The problem is shrinking margins, caused by price and cost pressure, regulatory change and expiring patents, report says
The pharma industry is grappling with a ‘strategic crisis’ according to three quarters of companies surveyed in a report from consultancy firm Roland Berger. The problem is shrinking margins, caused by price and cost pressure, regulatory change and expiring patents.
The top 10 pharma companies increased sales by 13% from 2009 to 2010, but their profits dropped during the same period by 4%. Compounding the problem in the long term, R&D costs have risen 80% over the past 10 years, while the number of new product launches has dropped by 43%.
Emerging markets offer the biggest growth – their market share is set to rise to 40% by 2016. The market for pharmaceutical products will grow on average by 4.5% annually until 2016. But growth in emerging markets will increase by almost 12%. China, Brazil, India and Russia (the so-called BRIC economies) in particular are experiencing high growth.
Half of the companies said they would be willing to move their administration, R&D and sales departments to emerging market regions.