Current pharma model irrelevant

September 18, 2009
Stephanie Sutton

Stephanie Sutton was an assistant editor at Pharmaceutical Technology Europe.

Pharmaceutical Technology Europe PTE

The current pharmaceutical model is in danger of becoming "irrelevant in the context of 21st century's global healthcare needs", according to a white paper published by global management consultancy firm A.T. Kearney.

The current pharmaceutical model is in danger of becoming "irrelevant in the context of 21st century's global healthcare needs", according to a white paper published by global management consultancy firm A.T. Kearney. The paper points to three 'tipping points' for the industry.

The first tipping point is the move from therapies to service models. "What would be compelling for payers is a service model that enables therapies to be administered with high compliance and can be proven to result in fewer admissions," said a statement from A.T. Kearney. "It would be even more compelling if this could be demonstrated in the payer's specific care system and target population. Positioning a therapy in this context dramatically increases its value."

The move to global mass markets rather than rich niches represents the second tipping point. Currently, the US dominates the pharma industry, but the white paper believes this market is failing. Additionally, there is interest in developing countries such as India and China. These countries are also experiencing an increase in diseases that are common in developed countries.

"Most countries will develop some form of comprehensively funded healthcare system as soon as they can afford to do so," said the A.T. Kearney statement. "This scenario offers enticing, but challenging opportunities for the global pharmaceutical industry. Emerging state-funded systems will need to develop cost-effective solutions to Western-style health problems, but they will not be prepared to pay Western-style prices."

The third tipping point is the fact that the "traditional model of a globally integrated pharmaceutical industry will struggle to survive" because it is too large to connect with the necessary parties in the markets it aims to serve. There is already a trend to specialize in specific therapy areas, and A.T. Kearney expects this to continue, although it may be challenging for companies to decide on which particular therapy area they should focus on.

The consultancy firm believes that what will emerge after these tipping points is a very different form for the pharma industry.

www.atkearney.com

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