Pharma Industry Challenges

Question 1

What are the main challenge areas in the pharma industry?

Answer 1

• Productivity
• Innovation
• RA & market access
• Changing demographics
• Mergers & collaborations
• Costs & revenues

Question 2

Productivity: negatives

Answer 2

• High-throughput screening failed to deliver the expected revolution (as it does not provide mechanistic insight and is limited by the diversity of the library)
• The industry model is highly inefficient due to competition (“product races”).
• Contract Research Organizations (CROs) can overpromise and underdeliver.
• Over-reliance on external contracts may reduce internal capabilities and insights.

Question 3

Productivity: positives

Answer 3

• Adoption of information technology for data capture.
• Emerging use of artificial intelligence (AI).
• Global programs to reduce duplication.
• Efficiency initiatives to streamline processes and improve quality.
• Internal growth strategies creating responsive organizations.

Question 4

Innovation: negatives

Answer 4

• Big Pharma struggles to attract top-tier scientists compared to the 1980s.
• Bureaucratic hurdles remain in large companies (e.g., multiple reviews, portfolio optimization).

Question 5

Innovation: positives

Answer 5

• The “brain gain” for start-ups compensates for Big Pharma’s loss.
• Entrepreneurial business models emerging.
• Opportunities in innovative therapeutic areas.

Question 6

Regulatory & Market Access: negatives

Answer 6

• Extensive data required for regulatory approval.
• Market access presents significant hurdles beyond approval.
• Cost-effectiveness evidence required before real-life clinical data.

Question 7

Regulatory & Market Access: positives

Answer 7

• Globalization and harmonization reduce duplication and increase returns.
• Challenges motivate the development of impactful, differentiated medicines addressing unmet needs (moving away from “me-too” drugs).

Question 8

Changing demographics: negatives

Answer 8

• Aging populations result in fewer taxpayers.
• Precision/personalised medicines create additional challenges.

Question 9

Changing demographics: positives

Answer 9

• Expanding access to pharmaceuticals in developing countries with large populations.
• Longer life expectancies lead to more elderly patients, creating opportunities in geriatric care.
• Treatment guidelines promote evidence-based medicine.

Question 10

Mergers & Collaborations: negatives

Answer 10

• Mergers often lead to shareholder value destruction.
• Frequently, mergers act as disguised downsizing, disrupting performance.
• Limited and overpriced opportunities.
• Innovators often leave after acquisitions.

Question 11

Mergers & Collaborations: positives

Answer 11

• Strategic partnerships are becoming more common.
• Venture-backed funding supports innovation.
• University technology transfer units are better developed.
• Enhanced capital efficiency (unlocks talent that may not have been there before).

Question 12

Rising Costs & Reduced Revenues: negatives

Answer 12

• Increasing costs of extensive development programs and clinical trials.
• Escalating litigation and high costs for biologics.
• Cost-effectiveness guidelines reducing product potential.

Question 13

Rising Costs & Reduced Revenues: positives

Answer 13

• Precision/personalized medicine enables higher pricing per patient.
• Higher pricing of biologics.
• Externalization is often more efficient than internal discovery.

Question 14

What is the impact of these pharma industry challenges?

Answer 14

• Delayed drug development.
• Escalating costs.
• Intellectual property (IP) issues and competition from generics.
• Significant public health implications.