Trends in the Pharmaceutical industry

Trends in the Pharmaceutical industry

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Description: We anticipate four general scenarios for the pharma industry 2020. The pharmaceutical industry will continue to strive to success, focusing on patients throughout an open-minded system. We believe that a combination of the first three “step change” business models is best suited to guide the ambition of an ideal competitor in the “Greatest challenge of change” scenario .

 
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Domain:  Medicine Category: Biotech/Pharma 
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Contents:
Trends  in  the  pharmaceutical  industry

Presentation  to  I3H  ULB  
Jan.16

1

Hystorical  evolution  o f  value  added – Economic  /  market

Pharma  companies  had  several  periods  and  adapted  the  value  creation  model
The  great  success  of  blockbuster  model  delayed  need  for  cost  optimizations
n The  global  blockbuster  market  has  historically  experienced  
high  growth  rates  (1994-­2000  CAGR:  23.6%).  Such  success  
underpins  the  overall  revenue  performance  of  most  of  the  
companies  that  currently  market  blockbusters.  Blockbusters  
offer  higher  returns  than  their  lower  value  counterparts  
relative  to  the  substantial  risks,  time  and  costs  involved  in  
product  development  and  commercialization

Added
Value

n This  boost  in  added  value  experienced  by  the  
pharmaceutical  industry  is  only  a  temporary effect;;  as  the  
blockbusters  that  have  driven  the  value  growth  are  heading  
towards  their  end  of  patent  protection,  industry  value  will  
drop  back  to  restore  overall  trend  levels

1950

2010

NCE’s

Improved
NCE’s

Blockbusters

2020

Pharmaceutical  industry
Trend  line

Source:  Datamonitor,  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

2

1

Pharma  success– managing  the  Value  chain

Historically,  the  pharmaceutical  industry  business  models  have  been  largely  based  on
Fully  Integrated  Pharmaceutical  Companies.
Current  p ositioning  o f    traditional  p layers  o n  the  industry  value  chain

Development

Research

Basic
Research

Source:  A rthur  D.  L ittle

Discovery

Pre-clinical

Clinic
Phase I

Clinic
Phase II

Regulatory
& Market Access

Manufacturing

Clinic
Phase IIIa

Clinical
Batches

Scale up

Commercial
Batches

Filing

Product
Launch

Positioning
&
Communicati
on

Marketing & Sales

Sales force

Public
Relations

Direct
Marketing

1):  CMOs  :  Contract  Manufacturing  O rganizations,  2):  CROs  :  Contract  Research  O rganizations

Trends  in  the  pharmaceutical  industry

3

Changing  b usiness  environment  – Drug  life  cycle

Traditional  players  value  creation  is  based  on  intellectual  property  supported  by  Patents
which  determined  the  drugs’  life  cycle  and  the  key  parameters  to  be  optimized…
Major  p arameters  o f  d rug  life  cycle
Profit
Time-­to-­Peak-­Sales

Time-­to-­Collapse

4

7

2
1

Time-­to-­Profit

5

Time-­to-­Market

Time-­to-­Patent  Expiry

Peak-­Sales

Time

6

3
Time-­to-­Competition
Milestones

1

Go

Launch

'Me-too‘ product

Generics’ entry

Source:    Arthur  D.  L ittle
Trends  in  the  pharmaceutical  industry

4

Changing  b usiness  environment  – Drug  life  cycle  – How  to  influence?

…and  pharmaceutical  companies  have  managed  to  optimize  the  lifecycle!

Major  p arameters  o f  d rug  life  cycle
Time-­to-­Collapse

Profit
3)  Favorable    
impact  on  
Time-­to-­Profit

4)  Increased  
Peak  S ales
5)    generic  
entry

2)  Reduced  
Time-­to-­Peak  
Sales

Time
1)  Reduced  
Time-­to-­
Market

Milestones

1

Go

Launch

'Me-too‘ product

Generics’ entry

Source:    Arthur  D.  L ittle
Trends  in  the  pharmaceutical  industry

5

Changing  b usiness  environment – Value  chain

The  pharmaceutical  industry  business  models  is  increasingly  modular  :
specialists  capture  some  of  the  value
Current  p ositioning  o f  various  p layers  o n  the  industry  value  chain

Research

Basic
Research

Discovery

Development

Pre-clinical

Clinic
Phase I

Clinic
Phase II

Regulatory
& Market Access

Manufacturing

Clinic
Phase IIIa

Clinical
Batches

Scale up

Commercial
Batches

Filing

Universities

Positioning of different types of players

1

Positioning
&
Communicati
on

Sales force

Public
Relations

Direct
Marketing

International Pharma companies

Universities

Product
Launch

Marketing & Sales

Biopharmaceutical companies
Regional Pharma companies

Universities

Traditional generic manufacturers
Bio-Generic manufacturers
Emerging biotechnology companies

Universities
Universities

Start-up biotech
specialized

CMOs
integrated CMOs1)

CROs2)
Source:  A rthur  D.  L ittle

1):  CMOs  :  Contract  Manufacturing  O rganizations,  2):  CROs  :  Contract  Research  O rganizations

Trends  in  the  pharmaceutical  industry

6

Content

The  typical  economics  of  a  Pharma  company
1

SALES  :                                            100%

2

COST  OF  GOODS  :    (20-­25%)

3

MRKT  &  SALES:            (25-­35%)

4

R/D                                                          (25-­20%)

5

ADMINISTRATION:      (8-­10%)

6

FINANCE:                                      (2-­3%)

7

PROFIT  BT:                                20-­7%

Trends  in  the  pharmaceutical  industry

7

1

Changing  b usiness  environment – Economic  /  market

There  are  essentially  four  forces  at  play  impacting  value  creation
REGULATION
n Available  funds  =  p ressure  o n  p rice
n Role  o f  p revention
n Influence  o f  regulation
n Global  d ebate  o n  p atents

SCIENCE

MARKET

n Growth  o f  b iotech
n Importance  o f  vaccines
n Higher  risk   of  p andemic  (global  warming)

n End  o f  the  b lockbuster  p roducts

Blockbusters  under  
stress

n Increasing  importance  o f  n iche  marketing
n Patient  centrism
n Importance  o f  e merging  markets
n Change  in  target  p atients  (e.g.  e lderly)

TECHNOLOGY
n Increased  technology  integration
n Innovation  is  b ecoming  more  complex
n Increased  formation  o f  p artnerships

Source:  Trends  in  p harma  a nd  p rioritization  (outlook  2 020),  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

8

1

Changing  b usiness  environment – Key  drivers  in  evolution  towards  “pharma  2020”

The  pharmaceutical  industry  must  act  against  the  increased  speed  and  intensity  of  key  drivers
KEY  DRIVERS  IN  EVOLUTION  
TOWARDS  “PHARMA  2020”
Economic  /
Market




n

Growth  in  the  global  pharmaceutical  market  is  expected  to  slow  down  to  3%  a  year
Pharmaceutical  companies  struggle  to  maintain  both  growth  and  profitability  as  margins  decrease  
Pharma  growth  is  now  driven  by  emerging  countries,  reorganizing  geographic  priorities  for  the  industry
As  blockbuster  products  come  to  an  end,  niche  marketing  becomes  ever  more  important

Political  /  
Regulation


n
n
n

The  global  debate  on  patents  fuels  political  pressures  and  incentives  which  pave  the  way  for  generics  
Limitation  of  available  funds  leads  to  price  pressure
Attention  in  healthcare  is  shifting  towards  prevention
New  regulations  limit  access  to  and  interaction  with  prescribers

Technological

n
n
n
n

Innovation  becomes  more  complex;;  despite  continuing  R&D  spend,  new  drug  approvals  are  lagging
A  global  wave  of  partnership  formation  is  taking  place
Rapid  growth  of  biotech  leads  to  increasing  share  and  value  of  biologics
Increased  technology  integration

Social

n
n
n

Prescriber  access  is    more  and  more  challenged  as  focus  on  patient  centrism  is  growing  
Key  target  patient  groups  are  changing  with  demographic  evolutions  (e.g.  aging  population)
Higher  pandemic  risks  lead  to  an  increased  importance  of  vaccines

Source:  Trends  in  pharma  a nd  prioritization  (outlook  2 020),  A rthur  D.  Little  a nalysis

cfr.  Detail  slide
Trends  in  the  pharmaceutical  industry

9

1

Changing  b usiness  environment – Economic  /  market

Growth  in  the  global  pharma  market  is  expected  to  slow  down  to  3%  a  year  (2008-­2013)

Global  pharmaceutical  market  2000-­2013
Sales  
($  bln)

+8.7%  p.a.

n In  2008,  the  global  pharmaceu-­
tical  market  was  worth  $730  bln  

+3.0%  p.a.

900
800
712

700

733

755

778

801

825

850

649
605

600

560
499

500
400
300

Comments

365

392

n The  US  make  up  almost  half  of  
the  global  pharmaceutical  
market  but  its  share  is  declining  
due  to  faster  growth  in  the  rest  
of  the  world
n Due  to  healthcare  cost  
containment  measures  in  
western  countries,  growth  is  
likely  to  remain  limited  over  the  
next  years

428

292

200
100
0
1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source:  IMS  Health;;  S G  Cowen  – Therapeutic  categories  o utlook  (2009),  A rthur  D.  L ittle  a nalysis  
Trends  in  the  pharmaceutical  industry

10

1

Changing  b usiness  environment – Economic  /  market

Pharmaceutical  market  growth  is  now  driven  by  emerging  countries,  reorganizing  geographic  
priorities  for  the  industry
Growth  Projections  for  the  Pharmaceutical  Industry  – bn  820  US  dollars  for  2009

Japan1):

Europe2):
North  
America:

$84-­88  bln
+  4-­5%  CAGR  

$162-­172  bln
+  3-­4%  CAGR  

$287-­297  bln
+  1-­2%  CAGR  

Emerging  countries3):
$105-­115  bln
+  14-­15%  CAGR
Source:   IMS  Health  E nd  o f  November  2 008    &  A rthur  D.  L ittle  a nalysis
1)  incl.  h ospitals;;  2 )  top  5 ;;  3 )  China,  B razil,  India,  S outh  K orea,  Mexico,  Turkey  &  Russia
Trends  in  the  pharmaceutical  industry

11

1

Changing  b usiness  environment – Political

The  global  debate  on  patents  fuels  political  pressures  and  incentives  which  pave  the  way  for  
generics  
Global  pharmaceutical  market  split  by  generics  and  branded
Sales  
($  bln)

671

701

729

750

773

795

820

Total

18%

19%

21%

23%

25%

28%

30%

Share  
generics

900
800
700
600

551

567

579

580

580

574

571

n The  global  generics  market  
was  worth  approximately  $120  
billion  in  2007,  corresponding  
to  18%  of  the  total  market
n Generics  is  expected  to  grow  
with  13%  annually,  2007-­2013
n Main  growth  drivers:
– healthcare  cost  containment,  
where  generics  have  the  
advantage  of  low  cost

500
400
300

– blockbuster  drugs  
approaching  patent  expiry

200
120

170

193

249

150

221

134

2007

100

Comments

2008

2009F

2010F

2011F

2012F

2013F

0

Generics

Branded

Source:  IMS  Health;;  Datamonitor  (2008);;  A rthur  D.  L ittle  a nalysis  
Trends  in  the  pharmaceutical  industry

12

1

Changing  b usiness  environment – Changes  to  the  business  models

There  is  another  reason  for  changing  the  current  blockbuster  model:  individual  response  rate  
to  existing  medicines  is  not  totally  satisfactory  today
Patients  may  respond  differently  to  the  same  medicine…
Hypertension  drugs
(ACE  inhibitors)

10-­30%

Heart  failure  drugs
(Betablockers)

15-­25%

Anti-­depressants
(SSRIs)

20-­50%

Cholesterol  drugs
(statins)

30-­70%

Asthma  drugs
(beta-­2-­agonists)

40-­70%
Percentage  of  the  patient  population  for  which  any  particular  drug  is  ineffective

Source:    The  case  for  p ersonalized  medicine,  P ersonalized  medicine  coalition,  November  2 006  -­ Arthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

13

1

Changing  b usiness  environment – Changes  to  the  business  models

Patient  sub-­groups  can  optimize  treatment  response  and  side-­effects  management…  and  
restore  innovation  premium:  personalized  medicine.
Differences  in  the  genetic  material  between  
individuals…

…leads  to  different  pharmacokinetics  and  
response  rate  between  individuals

Source:  Genomic  V ision
Trends  in  the  pharmaceutical  industry

14

1

Changing  b usiness  environment – Technological

Innovation  becomes  more  complex;;  despite  continuing  R&D  spend,  new  drug  approvals  are  
lagging
Pharma  R&D  spend  and  new  drug  approval  1992-­2006
Pharma  R&D  
spend  (BUSD)
60

Comments

Original  new  
drug  approvals
60

48

50

50

– CAGR  of  8,5%  2000-­2008
50

43
39

40
30

30

32

39

20
12

13

13

15

17

19

21

40

33

30

26
23

20

10

10

0

n The  spending  on  R&D  has  almost  
doubled  over  the  last  8  years  
n Even  though  spending  has  
increased  over  the  last  two  
decades,  the  number  of  original  
new  drug  approvals  has  been  
rather  stable  
n A  large  number  of  late  stage  
clinical  compounds  are  generated  
form  biotech  ventures
– Indication  that  venture  backed  
companies  are  efficient  in  R&D

0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Pharma  R&D  (bnUSD)

New  drug  approvals
Trendline

Note:   R&D  spending  figures  for  P hRMA  (The  P harmaceutical  Research  a nd  Manufacturers  o f  A merica)  which  includes  o ver  7 5%  o f  total  p harmaceutical  R&D  spend
Source:  P hRMA  (2009),  Wall  S treet  Journal  (2009),  B urrill  &  Co  (2007)
Trends  in  the  pharmaceutical  industry

15

1

Changing  b usiness  environment  – Pipelines  &  portfolios

As  a  direct  consequence,  product  pipelines  of  the  major  players  turned  to  specialized  
products  targeted  at  complex  diseases  and  hospital  care  while  trying  to  achieve  high  prices
Current  Product  Portfolios
%

Specialist  targeted  drugs

Pipeline  (Future  Products)

Primary  care  targeted  drugs

100

%
100

80

60

40

40

20

Primary  care  targeted  drugs

80

60

Specialist  targeted  drugs

20

0
Roche MSD Novartis BMS

Pfizer Sanofi- J&J Wyeth
Aventis

AZ

GSK

0
Roche MSD Novartis BMS

Pfizer Sanofi- J&J Wyeth
Aventis

AZ

GSK

Sources:  É tude  E urostaf  sur  la  visite  médicale  2 007,  IMS  Health,  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

16

1

Changing  b usiness  environment – Social

Prescriber  access  is    more  and  more  challenged  as  focus  on  patient  centrism  is  growing
Historical  situation

Today

PharmaCo

Regulator

PharmaCo

Payer

Prescriber

Patients  are  
increasingly  
well-­informed,  
organized  and  
powerful

Involve  patients  more  
in  risk/benefit  
assessments

Regulator

Search  for  a  novel  
business  model  
“beyond  the  
blockbusters”

Payer

Patient

Increase  focus  on  
Health  Economics

Better  informed  patients  to  
offer  better  service  and  
avoid  malpractice  

Prescriber

Patient

Trends  in  the  pharmaceutical  industry

17

2

Key  recommendations  to  shape  the  p harmaceutical  industry’s  future -­ Overview

After  the  success  of  the  blockbusters,  the  pharmaceutical  industry  must  refocus  on  5  key  
steps  to  shape  its  future
5  Key  recommendations  to  shape  the  pharmaceutical  industry’s  future
1 BACK  TO  T HE  
CORE  SCIENCE

4
GLOBAL  
MARKETS

Companies  will  have  to  rethink  the  
location  of  their  core  activities  as  
changing  demographics  force  
globalization

PARTNER-­
SHIPS

Increased  complexity  in  product  
development  will  create  highly  
strategic  virtual  networks  involving  
close  collaboration  of  different  but  
complementary  players

5

The  industry  
needs  to  come  
back  to  its  roots  
and  focus  on  
curing  diseases  
with  the  help  of  
science

2 FOCUS  ON  
PATIENTS

The  industry  can  
create  high  NPV  
by  being  
increasingly  
patient  centric,  
leveraging  the  
demographic  
changes  and  
integrating  into  
the  vast  
information  flow

3 TECHNOLOGY  
INTEGRATION
Integration  of  
technologies  will  
enhance
n service  level
n ease  of  use
n product  
delivery
n supply  chain  
efficiency
n level  of  
compliance
n product  
development

Source:  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

18

2

Key  recommendations  to  shape  the  p harmaceutical  industry’s  future -­ Back  to  the  core  science

The  industry  needs  to  come  back  to  its  roots  and  focus  on  curing  diseases  with  the  help  of  
science
1

BACK  TO  T HE  CORE  SCIENCE

Uncertainty  o ver  the  p ipeline
Blockbuster  growth  is  insufficient
Trend  towards  p ersonalized  medicine  
Development  of  the  niche-­buster  model  
Increased  speed  o f  ‘fast  follower”
Closer  innovation  and  second-­generation
Reimbursement  and  cost  p ressure  
Shift  towards  long-­term  cost-­benefit  analyses
Growth  o f  b iochemistry
Barrier  against  patent  loss

Source:  A dapted  from  S imon  &  K otler,  ‘Building  g lobal  b iobrands’,  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

19

2

Key  recommendations  to  shape  the  p harmaceutical  industry’s  future – Focus  on  patients

The  industry  can  create  high  Net  Present  Value  by  being  increasingly  patient  centric,  
leveraging  the  demographic  changes  and  integrating  into  the  vast  information  flow
2

FOCUS  ON  PATIENTS

Search  for  a  novel  b usiness  model  
“beyond  the  blockbusters”
Increased  focus  o n  h ealth  economics
Delivering  benefits
Increased  p atient  information  transfer
Offer  better  service  and  avoid  malpractice
Change  in  key  p atient  types
Stay  close  to  respond  faster
Patient  focused  treatments  and  applications
Personalized  medicine

Source:  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

20

2

Key  recommendations  to  shape  the  p harmaceutical  industry’s  future – Technology  integration

Integration  of  technologies  will   enhance  the  service  level,  the  ease  of  use,  the  product  
delivery,  the  supply  chain  efficiency,  the  level  of  compliance  and  the  product  development
3

TECHNOLOGY  INTEGRATION

From  fully-­integrated  to  virtually-­integrated
Integration  to  deliver  results
New  emerging  technologies  
Providing  new  and  more  precise  cures
Integration  o f  systems
Using  data  to  optimize  cure
Rise  o f  n ew  manufacturing  technologies
Increase  manufacturing  flexibility
Direct  delivery  to  p harmacies  
Bypass  traditional  wholesalers

Source:  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

21

2

Key  recommendations  to  shape  the  p harmaceutical  industry’s  future – Global  markets

Companies  will  have  to  rethink  the  location  of  their  core  activities  as  changing  demographics  
force  globalization
4

GLOBAL  MARKETS

Steep  rise  of  d isposable  incomes  
and  the  n umber  o f  middle-­class  h ouseholds
Expansion  o f  medical  infrastructure
Market  expansion
Greater  penetration  o f  h ealth  insurance
Market  expansion
Shift  in  d isease  p atterns  
Rising  prevalence  of  chronic  diseases
Adoption  o f  p roduct  p atents
IP  protection

Source:  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

22

2

Key  recommendations  to  shape  the  p harmaceutical  industry’s  future -­ Partnerships

Increased  complexity  in  product  development  will   create  highly  strategic  virtual  networks  
involving  close  collaboration  of  different  but  complementary  players
5

PARTNERSHIPS

Lack  o f  skills  
Increase  reliance  on  outsourcing
Need  for  increased  p roduction  flexibility
Use  of  toll  specialist  manufacturers
Collaboration  with  close-­to-­patient  p ersonnel  
Offer  tailor-­made  solutions
Collaboration  with  IT  d riven  integration  
Virtual  global  organizations  for  direct  delivery
Collaboration  with  g overnments  and  p ayers  
Ease  the  development  process

Source:  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

23

Key  recommendations  to  shape  the  p harmaceutical  industry’s  future -­ Conclusions

The  future  of  pharma  holds  significant  challenges,  which  can  all  be  converted  into  new  
opportunities  for  the  industry
Levers  for  success  in  the  n ew  h ealthcare  landscape

2

1

Focus  on  a  strong  medical  science  basis
2

Put  the  patient  at  the  centre  of  product  development  and  its  full  
life  cycle

3

Integrate  technologies  to  supply  better  treatments  faster
4

Be  ready  to  use  the  new  global  market  and  global  resources
5

Create  strategic  partnerships  to  accelerate  success

Source:  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

24

Business  models  to  answer  the  change  – Traditional  business  models

Today,  expansion  strategies  in  pharma  are  mostly  driven  by  traditional  ways  of  thinking  
leading  to  three  business  models:  global  players,  low  cost  manufacturers  and  niche  players
Typical  expansion  strategies  in  the  pharmaceutical  business

Ability  to  (discover  and)  develop  
value  added  solutions

3

Orphan
(targeted)

Biopharmaceutical  
&  niche  players

Rare/Complex
(specialty / hospital only)

Global   Leaders
Frequent
(mass market)

Generic  and  
Commodity  market

Endemic
(Public Health)
Domestic market
(50 to 300 millions people )

Developed countries
(~ 1 bn people)

Solvable population
(~ 2 bn people)

Worldwide population
(~ 6 bn people)

Ability  to  commercialize

Source:    Arthur  D.  L ittle,  L ife  S ciences  P ractice  Institute
Trends  in  the  pharmaceutical  industry

25

3

Business  models  to  answer  the  change  – Traditional  business  models

Moreover,  most  of  the  leading  players  now  consider  'health'  as  more  than  traditional  
prescription  medicines  based  on  small  molecules
Traditional
Rx  small
molecules

Biologics

Vaccines

OTC  /OTX(1)

Generics

Animal
Health

Medical
Devices
&  IVD

1) :  O TX  :  combination  o f  o ver-­the-­counter  (OTC)  a nd  p rescription  
Sources:  B ased  o n  sanofi-­aventis,  General  A ssembly,  A pril  1 1th    2009,  A rthur  D.  L ittle
2) :  P ro  forma
(Rx),   corresponds  mainly  to  p rescription-­free  medicines  sold  in  p harmacies  a nd  relying  o n  clinical  trials
26
Trends  in  the  pharmaceutical  industry

3

Business  models  to  answer  the  change – Five  “Step  Change”  new  business  model  archypes

Five  “Step  Change”  business  model  archetypes  can  be  tailored  and  combined  to  best  address  
the  changing  business  environment  and  to  implement  the  five  identified
Five  “Step  Change”  business  model  archetypes

1.  Share  the  cake  differently

Engage  with  external  parties  (customers  or  partners)  in  a  novel  
way,  thus  enabling  a  complete  overhaul  of  the  traditional  cost  
structure  &  pricing  format  used  by  your  industry

2.  Supplant  the  middleman

Go  direct  to  your  customers,  thereby  establishing  a  more  
intimate  relationship  with  your  customer  community,  and  use  the  
changed  cost  structure  to  widen  your  product  portfolio  and/or  
offer  lower  prices

3.  Shift  cost  curve  structurally

Deploy  a  radically  different  asset  base  to  achieve  – for  existing  
products  – cost  levels  previously  considered  unattainable  and  
consequently  price  levels  initially  labeled  suicidal  by  competitors

4.  Redefine  customer  experience

Exploit  unique  operational  capabilities  and  systems  to  offer  
customers  a  purchase  experience  they  probably  could  never  
have  imagined  themselves  

5.  Convert  products  into  service

Keep  ownership  of  the  product  and  charge  customers  for  its  per-­
unit-­use  as  if  it  were  a  utility,  thereby  lowering  the  purchase  
barrier

Source:  “Bringing  b usiness  models  d own  to  e arth”  (Arthur  D.  L ittle,  2 008)
Trends  in  the  pharmaceutical  industry

27

3

Business  models  to  answer  the  change  – Business  model  archetypes  -­ Examples

We  believe  that  a  combination  of  the  first  three  “step  change”  business  models  is  best  suited  
to  guide  the  ambition  of  an  ideal  competitor  in  the  “Greatest  challenge  of  change”  scenario    
Priority  “Step  Change”  business  model  archetypes

1.  Share  the  cake  differently

2.  Supplant  the  middleman

3.  Shift  cost  curve  structurally

4.  Redefine  customer  experience

5.  Convert  product  into  service
Priority  „step  change“  b usiness  models  suited  for  scenario  „  challenge  o f  change“
Trends  in  the  pharmaceutical  industry

28

Business  models  to  answer  the  change  – Scenario  analysis  to  determine  the  best  business  model

We  anticipate  four  general  scenarios  for  the  pharma  industry  2020
Illustrative

General  scenarios  pharma  industry  2020
Markets  /  Regulation
1.  E nd  o f  
blockbusters
2.  P atient  centricity
3.  Increasing  
importance  o f  
emerging  markets  
4.  Change  in  target  
patients  
5.  Collaboration
10.  Funds  
available

high

Scenario  2

“Greatest  challenge  for  
change”

6.  Increased  
Integration
7.  Increased  
IT/IS
8.  Growth  o f  
biotech

Scenario  4

low

Scenario  3

“Continuous  
improvement”

11.  P revention  
12.  Regulation

Scenario  1  

“  niche  markets”

Degree  o f  change

3

“  Fast    pacing  technology”

9.  Innovation

Science  /  Technology
low

Degree  o f  change

high

Trends  in  the  pharmaceutical  industry

29

5

Conclusions

The  pharmaceutical  industry  will   continue  to  strive  to  success,  focusing  on  patients  
throughout  an  open-­minded  system
New  
chemical  
entity

Proof  of  
concept  
(in  vitro,  in  
vivo)

Tox

Chemical  
manufacturing  
process,  I P

Pha
se  1

Pha
se  2

Pha
se  3

Regulator
y  f ile

Filli
ng

Marketi
ng

Sales  
informa
tion

Laun
ch

Life  Cycle  
management  
(follow-­up)

Gener
ics

MARKET

Patient

Pharmaceutical  Industry

Emerging  b usiness  model

BACK  TO  
CORE  SCIENCE

FOCUS  ON  
PATIENTS

TECHNOLOGY
INTEGRATION

GLOBAL  MARKETS
PARTNERSHIPS
Source:  A rthur  D.  L ittle  a nalysis
Trends  in  the  pharmaceutical  industry

30