The tough economic environment is putting great pressure on the pharmaceutical market. IMS health projected last week that the global pharmaceutical market will only grow 2.5 to 3.5 percent compared to their last projection in October 2008.
Biopharma industry is not completely immune to economic effects
Although our market has been more resilient compared to other industries, it isn’t completely immune and has been facing the consequences of lower growth rate and recessionary effects since last year. The good old days of extensive product pipelines don’t exist anymore, and pharma companies are rushing to diversify themselves into new areas like generics and biologics (last month has seen some major acquisitions). Worsening this scenario is the added pressure from healthcare payors on market demand which arises from the continuous shifting of costs towards the patient.
More cost pressures on patients
Healthcare spending is typically seen as immune to economic effects since it can be classified as a need rather than a want. However, in an economic climate like today’s, people are compromising on health insurance and much needed health expenses. Also, because more and more patients rely on themselves to provide for treatment, overall healthcare spending becomes dependent on consumer behavior i.e. patients’ own priorities rather than the payors priority. Although we could rationalize that healthcare choices are best left to the people themselves, not all people live by the notion that “prevention is better than cure“. Increasingly, people who cannot afford to spend much today do not carry health insurance, and even though this might seem like a relief for some time, they simply magnify their risks to uncertain health problems. Consequently any conditions that manifest from being ignored can only increase their eventual cost of healthcare and put additional pressure on providers.
Pharma embracing new avenues while pipelines shrink
The IMS report also makes another interesting observation that hints to a shrinking pharmaceutical market. New treatments that are currently in development are generally being targeted towards smaller populations of patients. This arises firstly from the fact that pipelines have been shrinking, but it also alludes to the fact that the platforms currently used for drug development are fading away. Most biotechnology and pharmaceutical companies are realizing that conventional methods of discovering treatments have limitations in terms of producing blockbusters, and are now shifting to new platforms of development. Stem cell technologies, biologics and gene therapy are a few examples of new platforms that are showing promise of providing us with new safer and effective treatments. However these platforms are still under development while the conventional platforms are losing their juice. Unfortunately this change of phase between generations of treatments comes right in the middle of an economic crisis.
A new collaborative solution is needed to make progress
The report re-emphasizes the need for pharma companies to find new avenues to sustain the healthcare system, not just by innovating and diversifying their way out of this difficult time but by collaborating with patients, providers and health plans so as to benefit all alike.
