New rules for a changing game: sweeping industry changes ahead
The Beyond Borders report examines three key trends that are transforming business models and the nature of competition for biotechnology and pharmaceutical companies.
Reinventing big pharma: As they face unprecedented patent expirations, pharma companies are trying to boost earnings by cutting costs and making deals. But the report points out that these approaches can only buy so much time -- longer term, pharma companies need to fundamentally reinvent their structures and incentives to improve the productivity of their innovation efforts. For biotech firms, the opportunity is to work collaboratively with big pharma, using creative business models that give them increased flexibility and a larger share of the value they help create.
The rise of personalized medicine: The adoption of personalized medicine is being hastened by business drivers such as pricing pressures and safety concerns. The Beyond Borders report predicts that personalized medicine will fundamentally alter the competitive landscape, changing the bargaining power of small and big drug companies and forcing firms to reassess traditional sources of competitive advantage.
Globalization: Similar to personalized medicine, globalization is
radically altering the traditional competitive advantages of pharma and
biotech companies. While the initial focus has been to lower drug
development costs, these financial gains will be temporary, according to
the report. The real opportunity is for western companies to work with
partners in emerging markets to develop innovative products suited
specifically for local market conditions.
Key regional findings
-- Revenues of public biotechnology companies in the US rose over 11% from
US$58.6 billion in 2006 to US$65.2 billion in 2007.
-- The US industry's aggregate net loss was unde
|SOURCE Ernst & Young|
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