Michael Brueckner
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For years, a glut of successful, well-recognized biopharmaceutical products generated extremely high profits for the industry.
The patents for these products and others have expired or are set to expire in the near future. In addition, research and
development (R&D) productivity has long been falling, and the industry has little prospect of replacing these blockbusters
while healthcare is likely to reform further squeeze margins and drive a shift to outcome-based pricing.
David Sheehy
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As a result, the enterprise value of biopharmaceutical companies as a whole has been stagnant. Evidence from Accenture's High
Performance Business research, conducted between 2007 and 2009, suggests that the investment community has become disenchanted
with the biopharmaceutical industry altogether and is looking at other industries with expected high growth for future investment.
This powerful mix of forces has significantly impacted the biopharmaceutical industry's ability to drive shareholder value
growth, and the forces are game-changing.
A NEW PLAYING FIELD
Scale and diversified portfolios no longer guarantee success for the biopharmaceutical industry. Biopharmaceutial companies
need to be bold and decisive to prove their future worth to a skeptical market. According to Accenture's research, which involved
analzying the 16 largest pure-play biopharmaceutical companies (i.e., those with more than 75% of their revenue derived from
pharmaceutical products) globally, biopharmaceutical companies must focus on what differentiates them in the marketplace and
build expertise in these carefully selected areas. Through years of research, Accenture has learned that high performance
is definable, quantifiable, and achievable. High performers effectively balance current needs and future opportunities. They
consistently outperform peers in revenue growth, profitability, and total return to shareholders. In addition, they sustain
superiority across time, business cycles, industry disruptions and changes in leadership.
Market focus and position
Specifically, large companies need to focus, invest, and divest to create the focused biopharmaceutical company of the future.
This strategy includes having the following: a clear focus on the business and its strengths; discipline to sell off any
pieces of the business that do not line up with the company's strategic focus; and the ability to selectively acquire, partner,
and form alliances with the companies that may bolster the business's dominance in its competitive field.
Distinctive capabilities
Driving focus and coherence through the entire value chain—from R&D to commercial, licensing, regulatory, and medical affairs—is
crucial for any business that wants to meet the challenges of today's market realities. Product life-cycle plans from a business
perspective should incorporate:
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Superior deal making: The ability to quickly identify, acquire, and assimilate new companies, as well as to quickly divest where necessary.
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A sophisticated approach to global expansion: A move to a mode of assessing different markets, balancing opportunities, and readying the organization to mobilize rapidly
for opportunities that clearly fit within a company's focus area.
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Next-generation customer centricity: Build on technology that enables customers to seek out information on provider, payer, physician, and patient needs and behaviors
to better manage and build those critical relationships.
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Pervasive, insight-driven decision-making: A robust and pervasive analytics capability will enable the high-performing biopharmaceutical companies of the future to make
better decisions and to collectively create and deliver the outcomes their customers want.
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Transformation and integration of disparate functional areas: R&D, sales and marketing, managed markets, supply chain, medical affairs, regulatory and compliance should be aligned far
more closely and the management of the risk/benefit profile of a company's portfolio will be much more deliberate and fact-based.
