The Pharmaceutical Industry 2008: Current and Future Trends and Strategic Issues Shaping Pharma

Published by: Datamonitor

Published: Mar. 20, 2008 - 187 Pages

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY

Scope of the report

Key findings

External factors driving change in the pharmaceutical industry

External factors affecting pricing in the pharmaceutical industry

External factors affecting proliferation in the pharmaceutical industry

External factors affecting product portfolios in the pharmaceutical industry

External factors affecting drug penetration in the pharmaceutical industry

External factors affecting costs in the pharmaceutical industry

CHAPTER 2 EXTERNAL FACTORS IMPACTING THE PHARMACEUTICAL MARKET DURING 2007

Overview of external factors impacting the pharmaceutical market during 2007

Increased focus on safety is keeping drug approval rate low

The effects of longer clinical trials on Pharma's ROI

Questions over safety and efficacy are the prime causes for delayed approval

Strategies implemented to improve drug safety

Drugs affected by the FDA's increasing safety focus

Legislative events continue to significantly impact Pharma

The FDA Amendments Act (FDAAA) aims to overhaul the drug safety program but many uncertainties remain

PDUFA was reauthorized and user fees were raised but the DTC program was abandoned

Risk Evaluation and Mitigation Strategies (REMS) can restrict the market penetration of a drug

The FDA's ability to require post-marketing studies has been expanded

The FDAAA gives the FDA the power to mandate labeling changes

FDA proposal for new labeling pre-emption rules is upsetting the lawmakers

Drug safety will be assessed by two separate bodies

Manufacturers not complying with the new safety requirements are subject to hefty civil penalties

Clinical trial registry and results database

Pediatric trial exclusivity term is kept at six months for all drugs despite opposition from the generic industry

Citizen Petitions may no longer delay the approval of generic drugs by the FDA

The FDAAA did not include generic user fees but they may be introduced in the near future

Changes in the US patent law may weaken the position of Pharma

The outcome of the US Presidential and Congress elections will impact the industry in the world's largest market

Republican candidates are against a federal universal healthcare system

Both leading Democrat candidates are proposing universal healthcare coverage

Tightening of pricing and reimbursement across the global pharma market

Increasing healthcare costs driving cost cutting initiatives globally at the possible expenses of pharmaceutical innovation

US - healthcare costs escalate prompting cost-effective initiatives

Reasons behind escalating healthcare costs

Medicare unable to negotiate with Pharma on drug prices

Japan implements further price cuts but delays reforms to P&R system

EU - implementing price cuts and reference pricing are the main cost containment tools used in most EU countries

Uncertainty over EU P&R reform

Italy to pay increased attention to pharmaceutical innovation

France - reimbursement drug list reforms have been insufficient in cutting reimbursement costs due to lack of physician compliance

Germany - continues to implement and review cost-cutting policies

Spain - reference pricing has cuts cost but is also partly responsible for a drop in investor confidence in Spain as a R&D center

UK - further implementation of cost-cutting reforms seen in 2007

Generics overview in the seven major markets

The global generics market is growing

Several measures to increase generics use were introduced in 2007 and will drive growth in the immature markets

Generics to be listed twice a year in Japan

Mandatory generic substitution in Japan

Education is key to improving generics uptake in all immature markets

The more mature markets are the most competitive

Generics companies engaged in price-fixing scams

Medicaid reimbursement for generics drugs to be reduced

Wal-Mart likely to push generic drug prices down further in the US

Biosimilars - a growing threat to biologics

Europe continues to lead in biosimilars approvals

Five biosimilars of epoetin alfa were approved in 2007 in the EU

Substitution is an unresolved issue in many countries, but France and Spain have banned automatic substitution

Payers are yet to introduce incentives for the use of biosimilars

The US is making progress towards establishing a pathway for approval of biosimilars

Lifecycle management strategies will also have to be employed for biologics in the future

Regulatory focus on immunogenicity is impacting the approval of both new biologics and biosimilars

Generic Lovenox was rejected by the FDA

Patients as consumers now have the ability to influence and alter healthcare decisions

The evolving role of patients and caregivers

Patient advocacy groups now have the ability to influence and alter healthcare decisions

Lack of transparent information for patients is affecting public perception of the Pharma industry - increasing distrust

Direct to consumer advertising under regulatory scrutiny in the US

EU to allow companies to provide information to patients

Current communication practices implemented by pharma companies are not tailored to patient needs

The emergence of new prescribers and influencers

CHAPTER 3 STRATEGIC RESPONSES TO CUT COSTS

Overview of strategic responses to cut costs

Outsourcing is increasingly used to cut costs

Manufacturing is mainly outsourced to India and China

GMP compliance and safety of products are critical for emerging market CMOs

More companies outsource clinical trials in order to speed up the trial process and cut costs

Emerging markets are presenting many cost- and time-saving opportunities for clinical trials

Many companies are moving some of their own operations to emerging markets

Generic drug-makers are also tapping into the cost-saving opportunities in India

Is Big Pharma facing an R&D efficiency crisis?

Pharma enters the biomarker era

Restructuring the R&D model

Roche focuses on specialized R&D centers

Pfizer and Bayer-Schering - cutting costs and concentrating R&D focus

Indian companies spin-out R&D

Which R&D model is best?

Using contract research organizations to optimize R&D

Pharma's evolving sales force effectiveness model through specialized reps and outsourcing

2007 was a year of cost cutting for Pharma

Increased regulation of sales and marketing set to continue and intensify in 2008

Pharma continues to streamline and develop sales and marketing departments to meet current challenges

Trends in new media's role in sales and marketing strategy

CHAPTER 4 STRATEGIC RESPONSES TO INCREASE SALES

Overview of strategic responses to increase sales

Cost-saving drives continued M&A growth

Factors driving M&A

Driving expansion and diversity in therapeutic and geographic markets

Simplifying access to drug candidates

Increased market penetration through sales force acquisitions

Divesting non-core assets to focus on core business strategy and specialization

Investigating future core areas and focusing on specialization

Licensing is becoming an increasingly expensive and complex option for Pharma

Increased competition and cost drives licensing of early-stage candidates

Rising cost of licensing deals increases pressure on cost-conscious Pharma

The increasing complexity of licensing deals

Biotechs increasingly exercise their bargaining power during deal negotiations

Deals between Big Pharma set to rise

Oncology remains the number one therapy area, and will drive the growth of the biologics market

Changes in the drug supply chain will impact on both legitimate and illegitimate players

Changes to the UK drug supply chain

Distribution of power shifts from pharmacists to manufacturers under DTP

Pharmacies are paying more under Pfizer's DTP model, for poorer service

Widespread changes in distribution will have a wide-ranging impact

The government's response to DTP

Implications for parallel trade in the EU

Simplified supply chains are insufficient, alone, to combat counterfeits

Emerging markets continue to attract Big Pharma despite challenges

Large patient potential is the main attraction

Strong economic growth is fueling the demand for modern pharmaceuticals

IP environment - improving but still a way to go

Indian Patent Act of 2005 - failing to deliver?

Chinese IP environment still needs to improve despite signing up to TRIPS

Compulsory licenses were issued in several emerging market countries in 2007

Increased funding of public healthcare systems gives hope for wider reimbursement

Drug pricing is tightly regulated in some countries

Personalized medicines offer an alternative to the traditional blockbuster model

Theranostics - Pharma revolutionizing its approach to diagnosis and treatment

Theranostics set to improve P&R of niche drugs

Investor uncertainty remains the biggest hurdle to theranostics

Current and future lifecycle management trends

Pharma moves away from indication expansions to R&D strategies that offer a greater ROI

Rx-to-OTC - to switch or not to switch?

Weighing up the success of Alli

The pitfalls of Rx-to-OTC switching

BTC adds another string to Pharma's bow

CHAPTER 5 BIBLIOGRAPHY

Publications and online articles

Conference literature

Datamonitor resources

Databases

Abbreviations

APPENDIX

List of Tables

Table 1: Drug safety concerns and outcomes in the US, 2007

Table 2: Three bills were introduced in the legislative houses in the US in 2007

Table 3: Euro-Canada health consumer index, 2008

Table 4: Information needs of patients

Table 5: Several companies have announced reduction of in-house manufacturing capacities

Table 6: Several multinational pharmaceutical companies have established a R&D presence in China

Table 7: MNCs prefer to carry out R&D in India in collaboration with an Indian company

Table 8: Countries on the US Priority watch list presenting concerns over IP, 2007

Table 9: Pharma cost cutting strategies in 2007

Table 10: Summary of leading M&A deals by value in 2007

Table 11: Biologic products will experience a more than 10-fold growth rate compared to small molecules in 2007-08

Table 12: Rx-to-OTC FDA approvals and non-approvals

Table 13: Euro-Canada index weightings

List of Figures

Figure 1: External factors driving implementation of strategic responses in the pharmaceutical industry

Figure 2: External factors affecting pricing in the pharmaceutical industry

Figure 3: External factors affecting proliferation in the pharmaceutical industry

Figure 4: External factors affecting product portfolios in the pharmaceutical industry

Figure 5: External factors affecting drug penetration in the pharmaceutical industry

Figure 6: External factors affecting costs in the pharmaceutical industry

Figure 7: The impact of an increasingly safety conscious industry

Figure 8: Legislative events and policy changes impact pharmaceutical companies' profits in multiple ways

Figure 9: The FDAAA reauthorizes three acts and introduces several new provisions

Figure 10: FDAAA expanded the FDA's authority to review TV DTC adverts but the user-fee program was abandoned

Figure 11: The FDA can require REMS both before and after approval

Figure 12: New US Patent and Trademark Office rules are unfavorable for pharma and biotech

Figure 13: The Patent Reform Act of 2007 proposes some fundamental changes to the US patent system

Figure 14: The frontrunners for the US Presidential election have a great deal of overlap in their healthcare reform plans

Figure 15: Potential impacts of the US Presidential elections on pharma industry

Figure 16: Factors driving tightening P&R

Figure 17: The impact of tightening P&R in the pharma industry

Figure 18: Pricing policies in the US, Japan and 5EU, 2007

Figure 19: Generics use will continue to threaten innovator profits

Figure 20: Key generic trends impacting the seven major markets

Figure 21: Biosimilars present a threat to the profits of companies with biologics

Figure 22: Events and trends increasing the threat of biosimilars

Figure 23: The Biologics Price Competition and Innovation Act passed the Senate but failed to clear Congress in 2007

Figure 24: Various lifecycle management strategies can be employed to maximize revenues derived from biologics

Figure 25: How patient empowerment affects Pharma's profitability

Figure 26: Drivers of patient empowerment

Figure 27: Influence of patient advocacy groups

Figure 28: Decision-making processes for prescription drugs

Figure 29: Outsourcing can impact profitability of pharmaceutical companies in various ways

Figure 30: Advantages and disadvantages of conducting clinical trials in emerging market countries

Figure 31: Is Big Pharma facing an R&D crisis?

Figure 32: Recommendations to improve R&D efficiency in the pharma industry today

Figure 33: Novel technologies such as biomarkers improve R&D efficiency through a variety of means

Figure 34: Recent trends in the Pharma-CRO relationships

Figure 35: How CSOs can boost company profitability

Figure 36: $115 billion worth of branded drugs from the top 50 Pharma companies face patent expiry through 2012

Figure 37: Factors driving M&A and licensing in the pharma industry today

Figure 38: The line between licensing and M&A is becoming increasingly blurred

Figure 39: Drivers and resistors of co-promotion

Figure 40: Oncology remains the number one therapy area for licensing deals in 2007

Figure 41: The changing face of pharmaceutical supply

Figure 42: Impending changes to the drug supply chain

Figure 43: Emerging markets present an opportunity to grow revenues

Figure 44: Attractions and challenges facing global pharmaceutical companies operating or wishing to enter emerging market countries

Figure 45: Factors driving the growth of theranostics in the pharma industry

Figure 46: Drivers and resistors of theranostics and personalized medicines

Figure 47: Niche drugs experience a greater return of promotional spend compared to those for large patient populations

Figure 48: A wide range of brand defense strategies are available, however timing of implementation is key

Figure 49: Key factors driving implementation of LCM strategies in the pharma industry today

Figure 50: Risks associated with indication expansion launch timing

Figure 51: Indication expansion - multiple options for driving market share

Figure 52: Decline in US indication expansions approved since 2004

Figure 53: Rx-to-OTC switches in the US and UK, 2001-07

Figure 54: 2007 US revenues of GSK's Alli and Roche's Xenical

Abstract

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