Mapping the Healthcare Landscape Bringing pharmaceuticals into focus


November 12, 2009
SKU: DFMN2504347
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Table of Contents Related Reports
ABOUT DATAMONITOR HEALTHCARE
About the Healthcare Strategic Analysis Team
1. Executive Summary
Strategic scoping and focus
Related reports
Upcoming related reports
Key findings
Big Pharma set for dramatic decline in revenue growth through 2014
A conceptual framework for profitability
Diversification as a tool to counter Big Pharma's forecast slowdown
Big Pharma has a track-record of moving beyond the pharmaceutical sector
The Big Pharma peer-set shows considerable variation in prescription focus
Prescription focus correlates with operating margin
Destinations for diversification within the healthcare landscape
Assessing the relative attractiveness of each sector within the healthcare landscape
Total healthcare market size of $3.7 trillion in 2008
The highest operating margins are associated with branded pharma
The branded pharma sector cannot be bested
Recommendations to maximize operating profit growth
Diversified companies should become more pharma-focused...
...or diversify strategically
Pharma-focused companies should remain pharma-focused and engage in consolidation
Strategy must be tailored to the company
Table of Contents
2. Historical trends in diversification
Key findings
Overview of Big Pharma's business model
Historical M&A and divestment analysis, 2000-Q2 2009
Analysis of mergers, acquisitions, and divestments over time
Analysis of mergers, acquisitions, and divestments by type
A history of non-pharmaceutical M&A
Big Pharma divestment profile is more varied
Big Pharma's current business model
Historical prescription pharmaceutical revenue growth rate justifies Big Pharma's focus to date
Big Pharma's pharmaceutical focus varies considerably at the company level
Correlation between operating profit and pharma focus
Company case studies
Prescription-focused companies
Pfizer has bolstered its pharma focus by acquisition
Eli Lilly beginning to make defensive moves
Bristol-Myers Squibb - becoming smaller and less diversified
Diversified companies
Johnson & Johnson is a successful diversifier
Novartis - strategic diversification
Bayer looking to increase its pharma focus
Exiting companies
Procter & Gamble diversifies away from pharmaceuticals completely
3. Defining the healthcare landscape
Key findings
The 10 sectors under analysis
A focus on diversification within the life sciences sector
Healthcare products and provision represents the primary division in human healthcare
Payers, hospitals, and drug supply chain intermediaries represent the key healthcare providers
Overlap between prescription benefits management organizations and mail order pharmacies
Overlap between retail pharmacy chains and drug distribution
Healthcare products classified as either pharmaceutical or non-pharmaceutical
Pharmaceutical products subdivided into prescription and over-the-counter
Non-pharmaceutical products divided into consumer health, medical devices and diagnostics, and alternative health
The consumer health/over-the-counter spectrum
The primary divider in animal health is 'companion' versus livestock
The provision of healthcare services in animal health is identical for companion animals and livestock
Consumer health is the key product differentiator between companion animals and livestock
Grouping of animal health pharmaceutical and over-the-counter products
Consumer health, pest control, and medical devices and diagnostics constitute the non-pharmaceutical division in animal health
4. Sizing the healthcare landscape
Key findings
Healthcare landscape overview
Prescription branded pharmaceutical market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
Over-the-counter/consumer health market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
Health insurance market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
Medical devices and diagnostics market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
Retail pharmacy market
Market size
Operating margin
Indicative Profit Potential
Strategic Outlook
Hospital market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
Generics market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
Prescription benefits management market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
Pharmaceutical wholesaler market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
Animal health market
Market size
Operating margin
Indicative Profit Potential
Strategic outlook
5. Assessing the healthcare landscape
Key findings
Healthcare landscape overview
Healthcare products present a more lucrative alternative to healthcare provision
The product-provision division should not be breached
The branded pharmaceuticals sector cannot be bested
Pharma-focused companies should seek growth within the pharmaceuticals sector
Diversified companies should increase their prescription drug focus
Strategic diversification - small, incremental moves within the product landscape
Pharmaceutical - medical device and diagnostics tie-ups
Pharmaceutical - consumer health/over-the-counter tie-ups
Strategic diversification - small, incremental moves within the provision landscape
Retail pharmacy - prescription benefits management company tie-ups
Retail pharmacy - wholesaler tie -up
Strategic diversification - parallel moves can provide synergies with minimal costs
6. Bibliography
Publications and online articles
Datamonitor reports
APPENDIX
Exchange rates
About Datamonitor
About Datamonitor Healthcare
Datamonitor consulting
Disclaimer
List of Tables
Table 1: Market size, operating margin and indicative profit potential for the healthcare landscape
Table 2: Big Pharma's mergers, acquisitions, and divestments by sector type, 2000-Q2 2009
Table 3: Notable divestures of non-core pharma assets by Bristol-Myers Squibb, 2005-09
Table 4: Financial performance of Johnson & Johnson's key divisions, 2005-08
Table 5: Notable divestments by Bayer, 2004-09
Table 6: The relative importance of mail order pharmacy services to the top three prescription benefits management companies in the US, 2008
Table 7: Retail pharmacy chains associated with wholesaler operations in the UK, 2006
Table 8: Prescription and over-the-counter product classification
Table 9: Consumer health and diagnostics/medical device classification
Table 10: Prescription and over-the-counter product classification
Table 11: Non-pharmaceutical animal health services
Table 12: Global prescription branded pharmaceutical market, 2008
Table 13: Operating margin for the leading prescription branded pharmaceutical companies, 2005-08
Table 14: Indicative Profit Potential for the prescription branded pharmaceutical market, 2008
Table 15: Global over-the-counter/consumer health, 2008
Table 16: Operating margin for the leading over-the-counter/consumer health companies, 2005-08
Table 17: Indicative Profit Potential for the over-the-counter/consumer health market, 2008
Table 18: US health insurance market, 2008
Table 19: Operating margin for the leading US health insurers, 2005-08
Table 20: Indicative Profit Potential for the health insurance market
Table 21: Global medical device and diagnostics market, 2008
Table 22: Operating margin for the leading medical devices and diagnostics companies, 2005-08
Table 23: Indicative Profit Potential for the medical devices and diagnostics market, 2008
Table 24: Global retail pharmacy market, 2008
Table 25: Operating margin for the leading US retail pharmacies, 2005-08
Table 26: Indicative Profit Potential for the retail pharmacy market, 2008
Table 27: US hospital market, 2008
Table 28: Operating margin for the leading US hospitals, 2005-08
Table 29: Indicative Profit Potential for the US hospital market, 2008
Table 30: Global prescription generics market, 2008
Table 31: Operating margin for the leading generics companies, 2005-08
Table 32: Indicative Profit Potential for the generics market, 2008
Table 33: US prescription benefits management market, 2008
Table 34: Operating margin for the leading US prescription benefits management companies, 2005-08
Table 35: Indicative Profit Potential for the prescription benefits management market, 2008
Table 36: Global pharmaceutical wholesale market, 2008
Table 37: Operating margin for the leading US pharmaceutical wholesalers, 2005-08
Table 38: Indicative Profit Potential for the pharmaceutical wholesale market, 2008
Table 39: Global animal health market, 2008
Table 40: Operating margin for the leading animal health companies, 2005-08
Table 41: Indicative Profit Potential for the animal health market, 2008
Table 42: Examples of human to animal drug cross-over
Table 43: Currency exchange rates, 2008
List of Figures
Figure 1: Big Pharma's projected sales growth decline through 2014
Figure 2: Profit at the company and sector level
Figure 3: Big Pharma mergers and acquisitions by sector type, 2000-Q2 2009
Figure 4: The spectrum of Big Pharma's business diversification, 2008
Figure 5: The correlation between Big Pharma's prescription focus and operating margin, 2005-08
Figure 6: The ten healthcare sectors, 2009
Figure 7: Market size across the healthcare landscape, 2008
Figure 8: Average operating margin across the healthcare landscape, 2005-08
Figure 9: Indicative profit potential across the healthcare landscape, 2008
Figure 10: Big Pharma's potential responses to the patent cliff
Figure 11: Optimizing operating margin growth
Figure 12: Big Pharma mergers, acquisitions, and divestments, 2000- Q2 2009
Figure 13: Big Pharma mergers and acquisitions by sector type, 2000-Q2 2009
Figure 14: Big Pharma's divestments by sector type, 2000-Q2 2009
Figure 15: Big Pharma's focus on prescription drug sales, 2001-08
Figure 16: The spectrum of Big Pharma's business diversification, 2008
Figure 17: The correlation between Big Pharma's prescription focus and operating margin, 2005-08
Figure 18: The diversification profile for Pfizer, Novartis, Eli Lilly, Johnson & Johnson, Bayer, and Bristol-Myers Squibb, 2007
Figure 19: Pfizer's prescription focus and operating margin, 2001-08
Figure 20: Eli-Lilly's prescription focus and operating margin, 2001-08
Figure 21: Bristol-Myers Squibb's prescription focus and operating margin, 2001-08
Figure 22: Johnson & Johnson's prescription focus and operating margin, 2001-08
Figure 23: Novartis's prescription focus and operating margin, 2001-08
Figure 24: Bayer's prescription focus and operating margin, 2001-08
Figure 25: Pharmaceuticals sales for Procter & Gamble, 2004-08
Figure 26: The ten healthcare sectors, 2009
Figure 27: The human and animal healthcare divide within the life sciences sector
Figure 28: The product-provision division running through human healthcare
Figure 29: The organizations responsible for human healthcare provision
Figure 30: The pharmaceutical, non-pharmaceutical divide in human healthcare products
Figure 31: The subcategorization of pharmaceutical products
Figure 32: The subcategorization of non-pharmaceutical products
Figure 33: The over-the-counter-consumer health spectrum
Figure 34: The companion-livestock divide in animal health
Figure 35: Classification of service provision in animal healthcare
Figure 36: Animal healthcare products for companion animals and livestock
Figure 37: Market overview for the global healthcare landscape, 2009
Figure 38: Market size, operating margin and indicative profit potential for the ten healthcare sectors
Figure 39: The companion animal-livestock split in animal health, 2004
Figure 40: Indicative profit potential of the human and animal health care sector
Figure 41: A comparison of the size and profitability of individual sectors within the healthcare landscape, 2009
Figure 42: Drivers and resistors for prescription to over-the-counter switching
 
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