A Healthy Regimen for Pharmaceuticals

Chris White
Mike Wise
Matthew Guagenty

Many of the blockbuster drugs have had their day. Looming patent expirations put about US$30 billion in sales at risk between now and 2007—and the pipeline is no longer brimming with promising new drugs to replace that revenue. The result: Pharmaceutical revenues in the United States could fall US$40 billion short of investors’ expectations by 2007. How can the industry avoid such a serious disconnect between expectations and results? Some pragmatic changes can go a long way toward improving performance.

To succeed, companies will need new competencies and capabilities, and they will have to excel at them. The industry needs an aggressive, yet workable, plan to deliver the growth investors expect in this challenging environment. Pharma companies need to focus on three important steps: get big, get flexible and get going.

Getting big means finding ways to gain scale efficiencies in a consolidating industry. It’s inevitable the pharmaceutical industry will follow the consolidation that other industries have. Getting flexible means creating leaner, more adaptive organizations through additional outsourcing and more efficient use of sales and promotional dollars. And finally, get going refers to taking a more pragmatic approach to drug development, focusing on speed and simplicity.