The pharmaceutical industry has changed significantly in the last 20 years.

  • Twenty years ago, the market was dominated by large multinationals that were fully integrated companies with their own discovery, development, and manufacturing engines. Today, these companies rely heavily on outsourced services. They in-license or acquire most of their innovation and outsource clinical development and manufacturing.

 

  • Twenty years ago, most blockbuster drugs were small molecules designed to address large therapeutics areas such as cardiovascular and CNS. Today, companies are developing biologics to address the needs of narrower patient populations. As a result, large sales forces have been replaced by highly skilled small groups of key account managers and medical science liaisons who can have more in-depth discussions with physicians.

 

  • Twenty years ago, market access was not such an important aspect. Companies would just leverage their massive sales force to make their products “top of mind” with physicians and win prescriptions. Today, having a comprehensive market access strategy including pharmacoeconomics is essential in successfully selling a pharmaceutical product.

 

  • Twenty years ago, the US, Europe, and Japan were the key markets where all innovation took place. Today, South Korea and China have built R&D capabilities and are having global success. Twenty years ago, local emerging markets companies sold their products as branded generics without having the need to perform bio-equivalence studies. Today, more and more regulatory authorities are requiring studies and driving bad actors out of the system.

 

Twenty Years Ago Today
Vertically integrated companies with discovery, development, manufacturing, and commercial capabilities Highly decentralized companies that in-license or acquire most of their innovation
Seeking to develop blockbuster drugs that were small molecules designed to address large therapeutics areas Developing biologics to address the needs of narrower patient populations
Large sales forces driven by “Top of Mind” strategy Highly skilled small groups of key account managers and medical science liaisons who can have more in-depth discussions with physicians.
Little focus on market access Having a comprehensive market access strategy including pharmacoeconomics is essential in successfully selling a pharmaceutical product.
US, Europe, and Japan were the key markets where all innovation took place South Korea and China have built R&D capabilities and are having global success
Local emerging markets companies sold their products as branded generics without having the need to perform bio-equivalence studies More and more regulatory authorities are requiring studies and driving bad actors out of the system
Small chemical-based molecules made up the bulk of new developments Innovation is much more complex. We went from chemical-based compounds to reformulations, to biologics, to cell therapy, and now gene therapy

WHAT IMPACT DO THESE CHANGES HAVE ON THE PHARMACEUTICAL INDUSTRY?

These changes are likely to have a significant impact on an industry that remains much too fragmented. Access to innovation is becoming costlier because technologies used to develop new drugs are becoming more and more complex. We went from developing small chemical-based molecules, to drug delivery technologies, to biologics, to cell therapy such as CAR-T and now gene therapy such as CRISPR.

 

  • In emerging markets, this means that branded generic companies’ ability to copy innovation is diminishing, while at the same time the use of pure generics is growing, leading to margin erosion. The only way to survive for these companies will be to scale up, pay to get access to innovation through M&A and in-licensing, or sell themselves.

 

  • In developed markets, the era of “me toos” is disappearing fast. Developing or acquiring new drugs will become more competitive and require additional financing, which could be obtained by securing non-dilutive global or regional licensing deals.

Alan Vanderborght

Alan Vanderborght

Chief Executive Officer at KYBORA
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Alan Vanderborght

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