Internal and External Challenges to Pharma in 2019

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-01-02-2019, Volume 43, Issue 1
Pages: 10

Pricing pressures, investment volatility, and government disfunction greet Pharma in 2019.

Good news about a record-setting number of new drug approvals in 2018 was tempered by financial and political pressures external to the industry. Questions on Bio/Pharma’s 2019 agenda include pressure to lower drug prices and contain costs, and deal with a volatile investment market and contentious federal government.   

In an annual GlobalData outlook report (1), 51% of respondents said drug pricing and reimbursement constraints will have the greatest negative impact on the pharmaceutical industry in 2019. While some drug companies self-imposed price freezes in 2018-under pressure from the Trump Administration and Congress-many kicked off 2019 with price increases for more than 100 drugs averaging 6.3%.

Investment options

The investor market resembled a roller coaster in 2018, ending on a downward trend. The Vantage 2019 Preview report (2) said it was difficult to predict how much further the market may fall, and those interviewed for the report expected a more volatile year.

Companies looking for funding will have to work harder in 2019, but the report says financing options are not expected to dry up. While there is enthusiasm over new therapies, these products must prove commercial success to maintain investor interest in biologic products, the report said.

A Deloitte report (3) in mid-2018 said the majority of US companies were interested in investing in R&D, business operations, and capital projects, including some US operations, as a result of the corporate tax reforms of the Tax Cuts and Jobs Act enacted in December 2017. The bio/pharma executives surveyed said they were likely or very likely to invest in R&D (67%), capital projects (57%), general business operations (50%), share buybacks (50%), and M&A (42%). Lower priority investments were compensation/pension funding (40%) and hiring (40%).

Big deals


The 2016 presidential election and tax reform debate of 2017 put some mergers and acquisition activity on hold, according to the Deloitte report; however, deals picked up in the first half of 2018.

In three weeks spanning the end of 2018 and start of 2019, several large deals were reported. Pfizer and GlaxoSmithKline announced on Dec. 19, 2018 that the companies will merge their consumer healthcare products businesses and form a separate consumer-focused company. On Jan. 7, 2019, Eli Lilly announced an agreement to acquire Loxo Oncology for $8 billion. And, in one of the largest pharma acquisitions ever, Bristol-Myers Squibb announced on January 3 that it will acquire Celgene in a cash and stock transaction valued at $74 billion. 

Restructuring FDA?

While the pharma industry-and the rest of the nation-awaited a resolution to the partial government shutdown, a white paper (4) based on input from seven former FDA commissioners, recommended FDA be reconfigured as an independent federal agency. A new structure is needed, they argued, to promote science-based decisions, increase transparency, streamline processes for developing regulations and guidance documents, and allow for more responsive and predictable decision making.

The white paper stopped short of recommending a new model for agency operations but defined several major shortcomings of current operations. With federal government operations on hold over political squabbling, it was nice to see constructive efforts to address what ails the industry.


1. GlobalData, The State of the Biopharmaceutical Industry–2019, January 2019.
2. A. Brown, J. Gardner, and E. Elhmirst, Vantage 2019 Preview, December 2018.
3. D. Green, M. Zellars, and C. Chang, “Life Science Companies More Bullish on US Investment Post Tax Reform,” Deloitte Insights, 2018.
4.  The Aspen Institute, Seven Former FDA Commissioners Recommend: FDA Should be an Independent Federal Agency, White Paper, January 2018.

Article Details

Pharmaceutical Technology
Vol. 43, No. 1
January 2019
Page: 10


When referring to this article, please cite it as: R. Peters, “Internal and External Challenges to Pharma in 2019,"Pharmaceutical Technology 43 (12) 2019.