Pharma Valley
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Big pharma companies won't be anymore, and a whole scale of specialised smaller R&D companies will emerge
Developments in time
2010-2015
The recovery from the financial crisis brought a further rise of the economies in emerging markets, above all in Asia. Overall globalisation increased, and with the development of China and India, also their awareness concerning the importance of Intellectual Property Rights was rising, resulting in an increased global recognition and enforceability.
As the R&D costs in the pharmaceutical industry were increasing and the development of new blockbusters was diminishing, the big pharmaceutical companies started R&D departments in emerging countries like China, India and the Philippines, where labour costs were low and young people with good education were entering the labour market, to reduce R&D costs.
Also the costs in the overall health system were still rising in the developed world, one main reason for that was identified to be the fragmented and time intensive approval system for new medication in the different countries of the world. The USA, Canada and the European Union started to simplify and harmonize their approval requirements for new medication.
2015-2020
The success in outsourcing large parts of R&D to Asia resulted in a transformation of the big pharmaceutical companies. A network of independent research centres, partly spin-offs of the big pharmaceutical companies, partly new companies established in Asia, performed R&D tasks for all main pharmaceutical companies. Most of these R&D companies were highly specialised on specific tasks and steps in the whole R&D process. Regional clusters developed with basic-research concentrated in the United States and Europe, specialisations in Singapore and the Philippines and production, including the acknowledged production of generic medicine, in India.
The size of the existing big pharma companies was reduced due to the outsourcing and spinning-off of large parts of their R&D activities. Their main activities in R&D laid in the definition and coordination of the different development steps and in performing the approval process. They also focused more and more on collaboration with healthcare insurance companies and patients to identify the areas in which new medication was required and on brand management.
Basically all countries joined the harmonized drug approval system established a few years ago. This led to a huge cost reduction for the worldwide launch of new drugs.
2020-2025
The fragmentation of pharma industry was still increasing over the last years. The former big pharma companies have transformed into facilitators that communicate the needs of the patients to the R&D network and that organise the different required R&D steps, selecting those parts of the R&D network that are best suited for the specific task.
Due to the specialization and focus in the last years, huge progress was made in the development of new treatments and due to the globally harmonized approval they could quickly be launched globally. Another core business of the traditional pharma companies was and marketing the newly developed medication with the patients. As IP rights were secured and as solidarity was established between the developed and less developed countries of the world, the new drugs were largely sold by differential pricing.