Pharma industry ‘on cusp of golden era’ – report
Major scientific and technological advances and increasing demand for medicines will revive pharma’s fortunes in the next decade.
This is according to a new report from PricewaterhouseCoopers, Pharma 2020: From vision to decision. But the consultants say that in order to survive to 2020 – and then to potentially thrive on the opportunities the next decade holds – pharma must meet the challenges of rising expectations from customers, poor scientific productivity and cultural barriers.
One of the major hurdles facing the pharma industry is the rising healthcare bill, the report says. Its expenditure as a percentage of Gross Domestic Product is climbing in all countries and is increasing most steeply in the mature markets where the industry has historically made most of its money.
“At a time when all economies are feeling the tougher times, the industry is having to play its part,” the report says. “The bill payers are demanding better outcomes and introducing new mechanisms to measure these as a precondition for paying for new medicines.”
As a result, PwC’s research suggests that the pharma industry must either offer more value without charging more, or prove that it can remove costs from another part of the healthcare system to make room for the higher prices it’s charging.
PwC says that pharma can do this by reducing spend on costly medical services and procedures by offering medicines that remove the need for these costly interventions. The consultants estimate that its share of healthcare expenditure in these countries could rise from 15% to 20% by 2020 if it can add this type of value.
Mike Swanick, global pharmaceutical and life sciences leader, PwC, said: “The industry is at a crossroads. In established markets, budgets are constrained and all stakeholders want real solutions and cures. Pharma companies must now deliver ‘real’ value to payers and patients to prove their worth and to rebuild trust in the sector. In growth markets, companies must respond responsibly to a growing population’s needs, recognising demographic and cultural diversity.
“The industry has historically found change difficult to deal with but time is running short and decisions must now be taken. Those that do, face an optimistic future, while failure to respond now could lead to many regrets.”
Despite the big changes in the industry over the past few decades, the report also finds that the organisational culture at many pharma companies has changed very little, or if anything has become more stultifying.
The industry has struggled to deal with change in the past, but the report says change must now be embraced in a rapidly changing world. A demanding commercial environment is set to continue and in order to succeed, the report suggests this must change and industry’s top figures need to foster a creative corporate culture that allows organisations to develop with the courage to explore, and flexibility to thrive, in different conditions.