Here is a provocative article from Institutional Investor that discusses problems with the Big Pharma model and passes through some predicitons of various analysts as to where we'll end up. My favorite assertion in the bunch? Only Roche and Novartis will survive as "full-fledged, real [drug] companies". Wow --that's 2!
The others? They'll have core competencies that fall into one of four basic skill sets: research, development, manufacturing and marketing. Viren Mehta, founder of Mehta Partners, says there's no reason to expect that a single company will be a master of all four or even two or three of them. Again - Wow! In the future, he predicts there will be no big or small companies, and no distinction between pharma and biotech. I believe the last -- I think drug companies will produce (or sell) generics, biosimilars and biobetters, small and large molecules and innovative drugs all combined in a single portfolio.
The other revelation for me oozed out when senior pharma executives were asked, "What is the core competency of your company?" Answers ranged from conducting clinical trials to global marketing to ultimate legal responsbility for safety. The analysts predict that ultimately some will shrink -- focusing on only one or two specialties. We may be left with general contractors that gather the work of their sub-contractors to submit to the FDA. Some may only be a brand name that stands behind a distribution machine. I've also seen speculation that the "big pharma's" will start to look like banks to fund projects and do marketing.
With these type of predictions flying in the wind, it is sure to be a period of constant metamorphosis while the ultimate business models shake out for each company (assuming that they survive).
Posted by Bruce Lehr June 7th 2011.