Preparing For an Uncertain Future

Published on: 
BioPharm International, BioPharm International-04-01-2010, Volume 23, Issue 4
Pages: 40–45

Given today's challenges, traditional strategies were bound to change. Now, there is one more big threat (or opportunity?) on the horizon.

For anyone who likes to ponder the business of biopharmaceuticals, there has been plenty of news to chew on recently, as companies make moves that hint at important shifts in strategy.

Laura Bush

AstraZeneca (AZ), GlaxoSmithKline (GSK), and Pfizer all have announced significant cuts in drug discovery investment. Are they inching closer to becoming virtual companies? I exaggerate a bit, but many big firms have already embraced contract manufacturing, and one could argue that they have been outsourcing significant amounts of R&D for years, by buying individual drugs from start-ups and whole pipelines through acquisitions of large and medium-sized competitors. Will some of them outsource R&D completely, and focus on what Steven Burrill considers their core competencies: post-discovery drug development, and sales and marketing?


Meanwhile, many are buying or partnering with generics companies, particularly firms selling in emerging countries. Recent deals involve AZ in India, GSK in India and South Africa, Sanofi-Aventis in Brazil, Mexico, and the Czech Republic, and Pfizer's failed bid for Germany's Ratiopharm. Big Pharma ownership of generics units is not new, but these recent deals show a strong interest in diversification among product types and geography. Pharma traditionally has made its biggest profits in the US because of the lack of price controls here, but they may wish to reduce their reliance on North America and take advantage of new opportunities in emerging markets.

Given ongoing industry challenges and the evolving nature of the pharma business, traditional strategies were bound to change. But of course, there is one more big threat—and perhaps opportunity—on the horizon: US healthcare reform. Now that reform once again seems imminent, there are many questions to consider, such as:

  • How strongly will biologics manufacturers feel the effects of biosimilars? At what discount will biosimilars sell compared to the price of their reference products?

  • How will reform affect the way companies negotiate drug reimbursement and formulary coverage with government and private payors?

  • As US government spending on healthcare increases, will the need to reduce costs lead to even greater use of small-molecule generics?

  • Will we start to see more comparative effectiveness studies?

  • How will healthcare reform affect innovation, and the US role in the industry?

  • Will cost pressures lead to more outsourcing and offshoring of manufacturing?

Regular readers of this column know this topic fascinates me, but it's a complex issue and difficult to tackle. So when I began preparing the keynote event for the 2010 Interphex conference, I decided to bring in a panel of experts to share their views on what healthcare reform means for the industry: Matthew Hudes, US managing principal of Deloitte Consulting Life Sciences & Health Care Practice; John Engel, founding partner of Engel & Novitt, LLP; and Michael Mawby, VP of government affairs of Novo Nordisk. Chris Matthews of MSNBC will moderate the panel, which will ensure a lively discussion! For more information, please see

I invite you to join us in New York on April 20 for this keynote panel. As it turns out, the topic couldn't be more timely.