Discuss the impacts on the global pharmaceutical industry

Split this presentation into two:

o Factors promoting growth and opportunities for growth
o Threats and pressures on the industry

First we look at the growth drivers

In the US and Europe, the proportion of people over 65 years of age is expected to continue
to increase by 50% in the next 20 years
With this increased life expectancy, the demand for drugs and healthcare services is also
expected to increase
Continue to produce drugs to target the elderly

In the developing world, many so-called emerging markets are transitioning to a developed
status
These countries include Brazil...
These countries are seeing rapid industrialisation and a fast growing economy
Also holds large portion of world population, giving them a significant share of the global
economy
Allows the governments to increase the provision of healthcare to the population
As population gets more affluent, citizens are able to afford modern medicines

Research has broadened our scientific knowledge and our understanding of the human
bodys chemistry
Increase potential for innovation and develop new medicines to treat and prevent diseases
Provides more opportunities to explore new pathways to developing drugs for disease
treatment and prevention

Health services consume a large portion of a governments budget

Within the governments interest to provide adequate provision of healthcare and maintain
their budget
Pharmaceuticals represent a cost effective means for governments to manage and contain
overall healthcare spend
For example, prescription drug therapy often evades the need for more expensive
interventions such as surgery and hospitalisation
Promotes healthcare authorities around the world to increase rational use of
pharmaceutical drugs

Summary of factors that drive the global pharmaceutical industrys growth

 Now discuss a few pressures currently being exerted on the industry
Perhaps the biggest near-term threat is the loss of patent protection on drugs and most
significantly on blockbuster drugs
What this means is that the pharmaceutical company loses its sole right to exclusively
manufacture and market the drug
Once the patent has expired, the drug can be manufactured and sold by other companies
At this point, the drug is referred to as a generic drug

As more and more generics enter the market, the price of the drug drops substantially
This erosion of sales causes a significant drop in revenue and few pharmaceutical companies
have enough late-stage pipelines and new drug launches to compensate for this
In addition, physicians are more likely to substitute patented, branded drugs with a cheaper
generic in the same therapeutic class, called therapeutic substitution.
The consequence of this is a deterioration in the growth of other drugs within that
therapeutic class

Proceeding from many patent expiries is the occurrence of mergers

Losing patent protection on a blockbuster drug has a heavy impact on the profit and growth
of the company
Merging with other companies in order to survive and compensate for loss in revenue due to
patent loss

Safety scares and high profile withdrawals of drugs have resulted in intense regulatory
scrutiny for new drugs seeking approval
As a result clinical trials are required to
o Have greater number of patients
o Longer observation periods
In order to assure tighter safety regulations and efficacy for newly developed drugs
This obviously has increased the required time and cost of each stage of clinical trials

Consequently over the years we have seen a fall in productivity

As you can see for the graph there has been an increase in total spending in research and
development (represented by the grey line )
But this has not always been accompanied by an increase in the number of new molecule
entities approved (represented by the blue line)
 Another important feature of the pharmaceutical industry today is that competition among
drugs is increasing
This means that the development of drugs that are seeking to treat the same medical
condition via the same chemical pathway is becoming more frequent
This gives less time for the innovator company to capitalise on the potential of their drug
before its first imitator is introduced on the market

With the exception of the United States, pharmaceutical prices in the developed world are
predominantly determined by government-controlled authorities
Governments are faced with growing budget deficits and high profitable pharmaceutical
companies are an easy target to impose cuts
Furthermore, organisations such as the National Institute For Health and Care Excellence in
the UK are performing cost-benefit assessments for high-priced pharmaceuticals before they
are considered for inclusion in the nations formularies

Summarise the various threats and pressures of the global pharmaceutical industry

In conclusion, the prospects of long-term growth for the pharmaceutical industry appear to
be the ageing demographics and the rise of the emerging markets.
However, with many patent losses in the next few years coupled with government controls
and pricing pressures, the industry is likely to see a slow revenue growth