Where is the Pharmaceutical Industry headed in 2015
How can we achieve the right balance between R&D, the profit drive and need to raise capital, and ensuring free access to health care for all?
Following a year where a phenomenal cure was met by pricing outrage, the march of new products, including vaccines for malaria and dengue fever, and promising immunotherapy cancer combos, most industry analysts believe we will see these trends continue in 2015…
Some of the key questions ahead, the same ones that have dominated the industry in recent years, are the following:as Pharma and Tech develop an increasingly close relationship, how will the industry live up to its professed values while pricing and profiting in the developed and developing worlds?
How does Pharma replenish the drug pipeline and maintain value through the full product life cycle? How does the industry achieve global operational efficiencies?
Improve its societal reputation? Secure market access? As Pharma Company executives struggle with these perennial questions, they may take solace from the notion that their operating context remains broadly the same.
But for how long can that operating context be taken for granted?
Indeed, Pharmaceutical companies in 2015 will be defined as much by attempts to tackle the crises and trim the excesses that characterized 2014 as it will by the exciting new developments in disease-treatments and healthcare technology.
As Pharm Exec‘s European correspondent said “2015 will see demands intensifying as further innovations with the merit—and prices—of [hepatitis C virus drug] Sovaldi provoke payers and governments into forming common fronts against what some of them have started to openly depict as drug-industry exploitation.”
2015 could also be a banner year for vaccines, especially in the area of tropical endemic disease, with the likely launch of Sanofi’s live, attenuated, tetravalent dengue vaccine (CYD-TDV) and GSK’s RTS’S – the world’s first vaccine against malaria.
Their overall efficacy in a real-world setting will be interesting to follow; both have the potential to reduce the risk of suffering or death for millions of people in endemic countries such as Brazil and India, as well other developing countries.
Tackling the Ebola outbreak remains a top priority; we can be sure to see the testing of any Ebola product with reasonably strong potential fast-tracked in 2015, with the requisite fundign to follow.
To make vaccine innovation profitable, companies will need creative solutions to balance stakeholders demands for returns in ways not required before.
We’re likely to see a combination of mechanisms to finance R&D and distribution within the Pharmaceutical Industry for these different vaccines, including tiered pricing across markets and public or NGO sponsorship to make the treatments affordable while at the same time rewarding innovation.
Pharmacutical companies & the Urge to merge-
With the cost of capital remaining low, and the appetite for deals in the Bio-Pharma market continuing, 2015 looks set to be another interesting year from a consolidation and strategic opportunity perspective.
Discussions with numerous investment analysts indicate that the scarcity of attractive assets will continue to keep valuations high, particularly for bio-techs with mid-stage drug candidates that represent an advance in therapy and encounter few upfront competitors in the field.
To thrive in this competitive environment, acquirers need to keep focused on two essentials: (1) how they intend to monetize these assets and (2) stay disciplined in their approach to negotiations. In an era of sharply curtailed product life cycles, any residual gain from paying too much is subject to a much bigger set of risks.
In the urge to merge there is the danger that valuable funds will be taken from R&D to streamline effectiveness. This may have a detrimental effect in the long term.