Pharmaceutical Executive Digest Europe - January 28, 2009 - (Page 8) Pharma Versus Pharma Like products, industries go through life cycle phases. And pharma’s current stage is about competition, competition, competition, says Stan Bernard. n recent years, pharma, like other industries, has matured into the competitive stage of its life cycle. Most executives understand the importance of product life cycles for brand planning; they also need to recognize the drivers and implications of industry life cycle stages. Moreover, understanding industry life cycles can help companies anticipate and benefit from market changes, ultimately providing a competitive edge in an increasingly competitive field. I The S-curve Experts identify four industry life cycle stages. For pharma, the life cycle can best be characterized as commencement, commercialisation, competition, and commoditisation. (See “Pharma: A Life in Stages.”) The life cycle typically takes the form of an S-curve. The introductory stage is a relatively flat line, reflecting the challenges of gaining customer acceptance (commencement). As customers appreciate and demand the product, explosive growth occurs (commercialisation). That growth eventually tapers off as customer segments become saturated (competition). Ultimately, sales growth stops and begins to decline as cheaper substitutes and alternative products appear (commoditisation). The US pharmaceutical industry is currently in the competitive stage, indicated by a relatively consistent decline in sales growth over the past decade, from solid double digits to single digits. In 2007, US pharma’s annual growth rate hit 3.8 percent, the lowest since 1961, when the commercialisation stage began. Other characteristics of the competitive stage: increasing marketing and R&D costs, more sophisticated buyers, greater competition, and decreasing profits. (See “characteristics of the Four Stages of the Pharma Life cycle.”) pharma’s pipelines have dried up: In 2007, only 17 NMEs were approved, though R&D spend had doubled. This past year, the US branded pharmaceutical industry launched fewer products than in any of the past 30 years. Driving forces Using Harvard professor Michael Porter’s competitive Structural Analysis Model, we can identify five forces catalysing pharma’s transition to the competitive stage. Reduced R&D productivity. The industry’s impressive run of developing new products peaked in 1996, when FDA approved a record 53 new molecular entities (NMEs). But over the past decade, This past year, the US branded pharmaceutical industry launched fewer products than in any of the past 30 years. Branded and generic competition. Twenty years ago, it typically took years for a branded competitor with a similar mechanism of action to enter the market; now it’s not unusual to have multiple, same-class competitors at the same time. 11 JACKY LAW Awaiting Pfizer’s next move? 13 CALENDAR Upcoming pharma industry events 2 NEWS Teva and Lonza join forces 3 FROM THE EDITOR Crises of confidence
Table of Contents Feed for the Digital Edition of Pharmaceutical Executive Digest Europe - January 28, 2009 Pharmaceutical Executive Digest Europe - January 28, 2009 Contents News From the Editor 2009 Forecast Strategy Jacky Law Calendar Pharmaceutical Executive Digest Europe - January 28, 2009 Pharmaceutical Executive Digest Europe - January 28, 2009 - Contents (Page 1) Pharmaceutical Executive Digest Europe - January 28, 2009 - News (Page 2) Pharmaceutical Executive Digest Europe - January 28, 2009 - From the Editor (Page 3) Pharmaceutical Executive Digest Europe - January 28, 2009 - From the Editor (Page 4) Pharmaceutical Executive Digest Europe - January 28, 2009 - 2009 Forecast (Page 5) Pharmaceutical Executive Digest Europe - January 28, 2009 - 2009 Forecast (Page 6) Pharmaceutical Executive Digest Europe - January 28, 2009 - 2009 Forecast (Page 7) Pharmaceutical Executive Digest Europe - January 28, 2009 - Strategy (Page 8) Pharmaceutical Executive Digest Europe - January 28, 2009 - Strategy (Page 9) Pharmaceutical Executive Digest Europe - January 28, 2009 - Strategy (Page 10) Pharmaceutical Executive Digest Europe - January 28, 2009 - Jacky Law (Page 11) Pharmaceutical Executive Digest Europe - January 28, 2009 - Jacky Law (Page 12) Pharmaceutical Executive Digest Europe - January 28, 2009 - Calendar (Page 13)
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