InterviewDaunting outlook ahead for pharma firms

05 March 2008 02:23  [Source: ICIS news]

By Feliza Mirasol

NEW YORK (ICIS news)--The pharmaceutical industry faces a great shift in the future where ranking companies by size will become less relevant, the president of New York-based investment bank Young & Partners, said on Tuesday.

 “Size used to be a core business model of the pharmaceutical industry, but it is now more of a liability than it is a strength. Ten years from now, the pharmaceutical industry won’t look the same as today,” Peter Young said in an interview. 

The trend toward personalized medicines and smaller niche drug markets is one driving factor causing the shift, as the old blockbuster model of doing business loses ground.

“Clearly, right now, the pharmaceutical industry is in some serious turmoil. I think the fundamental problem is the business model they were following before just isn’t working very well,” said Young.

Pharmaceutical companies, particularly the big ones, have been struggling. Even specialty pharmaceutical firms are seen often struggling after having done well for some time.

“Specialty pharmaceutical companies could take advantage of the fact that they could license from other people, acquire products at reasonable valuations, or focus on particular therapies, but they are not immune to the same problems now,” Young said.

All of the industry is facing daunting problems, and all branded drug makers know it. “They’ve all come to the realization that they may not be able to replace revenues that are going to be lost and the future is going to be tough,” said Young.

According to recent IMS Health data, the top 10 worldwide pharmaceutical companies by 2007 prescription product sales were Pfizer ($23.5bn) (€15.51), (GlaxoSmithKline ($20.1bn), Merck & Co. ($17.6bn), Johnson & Johnson ($16.3bn), AstraZeneca ($15.5bn), Amgen ($14.3bn), Novartis -- including Sandoz ($13.9bn), Roche -- including Genentech ($12.3bn), Sanofi-Aventis ($10.9bn), and Eli Lilly ($10.3bn).

($1 = €0.66)

By: Feliza Mirasol
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