No stranger to controversy, the pharmaceutical industry perpetually occupies a very challenging space between life saving product provider and potent symbol of power and capitalism. As a result, it frequently finds itself in the political crosshairs, with now being no exception.
As the industry once again finds itself at the wrong end of a consumer perception survey (bringing up the rear behind oil and gas) ¹, one of the issues influencing opinion is pricing pressure. Primarily being driven out of the US, but having a global impact, the subject brings into focus the challenges of the drug development model itself.What do those challenges look like and how will the manufacturers and marketers of the future need to evolve and adapt to be successful?
Tip of the iceberg
The drug development process in pharma is amongst the most challenging, risky, time consuming and therefore costly of any industry. The shiny part that garners attention (ie between launch and patent expiry) and hopefully changes the lives of lots of people suffering from a disease or affliction is merely the tip of a very large and complex iceberg. Patents generally run between 8-12 years – during which time companies must recoup all the R&D costs and deliver profit. What many don’t see however, is that the drug development process leading up to launch is often equally as long and littered with the failures and the fallen who never made it.
‘Only about 30 percent of compounds that enter the market recover their risk-adjusted R&D cost – around half of products achieve less than 50 percent of the sales that were forecast a year before launch.’ ²
So, make no mistake – once that launch button is hit, the pressure is on to start maximising returns from the word go!