Pharma companies face growing competition from generics, increasingly tough pricing and reimbursement, a clamp down on healthcare spending, and the need to treat patients for longer due to the ageing population. Combined, these factors threaten both current and future revenues, prompting pharmaceutical companies to adopt a range of corporate strategies to respond to the changing market dynamics.

According to a new report, pharmaceutical companies are faced with growing challenges in the major markets. Because of this, they are adopting a range of strategies designed to reduce costs and maximize efficiency. With growing competition from generics and thin late-stage pipelines, drug lifecycle management strategies are gaining prominence. In the face of a slowdown in the major markets, pharmaceutical companies are exploring a variety of new opportunities to sustain historic growth rates.

Every year, fewer and fewer drugs are gaining FDA approval. One factor responsible for the decreasing number of novel drugs approved each year is the increasing pressure that the pharmaceutical industry is facing over drug safety. This has been fueled by several recent high-profile drug withdrawals and black-box warnings.

Following the controversy with Vioxx in 2004, US legislators were prompted to significantly expand the FDA’s authority by passing the FDA Amendments Act of 2007. Although it is not yet certain to what extent the FDA will use its new powers, this crucial legislation changes the balance of power between pharmaceutical companies and the FDA, giving the agency greater powers to impose additional safety studies both prior to and post-approval. Thus, the legislation has the potential to increase development costs, reduce market penetration and impact upon approval rates. However, the new FDA power to demand post-marketing studies may actually be beneficial for certain drugs that would not be approved otherwise.

Additionally, in recent years, the duration of clinical trials has increased so that, despite swifter approval times, the duration between the start of Phase I clinical trials and approval is becoming longer. Consequently, at the same time that emphasis on cost-containment is mounting, pharmaceutical companies are facing the prospect of increasingly expensive drug development, now estimated to be in the region of $800 million to $1 billion per drug.

For more information see:
The Pharmaceutical Industry 2008: Current and Future Trends and Strategic Issues Shaping Pharma