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The global pharmaceutical market will more than double in value to $1.3 trillion by 2020, according to a report, but the industry needs to transform itself to make the most of the opportunities.
Pharma 2020, published by financial analyst PricewaterhouseCoopers (PwC), says the increase is driven by “soaring worldwide demand for medicines and preventative treatments as the population grows, ages, becomes more obese and more prosperous”. It also notes that by 2020, the “E7 countries” – China, India, Brazil, Russia, Indonesia, Mexico and Turkey – could account for as much as one-fifth of global pharmaceutical sales.
However, PwC warns that the current industry business model “is both economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets”. Pharmaceutical companies are facing a dearth of new compounds, relatively poor financial performance, rising sales and marketing expenditures, “increased legal and regulatory constraints and challenges and tarnished reputations”, while “healthcare payers and providers everywhere have recognised that current healthcare expenditure levels are also unsustainable”.
Steve Arlington, principal author of the report, said that “the core challenge for the industry is a lack of innovation”, adding that “over the next decade, the industry must shift its investment focus more toward research and less on sales and marketing”. He also claimed that “pharma’s traditional strategy of placing big bets on a few small molecules, marketing them heavily into primary care with the aspiration of achieving blockbuster sales, will no longer suffice”.
The report predicts that the focus will shift from treatment to prevention, saying the latter “represents a huge opportunity for both healthcare providers and the pharma industry”. Currently only 3% of healthcare spending in Organisation for Economic Co-operation and Development countries is used for prevention, yet the World Health Organization says up to 80% of heart disease, stroke and diabetes and 40% of cancer cases could be prevented.
The report claims new technologies will drive R&D, noting that the role of genetic-based diagnostics in the development of personalised medicines has gained in importance and “further research into the human genome will open up a new world of opportunities in molecular science and new ways of looking at targets”. PwC also argues that “the current linear-phase R&D process will give way to in-life testing and live licensing”, which will see the industry “conduct smaller, more focused clinical trials, continuously sharing results with regulators”.
The report suggests “there may well be one global regulatory system by 2020”, which would help cut spiralling regulatory compliance costs and reduce time to market. The document argues that the blockbuster sales model will disappear, to be replaced by “a smaller, smarter and more effective sales force, led by key account managers who will negotiate tender-based contracts on therapeutic benefit and outcomes.” PwC concludes that “the imperative will be who can add the most value, not who can sell the most pills”.