Mapping the Healthcare Landscape Bringing pharmaceuticals into focus

Table of Contents

EXECUTIVE SUMMARY

• Strategic scoping and focus
• Related reports
• Upcoming related reports
• Key findings
  • Big Pharma set for dramatic decline in revenue growth through 2014
  • A conceptual framework for profitability
  • Diversification as a tool to counter Big Pharma' s forecast slowdown
  • Destinations for diversification within the healthcare landscape
  • Assessing the relative attractiveness of each sector within the healthcare landscape
  • Recommendations to maximize operating profit growth

2. HISTORICAL TRENDS IN DIVERSIFICATION

• Key findings
• Overview of Big Pharma' s business model
• Historical M&A and divestment analysis, 2000 - Q2 2009
  • Analysis of mergers, acquisitions, and divestments over time
  • Analysis of mergers, acquisitions, and divestments by type

• Big Pharma' s current business model
  • Historical prescription pharmaceutical revenue growth rate justifies Big Pharma' s focus to date
  • Big Pharma' s pharmaceutical focus varies considerably at the company level
  • Correlation between operating profit and pharma focus

• Company case studies
  • Prescription-focused companies
  • Diversified companies
  • Exiting companies

3. DEFINING THE HEALTHCARE LANDSCAPE

• Key findings
• The 10 sectors under analysis
• A focus on diversification within the life sciences sector
• Healthcare products and provision represents the primary division in human healthcare
  • Payers, hospitals, and drug supply chain intermediaries represent the key healthcare providers
  • Healthcare products classified as either pharmaceutical or non-pharmaceutical

• The primary divider in animal health is ‘companion' versus livestock
  • The provision of healthcare services in animal health is identical for companion animals and livestock
  • Consumer health is the key product differentiator between companion animals and livestock

4. SIZING THE HEALTHCARE LANDSCAPE

• Key findings
• Healthcare landscape overview
  • Prescription branded pharmaceutical market
  • Over-the-counter/consumer health market
  • Health insurance market
  • Medical devices and diagnostics market
  • Retail pharmacy market
  • Hospital market
  • Generics market
  • Prescription benefits management market
  • Pharmaceutical wholesaler market
  • Animal health market

5. ASSESSING THE HEALTHCARE LANDSCAPE

• Key findings
• Healthcare landscape overview
  • Healthcare products present a more lucrative alternative to healthcare provision
  • The product-provision division should not be breached
  • The branded pharmaceuticals sector cannot be bested
  • Strategic diversification - small, incremental moves within the product landscape
  • Strategic diversification - small, incremental moves within the provision landscape
  • Strategic diversification - parallel moves can provide synergies with minimal costs

6. BIBLIOGRAPHY

• Publications and online articles
• Datamonitor reports

APPENDIX

• Exchange rates

TABLES

• Table: Market size, operating margin and indicative profit potential for the healthcare landscape
• Table: Big Pharma' s mergers, acquisitions, and divestments by sector type, 2000 - Q2 2009
• Table: Notable divestures of non-core pharma assets by Bristol-Myers Squibb, 2005 - 09
• Table: Financial performance of Johnson & Johnson' s key divisions, 2005 - 08
• Table: Notable divestments by Bayer, 2004 - 09
• Table: The relative importance of mail order pharmacy services to the top three prescription benefits management companies in the US, 2008
• Table: Retail pharmacy chains associated with wholesaler operations in the UK, 2006
• Table: Prescription and over-the-counter product classification
• Table: Consumer health and diagnostics/medical device classification
• Table: Prescription and over-the-counter product classification
• Table: Non-pharmaceutical animal health services
• Table: Global prescription branded pharmaceutical market, 2008
• Table: Operating margin for the leading prescription branded pharmaceutical companies, 2005 - 08
• Table: Indicative Profit Potential for the prescription branded pharmaceutical market, 2008
• Table: Global over-the-counter/consumer health, 2008
• Table: Operating margin for the leading over-the-counter/consumer health companies, 2005 - 08
• Table: Indicative Profit Potential for the over-the-counter/consumer health market, 2008
• Table: US health insurance market, 2008
• Table: Operating margin for the leading US health insurers, 2005 - 08
• Table: Indicative Profit Potential for the health insurance market
• Table: Global medical device and diagnostics market, 2008
• Table: Operating margin for the leading medical devices and diagnostics companies, 2005 - 08
• Table: Indicative Profit Potential for the medical devices and diagnostics market, 2008
• Table: Global retail pharmacy market, 2008
• Table: Operating margin for the leading US retail pharmacies, 2005 - 08
• Table: Indicative Profit Potential for the retail pharmacy market, 2008
• Table: US hospital market, 2008
• Table: Operating margin for the leading US hospitals, 2005 - 08
• Table: Indicative Profit Potential for the US hospital market, 2008
• Table: Global prescription generics market, 2008
• Table: Operating margin for the leading generics companies, 2005 - 08
• Table: Indicative Profit Potential for the generics market, 2008
• Table: US prescription benefits management market, 2008
• Table: Operating margin for the leading US prescription benefits management companies, 2005 - 08
• Table: Indicative Profit Potential for the prescription benefits management market, 2008
• Table: Global pharmaceutical wholesale market, 2008
• Table: Operating margin for the leading US pharmaceutical wholesalers, 2005 - 08
• Table: Indicative Profit Potential for the pharmaceutical wholesale market, 2008
• Table: Global animal health market, 2008
• Table: Operating margin for the leading animal health companies, 2005 - 08
• Table: Indicative Profit Potential for the animal health market, 2008
• Table: Examples of human to animal drug cross-over
• Table: Currency exchange rates, 2008

FIGURES

• Figure: Big Pharma' s projected sales growth decline through 2014
• Figure: Profit at the company and sector level
• Figure: Big Pharma mergers and acquisitions by sector type, 2000 - Q2 2009
• Figure: The spectrum of Big Pharma' s business diversification, 2008
• Figure: The correlation between Big Pharma' s prescription focus and operating margin, 2005 - 08
• Figure: The ten healthcare sectors, 2009
• Figure: Market size across the healthcare landscape, 2008
• Figure: Average operating margin across the healthcare landscape, 2005 - 08
• Figure: Indicative profit potential across the healthcare landscape, 2008
• Figure: Big Pharma' s potential responses to the patent cliff
• Figure: Optimizing operating margin growth
• Figure: Big Pharma mergers, acquisitions, and divestments, 2000 - Q2 2009
• Figure: Big Pharma mergers and acquisitions by sector type, 2000 - Q2 2009
• Figure: Big Pharma' s divestments by sector type, 2000 - Q2 2009
• Figure: Big Pharma' s focus on prescription drug sales, 2001 - 08
• Figure: The spectrum of Big Pharma' s business diversification, 2008
• Figure: The correlation between Big Pharma' s prescription focus and operating margin, 2005 - 08
• Figure: The diversification profile for Pfizer, Novartis, Eli Lilly, Johnson & Johnson, Bayer, and Bristol-Myers Squibb, 2007
• Figure: Pfizer' s prescription focus and operating margin, 2001 - 08
• Figure: Eli-Lilly' s prescription focus and operating margin, 2001 - 08
• Figure: Bristol-Myers Squibb' s prescription focus and operating margin, 2001 - 08
• Figure: Johnson & Johnson' s prescription focus and operating margin, 2001 - 08
• Figure: Novartis' s prescription focus and operating margin, 2001 - 08
• Figure: Bayer' s prescription focus and operating margin, 2001 - 08
• Figure: Pharmaceuticals sales for Procter & Gamble, 2004 - 08
• Figure: The ten healthcare sectors, 2009
• Figure: The human and animal healthcare divide within the life sciences sector
• Figure: The product-provision division running through human healthcare
• Figure: The organizations responsible for human healthcare provision
• Figure: The pharmaceutical, non-pharmaceutical divide in human healthcare products
• Figure: The subcategorization of pharmaceutical products
• Figure: The subcategorization of non-pharmaceutical products
• Figure: The over-the-counter-consumer health spectrum
• Figure: The companion - livestock divide in animal health
• Figure: Classification of service provision in animal healthcare
• Figure: Animal healthcare products for companion animals and livestock
• Figure: Market overview for the global healthcare landscape, 2009
• Figure: Market size, operating margin and indicative profit potential for the ten healthcare sectors
• Figure: The companion animal-livestock split in animal health, 2004
• Figure: Indicative profit potential of the human and animal health care sector
• Figure: A comparison of the size and profitability of individual sectors within the healthcare landscape, 2009
• Figure: Drivers and resistors for prescription to over-the-counter switching