Industry issues

The pharmaceutical industry is undergoing a period of intense transformation. Increased scrutiny of operational and research practices together with difficult questions over the safety of marketed drugs have created uncertainty in what has traditionally been considered a stable and highly profitable business. Many analysts suggest that the industry is moving from the era of 'blockbuster' drugs to a new model of drug development known as 'personalised medicine'.

Key issues affecting companies in the pharmaceutical sector include:

Successfully developing innovative drugs and enhancing R&D productivity

Companies need to move new products into existing and new markets quickly to obtain sufficient benefit from a limited patent life and to compensate for development costs which can exceed $800 million per drug. However, the issues involved in effectively carrying out research and development are complex and transcend science. The regulatory environment is also a key component that affects every stage of the process.

Related reading: Prescription for growth series

Pricing pressures and shrinking margins

Contrary to public perception, drugs form only a small proportion of overall healthcare costs. However, the high profitability of pharmaceuticals companies makes them a relatively easy target for healthcare providers trying to reduce costs. One of the solutions for the companies is to have an efficient control over operating costs.

Related reading: A better shape for the future - building value through integration and partnerships

Reputation management

A number of recent product recalls, despite quality assurance processes and regulatory requirements, have led many consumers to believe that pharmaceutical manufacturers have lost sight of their original vision of improving human health and are more interested in increasing profits. In the absence of trust, the public may demand an alternative business model which may impose unacceptable controls and operating restrictions.

Related reading: Recapturing the vision: Integrity driven performance in the pharmaceutical industry

Managing regulatory compliance

The pharmaceutical industry is experiencing a period of heightened regulatory scrutiny in a number of areas. Therefore, the industry will be challenged to move beyond the current crisis management approach to regulatory compliance and implement a comprehensive strategic approach that builds compliance into the way companies do business.