A variety of predictions are circulating the media about how the situation is affecting pharma and biotech companies. Some observers believe the current conditions have had a negative effect on companies,3 while others believe the opposite.4 It is impossible to predict the course of action for every company, but even considering the inevitability of generalizations, the background attitudes of companies are very relevant to anticipating company strategies in the future. In extreme conditions, few companies would dare to completely change their strategic approach to business; most are likely to hold firmer to their core strategies and move away from less mainstream projects.
The industry has always been characterized by large, pipeline-rich, companies with a conservative approach to drug development, and smaller, risk-taking players with limited portfolios. For most small companies, the problem is how to survive until the economy recovers; the Biotechnology Industry Organization has estimated that 180 listed biotech companies in the US have less than a year of cash at their current spending rates.5 As the US biotech sector is considered the world leader, this scenario does not bode well for similar companies in other countries.For ambitious companies, on the other hand, the current conditions may offer opportunities to prosper. In particular, many large pharmaceutical companies are expected to be on the look out for potential takeover targets that can be acquired cheaply.
Companies should stick to core strategy
The situation has also created doubts for pharmaceutical managers about where to best invest resources. Although the prices for new R&D technologies have dropped and many pharma companies are relatively cash-rich, there are never guarantees about which technology will add value to ongoing R&D projects or how they can be best incorporated. Also, it is not yet known when the global economy will recover or what impact recent events will have on healthcare policy and consumer attitudes in different countries. It makes financial sense for ambitious large companies to hold out for a bit longer until the economic situation has stabilized before embarking on any revolutionary approaches to drug development.