Pharma 2020 series: Pharmaceuticals & life sciences: Industries: PwC

Pharma 2020: from vision to decision

About the Pharma 2020 series

The Pharmaceutical industry's long successful strategy of placing big bets on a few molecules, promoting them heavily and turning them into blockbusters worked well for many years, but its R&D productivity has now plummeted and the environment’s changing. PwC believes that seven major trends are reshaping the marketplace:

Instances of chronic disease are increasing, placing even greater pressure on already stretched healthcare budgets

Healthcare policy-makers and payers are increasingly mandating what doctors can prescribe

A growing number of healthcare payers are measuring the pharmacoeconomic performance of different medicines. A widespread use of electronic medical records will give them the data they need to insist on outcomes-based pricing

Boundaries between different forms of healthcare are blurring, as clinical advances render previously fatal diseases chronic and the self-medication sector expands

Demand for medicines is growing more rapidly in the emerging economies than the industrialized economies

Governments are beginning to focus on prevention rather than treatment, although they have not yet invested very much in pre-emptive measures; and

Regulators are becoming more cautious about approving truly innovative medicines.

These trends will compound the challenges Pharma already faces, but they’ll also provide some major opportunities.

Industry challenges

Tomorrow’s challenge is to develop new medicines that can prevent or cure currently incurable diseases. Today’s challenge is to get to tomorrow – and that’s a tall order in itself.

Rising customer expectations: The commercial environment is getting harsher, as healthcare payers impose new cost constraints on healthcare providers and scrutinise the value medicines offer much more carefully. They want new therapies that are clinically and economically better than the existing alternatives, together with hard, real-world outcomes data to back any claims about a medicine’s superiority.

Poor scientific productivity: Pharma’s output has remained at a stable level for the past decade. Using the same discovering and developing processes, there’s little reason to think its productivity will suddenly soar.

Cultural sclerosis: The prevailing management culture, mental models and strategies on which the industry relies are the same ones it’s traditionally relied on, even though they’ve been eclipsed by new ways of doing business.

Market opportunities

What decisions should you make to successfully launch into 2020? In some respects, pharma’s never had it so good. The tools to develop remarkable new medicines are materialising, demand for its products is escalating and trade is getting easier. Collectively the mature markets generate 59% of the total revenues but they are becoming more difficult places where to prosper. They are demanding better outcomes as a precondition for paying for new medicines. Financial pressures have played a part in hardening healthcare payers’ policies. Crushing demographic and epidemiological factors have compounded these economic woes.