a smaller base.
The fifth and final trend on performance of the Pharma 50 is the broad move away from relying on mergers, acquisitions, and
divestitures to replace or supplement organic growth (Figure 5). The pace of mega-mergers since the start of the century has
begun to slow—Pfizer/Pharmacia (2003), Sanofi/Aventis (2004), Roche/ Genentech (2009), Merck/Schering-Plough (2009), and Pfizer/Wyeth
(2009). One might argue that Sanofi-Genzyme (in 2011) could be the last of the mega-mergers.
Figure 5: More new molecular entity drugs were approved in the United States last year than in any year since 1999.
Looking ahead, although industry performance in the mature market countries is slowing compared to historical rates, a trend
moderated by the growing support from emerging markets, there is still a silver lining. More New Molecular Entity (NME) drugs
were approved in the United States last year than in any year since 1999, continuing a rebound in approvals that started in
2011 and appears set to continue.
The right model?
The relative stability of the top 10 companies and the fact that many in this set have a predominant impact on the slow industry
performance overall provides insight into the current discussion over alternative business models to drive future success.
As companies look to fill the gaps in their portfolios by patent-expired blockbusters, most are finding that it takes several
mid-sized products with appeal to a well-defined disease segment in the specialty class. This is because it is becoming increasingly
difficult for drug makers in the small molecule, primary care markets to demonstrate the benefit of new drugs against the
existing standard of care. A strength in specialist-driven markets provides better prospects up front, especially for those
therapies that initiate use in the in-hospital setting. Regardless of whether it is a recent strategic choice, or if the company
was one of the early few who began with a rationale to serve this segment, a visible presence in specialty seems to be working
in the current environment.
Strategic choices aside, the extent and pace of future growth depends on a great number of factors including if and how those
who pay for pharmaceuticals around the world make provisions to afford the wave of innovations that is coming from researchers'
greater understanding of molecular biology and the genetic origins of disease. The signs of this rebound are there to see,
so don't get too distracted by the industry-wide slowdown currently underway—this is one cycle that, like all others in the
industry, will eventually play itself out.
Waseem Noor is a Vice-President with IMS Consulting Group and leads the global strategy and portfolio analysis team. He can be reached
. Michael Kleinrock is Director of Research Development at the IMS Institute for Healthcare Informatics. He can be reached at firstname.lastname@example.org