Pharmaceutical Technologist - May 2008 - (Page 11)

Success and the connected world become more prosperous. Another developing threat involves predictions that the rise in greenhouse gases will affect the world’s health, resulting in the spread of diseases such as malaria and cholera, as well as a higher prevalence of respiratory illnesses such as asthma and bronchitis. Business environment Executives in the industry report that during the next 12 months confidence levels are similar to the overall global figures for other industries, with 50% of industry respondents indicating they are very confident and 34% indicating they are somewhat confident in their company’s revenue growth. In the long-term (next 3 years), confidence is slightly higher (94%) than the global responses (91%), suggesting that, despite the challenges on a number of industry-specific fronts (e.g., R&D pipeline, increased regulatory burden and pricing concerns), executives remain hopeful that their companies will continue to prosper in the future. Regarding major threats, PLS respondents are more concerned than other industries about pandemics and health crises (47% for industry compared with 29% for global); protectionist tendencies of national governments (50% for industry compared with 40% for global); low-cost competition (56% for industry compared with 50% for global); overregulation (78% for industry compared with 58% for global); and intellectual property (IP) rights (63% for industry compared to 32% for global). For the patented segment, successfully addressing the growth of generic drugs and ensuring adequate IP protection (especially in developing countries) are major strategic challenges. Events such as the SARS outbreak and the ongoing challenge of HIV infections make it clear how devastating health crises can be. The scale and nature of these events often require a joint response from industry and government where decisions involving research, manufacturing and distribution are significantly influenced by government policy. Respondents indicated that new product development (38% for industry compared with 20% for global) is considered the main opportunity for business growth in the next 12 months, while more than three quarters of CEOs see technological innovation (81% for industry compared with 65% for global) as the key source of gaining competitive advantage in the long-term. Unsurprisingly, as many of the players in the sector are large multinationals, views about financing growth did not vary significantly from global figures; virtually all indicated that growth would be primarily funded from internally generated cash flow. The debt market was a less popular choice with the sector’s CEOs (13% for industry compared with 31% for global). healthcare services sectors, with the total deal value in excess of $212 billion (€136 billion) compared with 2048 deals and $152 billion (€97.3 billion) in 2005.1 Events such as the SARS outbreak and the ongoing challenge of HIV infections make it clear how devastating health crises can be. Business networks In recent years, there has been a rapid increase in the number and variety of deals between PLS companies, such as R&D deals to fill gaps in product pipelines, marketing deals that offer access to new or under-penetrated markets, and sourcing arrangements that support cost-containment strategies. PricewaterhouseCoopers’ M&A Insights report states that for 2006 (the most recent year where annualized data are available) there were 2112 deals across the pharma, biotechnology, medical device and The variety of deals is also increasing; during the last 2 years there has been a trend toward middle market pharma to pharma M&A (especially in Europe), medical device consolidation, more biotech to biotech deals and continued focus on divestitures of noncore assets by major players. The concept of networks resonates with executives in the sector — 28% strongly agree that networks will be a defining organizational principle for business, as opposed to 17% globally. According to the survey, PLS companies have completed more cross-border mergers or acquisitions during the last 12 months, and slightly more are planned than the global average. Also, sector CEOs expect to realize greater value from transactions than their global counterparts. However, only 13% of sector respondents believe that joint ventures and strategic alliances will play a greater role in the growth of On the go ● ● ● ● The PLS industry is one of the most important in the world, and sales are expected to reach $1.3 trillion by 2020. During the next 13 years, the market will be transformed by a variety of epidemiological and economic shifts; there will be greater demand for effective treatments and the disease burden of the developing world will increasingly resemble that of the developed world. According to company CEOs, the major threats facing the sector include pandemics and health crises, overregulation, low-cost competition and intellectual property rights. According to PricewaterhouseCoopers, companies must invest more in research, and need to understand and demonstrate the value of their products, as well as lower the cost of distribution to be successful. www.ptemagazine.com 11 http://www.ptemagazine.com

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Pharmaceutical Technologist - May 2008 Contents Industry Highlights Morpheus Market Watch Pharma’s Need for Integrated Safety Is Pharma’s Future Mobile? Facing the CRO Behemoths Q&A

Pharmaceutical Technologist - May 2008

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