Five Predictions for the Pharmaceutical Industry
I don’t pretend to have a crystal ball but trends and evolving patterns can lead one to predict pretty accurately what is going to happen in the future. As the predictions in Pharmaplasia have pretty much come to pass and continue to play out, I decided to take another shot at formulating what appears to be in store for the pharmaceutical industry over the next five to ten years. So here goes…
- Big Pharma investors will become less tolerant of multi-billion dollar mega-acquisitions of companies and technologies that benefit executives, bankers, and lawyers but do little to improve the acquiring company. Investors will no longer accept excuses when these overpriced deals don’t deliver on the expectations and promised returns.
- Biotech investment will continue to decline as investors become increasingly rigorous in their due diligence, identifying true innovation with meaningful clinical potential rather than investing hopefully in purported innovation hyped by articulate CEOs looking to win the “buy-out lottery.” With the first prediction in play, there will be fewer “buy-out lotteries” to be won.
- The continued product focus of pharmaceutical R& D is leading to a prolonged period of fewer truly innovative clinically important new treatments. The acquisition opportunities for development-ready, truly innovative technologies in small biotech companies will slow dramatically. And, merely shooting at “disease targets” with chemistry, without a comprehensive understanding of the pathophysiology of disease, leads to a “hit and miss” mentality, lacking in appreciation for the complexities of human biology.
- The market will continue to experience significant drug shortages until the healthcare market is willing to pay prices that support high quality cGMP-compliant manufacturing and the pharmaceutical industry (including generic drug companies) realizes that high quality cGMP-compliant manufacturing is a critical success factor, important enough to make the necessary investments to consistently sustain it. This is difficult for Pharma executives because manufacturing has always been the place to look for operational cost cutting and investment in manufacturing expertise and systems is not as “sexy” or newsworthy as placing a big bet on a “hyped up” new drug technology to excite Wall Street analysts.
- Unfortunately, the pharmaceutical industry will not have the necessary experience base or leadership to navigate this perilous journey. Downsizings, retirements, and industry changing career choices have diminished the necessary operational (think research and manufacturing) experience and expertise from the industry. And, those who have survived and aspire to take on leadership roles have mentored during a period characterized by “me too” drug and acquisition driven R & D, questionable (if not illegal) marketing and sales tactics, and a corporate priority for investor interests over patient well-being. Not exactly the development track you’d prescribe given the organizational challenges and the complexities of the evolving healthcare market these new leaders will face.
Realistically facing the prospects for the future can help identify opportunities for changing what isn’t working and developing plans to take corrective action, if necessary. If you don’t believe my predictions are valid, or you believe I have been to negative, then there is nothing to change. Big Pharma can continue doing what it is doing. Seems to me that’s been the consensus position for some time now.