Rises in healthcare costs and small molecule genericisation, developments in specialty care models, and new priorities around innovation and buisness model sustainability are all posing critical questions for pharmaceutical companys - emerging models and historical players alike. Can innovative players still succeed in this market? What does their future business model look like? How can today's Top 10 companies fight back, while maintaining a strong balance sheet and relevant portfolio. Do protected, product development-focused, research-based business models have a future? What new business models are poised to enter the Top 10 in the next 10 years?

1. The changing face of the
top 10 pharmaceutical companies
The beginning of the end for
innovative dominance
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So far, even with all of the tumultuous change in the pharmaceutical market
as austerity bites and we ride peak small molecule genericisation, the names
of the pharmaceutical companies at the top of the tree have been remarkably
stable. However, under this apparent consistency is a plethora of activity that
is changing the nature of major pharmaceutical companies – but is it enough?
A CHANGING ENVIRONMENT: THE PHARMA RESPONSE
The pharmaceutical environment of today differs considerably to that of only a decade
ago. Key events shaping the market have been:
* Rising healthcare costs leading to inevitable payer pressure in the pharmaceutical
market, which coupled with the ongoing financial crisis has tipped the emphasis
from slowing pharma spend growth to actually cutting pharma spend in many
mature markets
* Significant number of small molecule genericisation events in the primary care
market, leading to the demise of many blockbusters: 12 out of the world’s leading
20 blockbuster products are small molecules which either have or will lose their
protection by 2016.1 The remaining 8 products are all biologics, which even if they
lose patent protection will probably maintain much of their sales at least for the
next 5 years
* The rise of specialty care, and as a subset of this, biologics, which combined with
the previous trend, means the companies thriving in this new environment are
more dependent on specialty care than primary care
* A flattening off in the true number of blockbusters with fewer launches achieving
blockbuster status
Pharma has attempted to diversify over the last decade to compensate for many of the
above events, shying away from pure innovation and moving into areas such as
diagnostics and devices, generics and consumer health, to broaden their portfolios and
strengthen their balance sheets in the run up to Loss of Exclusivity (LoE) of key
blockbusters. There has also been a whole series of mega mergers and acquisitions
over this decade (Sanofi-Aventis, Bayer-Schering, Pfizer-Wyeth, Roche-Genentech,
Merck-Schering-Plough), leading to consolidation amongst the largest players.
Yet despite this continuous deal making and apparent consolidation, the
pharmaceutical industry remains remarkably fragmented. In comparison to the
automotive industry which sees the Top 10 players account for 80% of global
production,2 or the mobile phone market which sees the Top 10 players account for
66% global production,3 the Top 10 pharmaceutical companies have never managed to
break the 50% market share threshold - their grip on the global pharma market has
remained remarkably static over time, consistently around the 40% mark.4
This consistent global market share is equally true of the patent protected market,
often thought of as the stronghold of big pharma. Although the Top 10 were
disproportionately affected by the patent cliff (many attained their Top 10 ranking as a
result of blockbusters which have been the source of the largest losses in the protected
IMS HEALTH | THE CHANGING FACE OF THE TOP 10 PHARMACEUTICAL COMPANIES
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market), the amount spent on four "mega mergers" in 2009-2010 alone equated to
$200bn and despite this outlay, the Top 10 have only managed to retain share of the
protected market, rather than increase share (figure 1). This thwarted consolidation
goes hand in hand with another key event for the Top 10 in 2012: The arrival of Teva
into the elite Top 10. Replacing Lilly as a Top 10 player, this makes Teva the first
non-US or European based pharmaco, and the first pharmaco that did not start as a
traditional R&D based company, to enter the Top 10 (figure 2). Teva therefore
changes the face of the Top 10 pharmacos forever. Prior to Teva’s entry it was a given
that all Top 10 companies 1) originated in the mature markets of US or Europe and 2)
were primarily R&D driven – ie most of their sales came from protected products.
Teva originates from Israel and has been primarily dependent upon unprotected
products, although its protected portfolio is a key driver of profit and now accounts for
40% revenue.
FIGURE 1:
PROTECTED REVENUE OF TOP 10 FIRMS VS PROTECTED PHARMA MARKET*
350
330.5
169.5
172.8
Top 10 Players
156.6
157.7
Remaining Market
2007
Protected Market Sales, US$Bn
326.1
2012
52%
52%
300
250
200
150
100
50
0
Top 10 Share of
Protected Market
*2007 Top 10 includes Lilly; 2012
top 10 sees Lilly replaced by Teva
Source: IMS Health MIDAS September 2012, Market Segmentation, Rx bound.
FIGURE 2:
TOP 10 CORPORATIONS RANKINGS BASED ON SALES AT EX-MANF LEVELS, US$
TOP 10 CORPS 2002
TOP 10 CORPS 2007
TOP 10 CORPS 2012
1
1
Pfizer
1
Novartis
2
FOOTNOTE:
As of 1st Jan 2013
Abbott’s split is
complete and neither
AbbVie or Abbott are
forecast to be Top 10
players. We predict
that Teva will rise to
#9 and Lilly re-enter
at #10 when sales
data are compiled
later this year. Sales
include selected OTC
values.
Pfizer
GlaxoSmithKline
2
GlaxoSmithKline
2
Pfizer
3
Merck & Co
3
Novartis
3
Merck & Co
4
Johnson & Johnson
4
Sanofi-Aventis
4
Sanofi
5
AstraZeneca
5
AstraZeneca
5
Roche
6
Novartis
6
Johnson & Johnson
6
AstraZeneca
7
Aventis
7
Roche
7
GlaxoSmithKline
8
Bristol-Myers Squibb
8
Merck & Co
8
Johnson & Johnson
9
Roche
9
Abbott
9
Abbott
10
Pharmacia
Disappeared through M&A
10
Lilly
10
Teva
Entry into Top 10
Source: IMS World Review, IMS Health MIDAS, June 2012. 2002 and 2007 are year end results whereas 2012 is MAT 09 2012.
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THE RI SE OF GENERI CS AND I NCREASED DI VERSI FI CATI ON
The last couple of years have seen the peak of small molecule genericisation events
with the loss of exclusivity (LoE) of blockbusters such as Lipitor, Diovan, and Plavix.
For the period 2011-2016 alone, almost $180bn sales (based on sales in 2011) are at
risk from LoE events, with the biggest losses expected to have occurred in 2012.
This LoE boom has naturally led to an increasing abundance of high-profile generics,
at a time when austerity measures in mature markets such as Japan and Europe have
led to an increased push for generics usage over off-patent brands, and even the
introduction of INN prescribing in some countries. Add to this that in the high growth
emerging markets where pharma companies are desperately looking for golden
opportunities, typically >50% market value is derived from generic products, it is
therefore of little surprise that generics are seen as an increasingly important part of
many pharmaco’s portfolio (figure 3).
FI GURE 3:
TOP 10 CORPORATI ONS BASED ON SALES AT EX-MANF LEVELS US$
TOP 10 CORPS 2012
1
Novartis
I ncludes Sandoz sales: The number 2 generics player globally, accounting
for 16% of the Novartis group revenue in 2011. Strong biosimilars play.
2
Pfizer
Entering biosimilars (development phase) in addition to generics play.
3
Merck & Co
Entering biosimilars (development phase).
4
Sanofi
5
Roche
I ncludes generics sales: Generics accounted for 5% overall group sales
in 2011. Recently announced plans to develop biosimilar insulins.
6
AstraZeneca
Generics play will be emerging markets focussed.
7
GlaxoSmithKline
Generics play will be emerging markets focussed.
8
Johnson & Johnson
9
Abbott
10
I ncludes generics sales: “Established Pharmaceuticals” will account for
25% sales of the “new Abbott”.
Teva
Still strong focus in generics and biosimilars: The most international
generics player.*
Source: I MS MI DAS Sept 2012. *Based on being a Top 5 generics players in multiple regions globally.
FI GURE 4:
BUSI NESS AREA MATRI X 2002-2012
Company
Pfizer
Pharma
( SM)
Animal
Health
Vaccines
Biologics
Bio-similars Consumer
Health
Devices
Diagnostics
Generics
Nutrition
I PO Jan 2013
Novartis
Sanofi
Announced
2013
Merck
Alliance
AZ
GSK
Roche
J&J
Abbott
Teva
Company active in 2002 and 2012
Company entered since 2002
Source: Annual Reports, I MS Company Profiles, Press Releases.
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PHARMACEUTI CAL COMPANI ES
Company exited since 2002
No presence

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The generics business continues to remain the core of Teva’s model with over 50% of
its revenue derived from this despite diversification into innovative pharmaceuticals,
and more recently consumer health. With cost containment policies in mature
markets and the generic dominance of emerging markets, the generics market is
forecast to continue to see strong growth and if Teva can keep pace would certainly
seem sufficient to see Teva continue to work its way higher up the Top 10 rankings
and imply that a generics-lead heritage is no barrier to playing at the highest level.
Teva is one of the most international generics players, holding a Top 5 ranking across
many countries. However in contrast to the protected, innovative pharmaceutical
market, the generics market globally is much more fragmented with very few truly
international generics players. But large pharma and large generics corps have the
advantage of being able to travel the “value-add” route: As the small molecule patent cliff
starts to drop off and the focus switches to biologicals LoE, large pharma are at an
advantage across all regions. Development of biosimilars is both exceedingly costly and
time consuming relative to the development of small molecule generics. As a result
players have to be in the biosimilars game for the long haul and many smaller generics
companies simply cannot afford the investment. Big pharma and the truly international
generics players such as Teva and Sandoz have seized the moment investing heavily in
this space in recent years, with the hope of high returns.
The rise in importance of generics is just one example of an alternative to the small
molecule protected business that is attractive to pharma. As demonstrated in figure 4
there is today a wider range of mainstream business models in the pharmaceutical
industry than ever before (generics, devices, diagnostics, consumer health). It used to
be very clear that the protected small molecule segment of the industry was more
attractive than other business areas, being larger, growing faster, and returning higher
profit margins than anything else. This is no longer the case.
Generics are growing much faster than the protected sector and are a much larger slice
of the pharmaceutical market than ever before; consumer medicine also is growing
faster than protected pharma. Payer pressure on protected medicines, together with
smaller patient populations, larger and longer clinical trial requirements and slower
uptake means that protected medicines are not as profitable as previously, reducing
the gap between the profitability of protected medicines and other areas of pharma
(although a gap still exists). A combination of growth moving to other pharmaceutical
sectors, significant increases in the size of other sectors, and a smaller gap between the
profitability of the different sectors means that there is now a greater range of
potential business models that big pharma might consider to drive future revenue.
There is today a wider range of mainstream business models in the
pharmaceutical industry than ever before, covering generics, biosimilars,
devices, diagnostics, consumer health and animal health.
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WHAT DOES THI S MEAN FOR I NNOVATI ON?
So what does this mean for innovation? Can innovative players still succeed, and in
the cost-constrained environment of today will payers still reward innovation?
Only four products launched globally since 2009 have passed the $1bn threshold
traditionally used to define the “blockbuster”. These are Victoza (launched 2009),
Gilenya and Prolia (launched 2010), and Incivek (launched 2011).5 Only one of these
four blockbuster successes is the product of development of a Top 10 pharmaco
(Novartis’s Gilenya). Furthermore these products demonstrate the shift towards
specialty care that is being seen in today’s pharmaceutical market. Aside from vaccines,
IMS predicts the only remaining fast growing area of primary care is diabetes, where
significant unmet need still exists and where payers are willing to reward innovation in
the hope of lessening long-term care costs by failing to act soon enough (figure 5).
FI GURE 5:
FORECAST LEADI NG THERAPY CLASSES I N 2016
20
Global CAGR
2012-2016:3-6%
Speciality
18
Autoimmune
Traditional
16
MS
Spending CAGR 2007-2011
14
Antidiabetics
12
Angiotensin I I
10
8
Asthma/ COPD
I mmunostimulants
Contraceptives
Narcotic Analgesics
Platelet Aggr
I nhib
4
Vaccines
Oncologics
Antipsychotics
6
Global CAGR
2007-2011: 6.0%
Antivirals
excl HI V
Cephalosporins
2
Lipid Regs
0
Anti-Epileptics
Anti-Ulcerants
-2
-4
-10
I mmunostimulants
HI V
Antivirals
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15
Source: I MS I nstitute for Healthcare I nformatics; April 2012.
The shift towards specialty care has in many ways acted to level the playing field
between mid-size pharma and large-pharma, since in so many specialty therapy areas
patients are being segmented into smaller, more targeted, populations. This is most
notable when looking at the fastest growing players in the innovative space over the
last decade. Restricting the market to non-generics and current Top 50 players,
we looked at how many places pharmacos had moved up the rankings over the last
decade (figure 6 overleaf).
Vertex, who are the makers of Incivek (noted above as one of only four blockbusters to
have launched since 2009), has come from nowhere to enter the pharma Top 50 off the
back of just that one product – a product that is on track to be one of the most successful
launches in contemporary history. Incivek is for the treatment of Hepatitis C, a therapy
area renowned for its continuing unmet need and market potential. But what makes the
success of Incivek even more impressive is that it launched only 10 days apart from
Victrelis, Merck and Co’s product for the same disease genotype. Here we see a small
biotech with a first launch, taking on the might of big pharma and coming out on top, in
what could be described as a “David vs Goliath” type battle.
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FI GURE 6:
2002-2012: TOP 10 FASTEST GROWI NG CORPS BY NON-GENERI C REVENUE TO BECOME PART OF
GLOBAL TOP 50*
FASTEST GROWI NG 2002-2012
1
RANK I N 2002
RANK I N 2012
JUMP I N RANKI NGS
-
42
n/ a
Vertex
2
Actelion
322
50
272
3
Reckitt Benckiser
156
43
113
4
Celgene
103
31
72
5
Gilead
59
16
43
6
Endo HS
61
37
24
7
Shire
42
24
18
8
Otsuka
31
18
13
9
Allergan
39
32
7
Roche
10
4
6
10
Source: I MS Health MI DAS MAT, Sept 2012. Market Segmentation.
*Rx and Non Generics only. Methodology – Highest movement in rankings in 10 years to be part of 2012 top 50 companies by revenue.
Vertex engaged prescribers and patients in a strong disease awareness campaign
throughout the development cycle and instead of relying on a large conventional sales
force, Vertex focused on MSLs, HCP education, and patient communities. In this way
Vertex managed to overcome the inevitably larger promotional budget that Merck had
at their disposal (figure 7). Outside of the US, J&J are marketing the product as Incivo.
MI D-SI ZE VS LARGE PHARMA: VERTEX VS MERCK & CO, US MARKET
Apr-12
May-12
Mar-12
Feb-12
Jan-12
Dec-11
$600
Oct-11
$800
Nov-11
$1,100
Sep-11
Millions
$1,200
Jul-11
$1,400
NBRx Volume
Aug-11
1,400
1,200
1,000
800
600
400
200
0
Jun-11
Cumulative Sales
$1,600
May-11
FI GURE 7:
10,000
$400
8,000
$200
6,000
I ncivek
Apr-12
May-12
Feb-12
Mar-12
Jan-12
Dec-11
Oct-11
Nov-11
Sep-11
Jul-11
Aug-11
Jun-11
May-11
$0
Victrelis
Source: I MS Sales & Prescription Data, US data only.
NBRx are new to brand prescriptions, TRx are total prescriptions.
4,000
2,000
0
TRx Volume
I ncivek TRx
Victrelis TRx
In addition to Vertex, within the fastest growing Top 10 we also see companies such as
Actelion, Celgene, Gilead, Shire. These are companies which have remained committed
to a particular specialist-led therapy area, be it CV, Oncology, HIV, ADHD. Specialty
pharma has seen strong growth rates over the last decade and this is true of the areas in
which these companies play. But not only has the therapy area seen strong growth,
each of these companies has out-performed its market as a whole. For example the
“other cardiovasculars” market into which PAH is classified, has seen a 32% CAGR
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PHARMACEUTI CAL COMPANI ES

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from 2002-2012, yet Actelion has experienced a 60% CAGR. HIV has seen a 12% CAGR,
yet Gilead grew at 40% over the last decade. Any diversification has been limited and
complementary. Gilead has made a play in the HCV space, and indeed is widely forecast to
become a dominant player in that field too, but HCV is still an anti-viral treatment so they
are staying within their area of expertise. For those who remain unconvinced that smaller
companies cannot take on the might of big pharma despite the very recent Vertex vs
Merck example, remember that when Gilead entered the HIV antivirals market, GSK and
BMS between them held a 75% market share – a distant cry to Gilead’s dominance today.
So how can the Top 10 pharma companies fight back in this innovative space? The
reduction in the productivity of R&D, both with respect to the number of NCEs and
their yield in terms of early sales, peak sales and overall lifetime sales, at the same
time as R&D costs have continued to rise, mean that large pharma need to adapt a
radical rather than an incremental approach to innovation (figure 8).
FI GURE 8:
FORMULA FOR SUCCESSFUL I NNOVATI ON
1. Identif y areas
to play
=
Diversif ication f rom key TA
expertise is complementar y
& f ocussed like f astest
growing
+
Innovation is f ocussed in high
retur n therapy areas
2. R & D
=
R&D process is designed
cost-ef fectively to allow
balanced emerging/ mature
NCE sales by enabling volume
play
+
R&D process is shared and
de-r isked through
partnerships and alliances
3. Identif y
un-met need
=
Identif iable patient
population f or whom
t reatment will wor k
+
Payers agree with targeted
unmet need
+
Appropr iate outcomes
data collected and f ir m
plan f or RW E
We believe that the imperatives of an innovative model are as follows:
1. Focus
There is an increasing difference of opinion as to what “innovation” means to key
stakeholders. Unmet need still exists, but profitable unmet need is now focused on
fewer areas, being much more dependent on what payers will consider as true unmet
need and what they consider to be adequately satisfied with low cost generics. This
“payer unmet need” is a subset of all clinical unmet need. What we see from the fastest
growing innovative companies is a focus on specialty medicine in areas of high unmet
need, strong relationships with both payers and patients, with limited diversification
from these core areas of expertise.
2. Nimble and flexible
The days of being driven for a decade or more by a single blockbuster product are
over. As demonstrated above only four products launched in the last three years have
reached blockbuster status, and blockbusters will be fewer and further between going
forward. Companies need to adapt to smaller patient populations and be able to move
quickly to advance discoveries in a minimal timeframe at lower costs to compensate
for potentially lower overall revenues from individual products. They also need to be
able to successfully launch a larger number of products in a shorter time-frame,
something that even Top 10 companies have, historically, found challenging.
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3. Partnerships
R&D will continue to be hugely expensive and risky, and being more focused and
nimble means companies cannot do everything. Partnerships allow companies to be
more flexible. Partnerships are not a new concept in pharma, although they have
typically been most prolific in specialty medicine as we see big pharma partnering
with small-mid size pharma to finalise development and commercialization. Going
forward, as fewer companies invest in primary care due to the ongoing small molecule
genericisation, we feel that significant developments in this arena will only come
about through partnerships to lessen risk. Even in diabetes, the fastest growing area of
primary care, partnerships are becoming a dominant force as Lilly/BI and BMS/AZ
work together to try and win in the market.
4. Expanding geographic footprint
At present although growth in mature markets is essentially flat vs the high growth
emerging markets, over 80% of NCE sales come from the mature eight markets. The
top 20 original brands in emerging markets are all older products, the majority of
which had a first launch 11-20 years ago. Getting the price-volume balance right in
these emerging markets is essential to success for big pharma - they have to be able to
make innovation pay in pharmerging markets because it is under such pressure in the
large developed markets.
To be able to refocus on innovation and succeed in this new environment, large
pharma needs to emulate the focus and entrepreneurial environment of the fastest
growing companies. By splitting its business into proprietary pharmaceuticals and
“everything else” Abbott has gone down this path. Pfizer’s share price hit a high in
2012 when Goldman Sachs sparked rumour of a break-up back into core pharma and
other pieces, away from the diversified behemoth of present. In addition in the Jan
2013 call to investors, Ian Read mentioned again the possibility of a break up. We
believe that the innovative requirements of the future means that going forward there
will be fewer large pharma companies that are “true nuts and bolts” R&D firms than
today, and that as a result there will be fewer truly innovative firms in the Top 10
pharma rankings in the future.
There is of course, an additional hurdle for successful pharma players to overcome; it’s no longer just
about the payer and physician. On a global basis we see health insurance schemes, and government
schemes, trying to push responsibility for healthcare onto the patient. This is not only in the form of
prevention (weight loss, smoking cessation, healthy living) but also in the form of adherence. In
Germany for example, there are incentives/bonuses in the private insurance schemes for adhering to
treatment plans, participation in special care plans etc. This actually provides pharma with a great
opportunity to increase adherence to medication and improve outcomes measures. Pharma therefore
has opportunities to both educate and engage with the patient. This leads quite naturally into the realm
of digital devices and social media. Large pharma has developed a range of tools here including apps for
iPhone/iPad which act as “diaries” or “tracking alerts” reminding patients to take their medication and
track their progress. There are also initiatives such as games for younger patients where they are
rewarded with points for good adherence. Pharma could undoubtedly go much further with this.
Looking at consumer centric companies such as Amazon could teach pharma the principles of a “one
stop shop” offering. Amazon offers an integrated platform to purchase multiple goods/services and
customized advertising based on the consumer’s profile and previous purchases. Could pharma emulate
this service-oriented patient centric approach?
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THE FUTURE OF THE TOP 10
Big pharma unsurprisingly view today’s pharmaceutical market environment as highly
challenging, which it is. But how much is the perception of an adverse environment a
product of reliance on a single model of focus on R&D, on protected products, and on
the mature markets? IMS believes that today’s prescription medicine environment is
the most diverse ever in terms of geography, stakeholders, product offering
opportunities, pricing/value choices and commercial model options that the industry
has ever experienced, giving the big players in the prescription medicines industry
more opportunities and options than they have ever had before to become or to
remain a Top 10 player.
We believe Teva is just the first of a number of players who will be in the Top 10 with a
substantially different model to the traditional Top 10 player. We believe that going
forward the top of the pharmaceutical industry will see more focussed, nimble,
innovation led players, but, unlike today, that will not be the only model. There will also
be payer focused (low cost) players and even consumer led players. There will be a
starker choice between size and growth, and profitability, than there has been and many
of the current Top 10 pharmaco’s will be smaller than they were in the 1990s and 2000s.
1. The dominance of the protected product dependent, research based model in the Top
10 will be broken over the next 5-10 years.
It will no longer be the case that 100% of the world’s largest prescription medicines
companies are described as R&D led and mature market dependent. We say this since
not only has Teva already entered the Top 10 and Sandoz contributes so much to
Novartis sales, but also because Andrew Witty has talked about GSK moving away
from “white pills and western markets”6
2. There will still be innovation focused companies, and they may even be the majority of
the Top 10 companies, but these innovation led companies will be very different to the
traditional model.
Instead of being small molecule, primary care focused, addressing large patient
populations and largely competing with each other, they will become largely specialty
driven, with a portfolio which includes biologics, focussing on smaller patient
populations, and competing on a much more level playing field with the small to
medium sized companies that have been the success story in terms of growth and
launches over the last few years.
3. The innovation focused companies will still be big, but absolute size in the protected
prescription market will fall.
This will be because more new protected agents will be for smaller patient populations
(whether biomarker or payer defined). The logical response of companies wishing to
follow the innovative route and maintain size is to launch a larger number of smaller
products, and to launch them successfully in a wider group of countries, including
emerging markets. That in itself brings challenges – companies have historically not
been good at consistently rolling out large numbers of excellent launches in a shorter
timeframe, even if their R&D manages to develop large numbers of quality NCEs.
Some companies, inevitably, will fail to rise to this challenge. They will see the
innovative portion of their sales reduce considerably and will be reliant on nonprotected prescription businesses (even non prescription businesses) going forward.
4. The non-innovation led companies in the Top 10 will undoubtedly include one or more
companies for whom the unprotected segment is of great importance.
Teva is the first; it may not be the only one. Companies with this model can still have
an innovative sector (Teva does) but it won’t be the only driver of the company’s
growth and sales. These companies, to succeed, will be internationalising the
unprotected business, which historically has been much more fragmented than the
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protected prescription business. They will succeed not only through breadth of
geographic expansion but also by their innovativeness in offering a value portfolio –
including “supergenerics”, biosimilars and other value adds to protect against the
lowest cost generic competition and also to raise margins. The new Abbott will derive
about 25% of its sales from branded generics, with ~50% of those sales coming from
emerging markets.7 This is a great example of what was a largely innovative company
focussing on growing their back catalogue and acquired generic businesses in
emerging markets – which is the ideal environment.
5. It is also possible in the next five to ten years that completely new business models start
to emerge and are successful enough to maintain or drive companies into the Top 10.
We noted above the rise of the patient as a stakeholder with a voice and an opinion in
healthcare. All prescription medicine players, whether protected or unprotected, have
to take note of this and respond. But just as there is an opportunity for companies
whose primary focus is the prescriber (the innovative protected companies) and the
payer (the unprotected prescription companies), perhaps there is also a role for a
company that has as its focus the patient/consumer. Since a primary focus here
would be a new entrant it is not yet clear exactly what the core of this model might be
– it could be from OTC consumer medicines, or potentially from “lifestyle”
prescription products paid for out of pocket. It could even be from the very recent but
burgeoning area of medical apps (which can even be prescribable), or a combination
of all these three, so long as the company in question is state of the art in their ability
to understand and communicate with the consumer.
What is clear is that the Top 10 of the next 5-10 years will have diversity of business
model, primary customer and geography as key features. Completely new approaches
have a better chance of succeeding in this new environment than was ever the case
before. We also believe that the Top 10 will hold an even smaller share of the
pharmaceutical market going forwards, and become even more fragmented than at
present. One has to hypothesize that if the Top 10 didn’t manage to break the 50%
market share threshold in the era of $bn blockbusters, they are unlikely to achieve
this in the lower revenue era of the future.
The pharmaceutical industry has historically been highly conservative, and that default
mode is not going to be an asset in the next few years – out of the box thinking and a
willingness to discard many of the fondly held beliefs of the past will be the crucial asset.
REFERENCES:
1
IMS Blockbusters White Paper
2
Zacks Equity Research Auto Industry Outlook and Review
- October 2012, http://www.zacks.com/stock/news/84881/autoindustry-outlook-and-review-october-2012
3
Gartner News Room Aug 2012: Worldwide sales of mobile phones,
http://www.gartner.com/newsroom/id/2120015
4
IMS MIDAS September 2012, IMS World Review
IMS MIDAS September 2012
The Telegraph and other press articles, 2009/2010,
http://www.telegraph.co.uk/finance/newsbysector/pharmaceutical
sandchemicals/7158658/GSK-seeks-to-abandon-white-pill-andWestern-markets-strategy.html
7
Abbott Presentation to JP Morgan Health Conference Jan 2012
5
6
AUTHORS:
Carolyn Gauntlett, Senior Consultant, Thought Leadership, CGauntlett@ uk.imshealth.com
Sarah Rickwood, Director Thought Leadership, SRickwood@ uk.imshealth.com
info@ imshealth.com
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