The future of Pharmaceuticals 2020
At the Rotterdam School of Management MBA students Paul Steverink, Richard White, Gijs von Morgen an AndrÃ© Hendriks have as part of their assignment for the course New Global Business Environment looked at the future of Pharmaceuticals in 2020. To download their full report in PDF please click here.
The drugs industry will develop towards a globalized and highly consolidated industry. The industry is increasingly subject to forces of product protection expiration, infringements and the necessity of R&D investment cross-licensing. Average expenditures to get a drug to market are about $800 million over a 10-15 year drug discovery, development and approval lifecycle. Only one third of drugs that make it to market deliver a positive return on investment. Pharmaceutical companies must continue to build efficiencies into the research and development process in order to speed time-to-market and reduce costs. This has enforces a process of increasing consolidation.
A Sour Pill
In January 2006, the New York times published a shocking article revealing fraud within one of the largest of the global pharmaceutical companies. It appears that R&D research results have been falsified. A large number of drugs that have been introduced on the market are retracted. Law suits, amongst others in Japan and the USA, are filed against the industry foremost based on unjustified enrichment allegations.
In March 2015, the first drug is launched actually being able to extent human life span through the inhibition of the "consumption" of the chromosomes. This consumption eventually kills the replicating mechanism required to "refresh" tissues. In 2017 the incidence of tumor diseases in treated patients has increased enormously. The drug is taken off the market.
Low Cost Immortality?
In the Low Cost Immortality scenario the decreasing level of IP-enforcement minimizes the profitability of Pharmaceuticals. Until today these profits have been largely used for high risk R&D programs, leading to the potential introduction of new (blockbuster) drugs. However, in this scenario several events lead to an increasing availability of innovative drugs with limited IP-enforcement.
In 2005 the Least Developed Countries increase parallel importing to tackle existing epidemic diseases. In China a second epidemic of SARS forces the Government to issue licenses for local production of vaccine. Other governments in the region issue compulsory licenses to China to supply their vaccine requirements. The value of the IP-rights to the developer, Pfizer, are rendered worthless.
By 2010 rapid global warming increases the prevalence of previously unknown infectious diseases to the western world is rapidly increasing. Existing technology proves ineffective and the vaccine industry is left nervously researching for preventive cures for the emerging diseases with little technical and commcercial success (as a results of the â€˜a prima facieâ€™ lack of patent protection). In desparation, developing countries spray enormous quantities of pesticides to kill vectors such as insects that transmit the emerging diseases; hundreds of millions of fruit bats are destroyed.