Reshape In Pharma Business:
The current global financial crunch has less impact on the healthcare industry than for other industry sectors; nonetheless it will intensely reshape the business. To create a healthier business there is a need to understand the evolving nature of the pharma industry and the ripples it creates in rest of the healthcare segments. The responses to the changing global economy are varied in nature, benefits, and risks.
What does recession mean to Pharma?
Recession allows redesigning the economy, but particularly allows the “fittest” companies to survive and grow. Almost always immune to economic recessions and crisis, the healthcare industry is showing this time, signs of weakening and faces severe pressure. Although, economic recession is difficult to live through, the pharma industry can survive the crisis if it wisely considers and adopts new working strategies.
Is recession a boon or bane?
It’s a boon to big pharma companies as recession has yielded mega-mergers or small-scale acquisitions and portfolio expansion. It’s a bane to small pharmaceutical and biotech companies as most of them require venture capitalists. Currently importance should be given to balance the more pressing short-term issues against the long-term trends in shaping the industry.
Factors playing an important role in reshaping pharma business:
The profound reshape in the pharma business is due to unprecedented challenges caused by the global economic downturn and President Obama’s planned overhaul of the US healthcare system. In addition, exports are likely to be affected due to stringent FDA regulations.
Strategies implemented to with-stand Recession:
Pharmaceutical companies have resorted to the usual tactics of reducing the number of employees and lay-offs to cut down expenditure and to maintain profit. Innovative sales and marketing techniques are being sought to remain competitive during the financial crisis.
- Strategic solutions to with-stand global crisis:
- Strategic acquisitions in order to maximize the chance of survival
- Exploring shallow pipelines
- Moving into specialized high-growth areas
- Increased focus on developing biologic therapies
- Expansion plans in rest of the world-branded pharma
- Outsourcing of costly activities such as research and development, clinical trials, and manufacturing
Coming to the Indian scenario, there is a tremendous pressure on companies with weak pipelines for new products as their research products go off patent. On the other hand, it is the most opportune time for Indian generics majors to target emerging markets like Europe, South America, Australia, and South Africa, rather than investing into US market.
Further, playing a more niche strategy in terms of product profiles such as novel drug delivery system, injectables, oncology, vaccines, preference for generic drugs, investment in medical devices, and diagnostics would lead to high profits.
Benefit to Contract Research and Manufacturing Services (CRAMS):
India is fast turning into a global hub of cost-effective clinical research outsourcing with adaptation of international regulatory standards.
Indian companies are likely to benefit in the form of outsourced services (CRAMS) as the merged entity could decide to outsource more manufacturing and US companies are likely to resort in order to cut their costs further, as pressure on the margins increase.
Thriving in such a crisis requires stream lining operations. If this situation continues, the global healthcare markets would suffer from a dearth of innovative drugs. The government has to increase liquidity by pumping in fresh monetary resources and thereby supporting drug research by standing up to international pressure to amend our laws in patents, in trade, and in regulatory matters.
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