The Pharmaceutical Market Outlook to 2015: Implementing innovative, long-term strategies for sustainable future growth, examines the key changes in market strategy which will help companies to boost profitability, drive market share and enhance R&D productivity. This report also provides insight into the drivers and resistors of the pharmaceutical market to 2015, with a unique survey of 300 senior industry executives from pharmaceutical, biotech, speciality and generics sectors. Growth in the pharmaceutical industry is currently driven by innovation in biotechnology, the increasing aging population, and emerging geographical markets such as China and India. Pharmaceutical companies are increasingly collaborating with biotech companies to leverage their expertise, products and operations to help overcome the productivity gap and promote future growth. Use this report to benchmark the networking growth model used by your competitors, identify potential alliance partners and plan a long-term growth strategy to secure your leading position in the next ten years.

Table of Contents
 

 
The Pharmaceutical Market Outlook to 2015
 
Executive summary 10
 
Challenges and resistors to growth 10
 
Failing short-term strategies 11
 
Future strategies to expand the customer base 12
 
Future product portfolio strategies 13
 
Future growth and alliance strategies 14
 
Competitive company strategy analysis 15
 
Chapter 1 Challenges and resistors to
 
growth 18
 
Summary 18
 
Introduction 19
 
New challenges faced by the industry in 2004 19
 
Full clinical trial data disclosure 19
 
Accusations of industry and FDA collusion 20
 
Major product recalls 20
 
Plummeting stock values 21
 
Continuing challenges 22
 
Weakening product pipelines 23
 
Soaring costs of R&D 25
 
Increasing generic competition and parallel trade 25
 
Increased cost containment 29
 
Opportunities in the pharmaceutical marketplace 31
 
Chapter 2 Failing short-term strategies 34
 
Summary 34
 
Introduction 35
 
Reliance on US revenues 36
 
Long-term sustainability 38
 
Increasing sales & marketing spend 39
 
Long-term sustainability 40
 
Reliance on blockbusters and me-too drugs 41
 
Long-term sustainability 42
 
In-licensing of late-stage products 42
 
Long-term sustainability 44
 
Mega-mergers 45
 
Long-term sustainability 47
 
Focus on long-term sustainable growth 49
 
Conclusions 50
 
Future strategies to expand the customer base 50
 
Future product portfolio strategies 50
 
Future growth and alliance strategies 50
 
Chapter 3 Future strategies to expand the
 
customer base 52
 
Summary 52
 
Introduction 53
 
Expansion into emerging geographical markets 53
 
Global population demographics 53
 
Geographical pharmaceutical markets 54
 
Chinese market entry 55
 
Case Study: Pfizer expansion in China 56
 
Targeting growing patient populations 58
 
Aligning R&D with commercial business functions 58
 
The ageing population 59
 
Age demographic trends 59
 
Healthcare spending by age 60
 
Age-related diseases 61
 
The market for age-related diseases 62
 
The obese population 62
 
Obesity epidemiology 62
 
Obesity-related diseases 64
 
The market for obesity-related diseases 64
 
Chapter 4 Future product portfolio
 
strategies 66
 
Summary 66
 
Introduction 67
 
Alternatives to a mega-blockbuster strategy 67
 
Small molecule drugs versus biological therapies 69
 
Sector performance 71
 
Sector growth to 2015 73
 
The biotech sector 74
 
Targeted biological therapeutics 75
 
Case study: Herceptin – a targeted therapeutic for breast cancer 76
 
Market growth to 2015 77
 
The generics sector 78
 
Case study: Sandoz (Novartis) focusing on biogenerics 81
 
Market growth to 2015 81
 
Big Pharma involvement in biotech and generics 82
 
Big Pharma involvement in biotech 82
 
Successful involvements 83
 
Investment in the biotech sector 84
 
Big Pharma involvement in generics 84
 
Unsuccessful involvements 84
 
Successful involvements 85
 
Competitive advantage in the generics sector 86
 
Investing in the generics sector 86
 
Chapter 5 Future growth and alliance
 
strategies 90
 
Summary 90
 
Introduction 91
 
Alliances between industry sectors 92
 
The issue of scale 93
 
Scale in R&D operations 94
 
Scale in sales and marketing operations 95
 
Strategies beyond mega-mergers 96
 
Re-organization of internal R&D 97
 
Exploiting external R&D resources 98
 
Alliance deals 99
 
Collaborative alliances 100
 
Technology licensing 100
 
Buyer-supplier relationships 101
 
Evaluations 101
 
Mergers and acquisitions (M&A) 101
 
Forecast to 2015 102
 
The move towards networked pharma 104
 
Chapter 6 Comparative company strategy
 
analysis 108
 
Summary 108
 
Introduction 109
 
Pfizer 110
 
Growth and alliance strategy 110
 
Geographic expansion 111
 
GlaxoSmithKline 111
 
Growth and alliance strategy 111
 
Sanofi-Aventis 114
 
Geographic expansion 115
 
Investment in generics 115
 
Growth and alliance strategy 115
 
Novartis 116
 
Investment in generics 117
 
Growth and alliance strategy 118
 
Roche 119
 
Growth and alliance strategy 119
 
Investment in biotech 121
 
UCB 122
 
Investment in biotech 122
 
Growth and alliance strategy 122
 
Conclusions 124
 
Chapter 7 Appendix 128
 
Primary research methodology 128
 
Index 130
 

 
List of Figures
 

 

 
Figure 1.1: Challenges for pharmaceutical sales and marketing 23
 
Figure 1.2: Number and time of NME approvals, 1995-2004 24
 
Figure 1.3: Total value of US drugs going off patent per year, and impact on revenues of generic
 
copies, 2004-2010 26
 
Figure 1.4: US patent expiries for top ten selling drugs, 2004 27
 
Figure 1.5: Pharmaceutical expenditure as a share of total healthcare expenditure in 2002 30
 
Figure 1.6: Pharmaceutical market drivers, 2004 31
 
Figure 2.7: Short-term strategies for delivery of revenue growth 35
 
Figure 2.8: Average branded drug prices in selected countries compared with the US, 2003 36
 
Figure 2.9: Pharmaceutical sales by region/country, 2004 37
 
Figure 2.10: Years of marketing exclusivity, 1968-1995 39
 
Figure 2.11: Breakdown of projects by clinical phase and source of drug, March 2004 44
 
Figure 2.12: M&A/restructuring activity, 1994-2004 46
 
Figure 2.13: Change in market shares of mega-merged & non-mega-merged companies, 1995-2002
 
48
 
Figure 3.14: Pharmaceutical sales and growth rates by region/country, 2004 55
 
Figure 3.15: Annual population growth rates by age group and region, 2000-50 59
 
Figure 3.16: Healthcare spend in the US by age group, 1985 & 2000 60
 
Figure 3.17: Prevalence of obese and overweight adults in US, 1976-2000 63
 
Figure 4.18: Product positioning in the healthcare marketplace 68
 
Figure 4.19: US approvals of small molecule drugs and biological therapies, 1994-2003 70
 
Figure 4.20: Growth rates in the US by sector, 2003-2004 72
 
Figure 4.21: Industry prediction of future sector annual growth rates to 2015 73
 
Figure 4.22: Comparative approval success rates of US biopharmaceutical products and drugs 78
 
Figure 4.23: US generic drug approvals, 2000-2005 80
 
Figure 4.24: Biotech sales of leading players, 2003 82
 
Figure 5.25: The rate of mega-mergers to 2015 91
 
Figure 5.26: Alliances between industry sectors, 2004-2015 92
 
Figure 5.27: R&D productivity of the top 39 pharma & biotech companies, 2002 94
 
Figure 5.28: Sales vs. S,G&A, 2004 96
 
Figure 5.29: Impact of alliances on future drug development 99
 
Figure 5.30: Growth and alliance strategies to increase R&D productivity, 2004-2015 103
 
Figure 5.31: Big Pharma should concentrate on core competencies 104
 
Figure 5.32: Vision of networked pharma in 2015 105
 
Figure 6.33: R&D, S,G&A and sales, 2004 109
 
Figure 6.34: GSK Centres of Excellence in Drug Development (CEDD) 112
 
Figure 6.35: GSK’s R&D network 114
 
Figure 6.36: Roche’s R&D network 120
 
Figure 6.37: Biologic medicine approvals by major indication, 2003 121
 
Figure 6.38: UCB R&D network 124
 
Figure 7.39: Survey respondents by type of company 128
 
Figure 7.40: Survey respondents by job function 129
 

 

 
List of Tables
 

 
Table 1.1: Performance of US, Euro, UK and Japanese pharma stocks, 2002-2004 22
 
Table 1.2: Total pharmaceutical R&D expenditure ($bn), 1980-2004 25
 
Table 2.1: S,G&A expenditure of top 50 pharmaceutical companies, 1999-2003 40
 
Table 2.2: Cost savings achieved on past mergers 47
 
Table 3.3: Most common age-related diseases 61
 
Table 3.4: Global ageing diseases market, 2003 62
 
Table 3.5: Obesity-related diseases 64
 
Table 3.6: Global obesity-related diseases market, 2003 64
 
Table 4.7: Sales in the global and US markets by sector, 2004 72
 
Table 4.8: Top global biotech products, 2004 75
 
Table 6.9: Novartis sales by division, 2003-2004 116