This latest strategic publication from HBS Consulting on Pharmaceutical
/Medical Device/Diagnostics Licensing and Collaborations provides:
- An insight into the market and an overview of the latest trends and
collaborations between the different industry sectors.
- A comprehensive analysis of opportunities for diagnostics and
pharmaceutical companies within the area of personalised or individualised
medicine.
- An overview of opportunities and developments in combination drug- device
products
- Evaluation methodologies and industry-specific strategic recommendations
that may be used by companies that are seeking to benefit from diagnostics,
medical devices and pharmaceutical alliances.
Pharmaceutical stocks are traditionally a favourite during uncertain economic
times. Underpinning this confidence in the sector is that even within periods of
global recession pharmaceutical companies manage to post reasonable gains when
compared to many other major industry sectors. In such a dynamic sector it is
interesting to see how the market has fared over the last three years. Global
pharmaceutical sales reached $466bn in 2003, up from $317bn in 2000. Despite
this upsurge in the market institutional shareholders, in particular, continue
to pile the pressure on pharmaceutical companies to satisfy increasingly
elevated expectations. The overriding concern that shareholders have is that
pharmaceutical manufacturers will not be able to maintain their growth unless an
improvement is seen in the portfolio of late stage products in pharmaceutical
pipelines. Coupled to this is the increasing burden of drug and development
costs associated with new medical entities (NMEs). The current strategy for
pharmaceutical companies is to utilise resources in such a way that strategic
emphasis is placed on researching and developing products providing high value
returns. This "blockbuster" strategy has its advocates but there
is an increasing shift in expert opinion which veers towards advising
pharmaceutical companies to adopt a different approach to how they discover,
develop and market their products, and also how they partner with outside
organizations. Biotechnology, medical device and diagnostics companies face
similar challenges but the business models adopted by each of these industries
differ in certain ways to the pharma approach.
This strategic report provides a review of the pharma business model
currently adopted, and also offers an appraisal of current literature for and
against the implementation of the pharmaceutical "blockbuster"
approach. This analysis leads to a discussion on the reasons behind the belief
that greater collaboration between the different industry sectors is likely to
intensify and may hold promise for sustained profitability and business growth.
Emerging developments in the pharmacogenomics field and in combination
drug/device products are setting the ground for increased licensing and
collaborative efforts between pharmaceutical and medical device and diagnostics
companies. With respect to pharmacogenomics, some companies such as Roche have
laid the foundations within the business which sets the company on track to take
full advantage of the trend toward personalised medicine. Its strengths in the
diagnostics and pharmaceutical fields means that it is well placed to provide
the tools for diagnosing disease, disease predisposition, response to drugs and
the drugs themselves. The strategic review looks at where opportunities for
diagnostics and pharmaceutical alliances may lie for those companies which seek
to exploit the potential within the area of personalised or individualised
medicine.
The medical device sector has created its own blockbuster product in
2003, within the area of drug eluting stents. This development suggests that
combination drug/device products offer the potential for multi-million dollar
opportunities. How do giants like Medtronic approach this area and what
strategies do leading smaller companies generating products for the combination
drug/device field like Angiotech Pharmaceuticals deploy? The HBS Consulting
strategy review investigates and highlights the emerging technologies in this
area, analyses the approaches of the main companies and points out some of the
areas where collaborations and alliances are anticipated to bear fruit in the
medium term.
Given the anticipated heightening in activity the review discusses the
evaluation methodologies and requisite decision models used for assessing and
negotiating licensing deal structure. While pharmaceutical companies will be
adept at the use of these methodologies the review emphasises the use of these
approaches for emerging diagnostic and device companies. This is particularly
useful for those diagnostics companies and dedicated device companies offering
technologies compatible with the product development activities of the
pharmaceutical and biotechnology sectors. The methodologies discussed include
discounted cash flow, decision analysis, sensitivity analysis, market
forecasting analysis and real options valuation.
Using a combination of general case studies the report guides the reader
through the licensing and portfolio evaluation methodologies necessary for
licensing opportunities between the pharmaceutical and biopharmaceutical sectors
and the device and diagnostics players.
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