Pharmaceutical Industry.
Kaoutar Kasmaoui - Rim El Guerrab - Ghita Ouchane - Younes El Gharbi
BACKGROUND OF PHARMACEUTICAL
INDUSTRY
difficulty of measuring the research productivity (10 to 12 years to release a new drug in the market).
Increase in the budget for marketing expenditure over the budget of R&D.
Political pressure due to the health care expenditure is arising percentage of the GDP.
KEY UNCERTAINTIES
How can Eli Lilly face the competition of less expensive generic equivalents of blockbusters before the expiration of their
patent?
What if blockbuster products have problematic side effects and need to be recalled after being released?
Will the government and private insurers continue to be in charge of the costs of prescription drugs?
Will pharmaceutical industry be able to translate advances in genomics, proteomics, and other technologies into new
products?
What if the public perception of and confidence in the pharmaceutical industry dropped? Will it affects Eli Lillys strategy
and sales ?
How can Eli Lilly overcome the new Asian competition?
How society views healthcare?
Will society influence public healthcare policy, regulations, and demand fo healthcare products?
To which degree technology influence pharmaceutical industry?
Radical Innovation
Incremental Innovation
COST OF R&D
According to the Food and Drug Administration (FDA), the cost per new drug discovery has
grown from US$154 M in 1976 to US$800 M in 2000.
From 10.000 analysed in laboratories, only 1 or 2 eventually pass all approval stages to become
a marketable medicine with a high risk of failing at clinical testing phases.
According to the European Federation of Pharmaceutical Industries and Association, only 3 out
of 10 new marketed drugs earn back the cost of investing in R&D (EFPIA, 2007)
R&D is time consuming since the median time from discovery to patent of a new drug averages
now from 12 to 13 years (EFPIA, 2007)
DECLINE IN R&D
PRODUCTIVITY
COMPETITION FROM
GENERICS
Generic drugs are sold 20% to 80% bellow the price of equivalent
branded drugs.
PRODUCT LIABILITY
ANALYSIS
Up to 2010 USA was the only major market in which there were no general
government prices controls on drugs. As a result prices have continued to rise.
(US Government Accountability office 2006)
Because people do have other expenses, they except the government will help
them partially regarding healthcare expenses.
Eli Lilly as many other pharmaceutical companies expect from the government
to set up more severe pressures and regulations on pharmaceutical pricing.
OBAMA-CARE
Delta Model
RECOMMENDATION
EXPECTED RESULT