This comes to us from the Independent via the PharmaGossip blog. It is another article documenting the patent cliff -- $142 B worth of drugs falling down over the next 5 years. This time, not only detailing what's coming off patent, but reiterating the lack of new drugs that are making it through the approval process.
Pharma companies will be losing 14 to 41 per cent of their existing revenues in that 5 year span. There is debate as to whether pharma should continue to invest so heavily in R&D for new "blockbusters". A new PricewaterhouseCoopers (PWC) report, Pharma 2020: The Vision, notes that in the six years from 2001 to 2007, the FTSE pharmaceutical index grew only by 1.3% versus Dow Jones World index rise of 34.9%. Only 5 of the top Big Pharma generate more than 10% of their revenue from drugs introduced since 2001. Yikes! The industry is spending 2x as much on R&D and only getting 2/5 as many products to market as a decade ago.
The PWC report isn't all gloom (a few rays of sunshine). PWC does point out that the global pharma market is still expected to grow from its current $518 B size to as much as $1.3 trillion by 2020. Growth in pharmerging countries is expected in strong double digits. World population is still expected to grow to 7.6 billion by 2020 and there will be an increase in people over the age of 65 from $477 M to more than $719 M during that time. This population are big users of prescription drugs -- 75% of whom take at least 1 prescription, and 33% take more than 4 prescriptions (especially in my family).
Check out another closely related topic, regarding "Why in-licensing is not the cure", from Seeking Alpha. This speaks heavily to a Morgan Stanley and Accenture reports that urge big pharma companies to follow an "Integrated Therapeutics" model. A model not dependent solely on producing innovative medicines. Rather, the companies focus on producing a "suite of medical solutions that include risk-sharing pricing contracts, drug delivery devices, companion diagnostics, or care management services." This way meaningful value is added to the product, beyond solely the molecule, and benefits are generated for the many parties involved including patients, payers and drug makers.
Posted by Bruce Lehr August 30th 2010.
Here is a corollary article published (Sept 7th) in Seeking Alpha by ME Garza. It says Big Pharm will be seeking more deals and fewer new drug applications will be submitted.
http://seekingalpha.com/article/224105-big-pharma-headed-for-more-deals-less-new-drug-applications
Posted by: bigredbruce | 09/07/2010 at 01:52 PM