PharmTech: Looking ahead, how will the pharmaceutical company of 2020 be different from the pharmaceutical company of 2010? How would it be the same?

Carolyn Gauntlett, consultant, IMS Health: 2012 could mark the year when the first company, Teva Pharmaceutical, which neither originated in Europe or the United States or that is primarily a R&D-led organization, becomes a top-10 global pharmaceutical company. The grouping of top-10 global pharmaceutical companies that Teva joins is, itself, changing rapidly as innovative launches become fewer and yield less and  pharmaceutical companies are diversifying into other healthcare fields. Crucial questions are how companies are most likely to develop in the next 10 years and what the successful models to survive and thrive will be.

To understand the drivers that will shape the top-10 companies of the future, IMS finds that the innovative R&D model is under increasing pressure, with R&D costs rising for at best, no more, but more likely, fewer, new molecules, which in turn do less well in terms of overall sales and market share in the cost-constrained Western markets, which constitute most of the sales opportunity. We believe this inexorable pressure will not only cause the top-10 companies to continue to diversify out of their core of innovative prescription medicines, but it could also mean that within a decade, fewer very large companies will depend on full-line discovery to commercialization as their primary business. The listing of top-10 companies will still have companies fitting this bill, but the top-10 companies also will include organizations focusing only on the commercialization of products developed elsewhere. In addition, the top-10 companies will contain some companies with a primary focus not on innovation, but on the payer, and therefore will be an international player capable of delivering low-cost, high-volume solutions to major institutional buyers across the globe and across the spectrum of pharmaceutical, and maybe, more generally healthcare provisions from specialty to primary care. Innovative players also will become more payer-focused and be intimately involved in the production and interpretation of real-world evidence to develop the use of their protected products.

The innovative- and payer-focused company models already exist, but a third model also will develop, aided by the rise of patient power and new technology. A combination of consumer focus, direct communication with patients through social media, and the development of applications (i.e., apps) as genuinely useful, even vital, tools for patients and prescribers will allow companies to create a patient-led competitive space that has, to this point, not existed.

Lastly, all companies that aspire to enter or remain in the top-10 will have to grow the value contribution that emerging markets make to their global revenues. This strategy will be both from business models adapted to pharmerging markets’ voracious appetite for low-cost, high-volume generic products and by developing the market for high-value, patent-protected new agents. The BRICT countries (i.e, Brazil, Russia, India, China, and Turkey), which soon will drive more than 50% of the world’s value growth, will become viable drivers of innovation and value.