Troublesome Signs for Bio/Pharmaceutical R&D - Pharmaceutical Technology

Latest Issue
PharmTech

Latest Issue
PharmTech Europe

Troublesome Signs for Bio/Pharmaceutical R&D
A dearth of late-stage candidates could hurt the pharmaceutical services market in the future.


Pharmaceutical Technology
pp. 52-54

Implications

The global financial outlook is not likely to improve in the foreseeable future. The outlook in Europe remains highly uncertain, with further cuts in government expenditures likely and the survival of the euro zone at risk. Deep budget cuts are coming in the United States, where the aging population and the need to cut budget deficits will put severe pressure on Medicare, the large government-sponsored healthcare program.

These macro environmental challenges and uncertainties compound the bio/pharmaceutical industry's internal challenges, most notably the decline in revenues resulting from patent expiries. Under these circumstances, the outlook for bio/pharmaceutical R&D spending would seem to indicate little or no growth in coming years.

The difficult R&D environment will have a mixed impact on the bio/pharmaceutical services industry. Bio/pharmaceutical company efforts to control R&D costs have helped the contract-services industry, and the penetration of outsourcing is likely to grow, especially in the nonclinical-development segment. However, those benefits will not be equally shared among all industry participants. Thanks largely to the efforts of the global bio/pharmaceutical companies to reduce the number of vendors they work with, a select number of preferred providers is benefiting disproportionately from the outsourcing trend. The clinical-development services segment has already consolidated into a handful of major CROs with large market shares, and we are seeing evidence of a similar consolidation in the nonclinical-development segment although the pace is slower. CROs and CDMOs that don't achieve preferred-provider status will be left to fight over limited opportunities among small- and mid-size bio/pharmaceutical companies.

The pharmaceutical services industry has traditionally risen and fallen with the R&D spending tide. When the tide has been high, most of the companies in the industry have prospered, but when the tide has gone out, all the participants have suffered more or less equally. If we are going into another period of industry weakness, the pain is not so likely to be shared this time around.

Jim Miller is president of PharmSource Information Services, Inc., and publisher of Bio/Pharmaceutical Outsourcing Report, tel. 703.383.4903, fax 703.383.4905,
, http://www.pharmsource.com/.

Reference

1. J. Whalen, "Europe's Smaller Drug Firms Feeling Pain," Wall Street Journal, Oct. 28, 2011.


ADVERTISEMENT

blog comments powered by Disqus
LCGC E-mail Newsletters

Subscribe: Click to learn more about the newsletter
| Weekly
| Monthly
|Monthly
| Weekly

Survey
FDASIA was signed into law two years ago. Where has the most progress been made in implementation?
Reducing drug shortages
Breakthrough designations
Protecting the supply chain
Expedited reviews of drug submissions
More stakeholder involvement
Reducing drug shortages
70%
Breakthrough designations
4%
Protecting the supply chain
17%
Expedited reviews of drug submissions
2%
More stakeholder involvement
7%
View Results
Eric Langerr Outsourcing Outlook Eric LangerRelationship-building at Top of Mind for Clients
Cynthia Challener, PhD Ingredients Insider Cynthia ChallenerRisk Reduction Top Driver for Biopharmaceutical Raw Material Development
Jill Wechsler Regulatory Watch Jill Wechsler Changes and Challenges for Generic Drugs
Faiz Kermaini Industry Insider Faiz KermainiNo Signs of a Slowdown in Mergers
CMOs and the Track-and-Trace Race: Are You Engaged Yet?
Ebola Outbreak Raises Ethical Issues
Better Comms Means a Fitter Future for Pharma, Part 2: Realizing the Benefits of Unified Communications
Better Comms Means a Fitter Future for Pharma, Part 1: Challenges and Changes
Sandoz Wins Biosimilar Filing Race
Source: Pharmaceutical Technology,
Click here