Global Pharma Industry: In Need of a New Business Model?
|
Code :BSM0023
|
Region : Global
|
||||
 |
 |
 |
 OR |
||
|
Introduction:By 2005 the global pharmaceutical industry, the most profitable industry in theworld, has come under severe criticism fromall quarters. In 2001, the profitmargin on sales for the ten pharmaceutical companies included in the Fortune 500 list, was 18.5% while the median return of all other companies in the listwas 3.3%. In 2002, the ten drug companies outsmarted the remaining 490 companies in the Fortune list with a profit of $35.9 billion against $33.7 billion. By 2003, returns for the drug companies had fallen by 14.3% but they were still ahead of the median returns of 4.6% for the other industries. However, by 2005, the much celebrated pharmaceutical industry has come under attack. Increasing distrust among the customers on the ethics of the drug companies, analysts castigating the companies for spending tens of billions of dollars on making 'me-too' drugs instead of inventing newmolecules, trade journals accusing the industry for corrupting theminds of the physicians and fancy publicity with huge sums spent on marketing and advertisement – affected the industry's image. On the business front, patents worth $30 billion (one-fifth of annual sales in US alone) would expire by 2008, leaving the drug companies without any potential blockbusters in the pipeline. To add to the woes, an onslaught of generic drugs (once the patents expire) is expected to erode the revenues of the big companies.Under such circumstances, it is felt that the business model that has proved successful for the global pharmaceutical industry in the last decade of the 20th century has been irreparably damaged. Barrie G. James, president of Pharma Strategy Consulting, said, "you can't ride the old business model into the future—it is fast falling apart". |
|
| For Case Books
Click Here >> For Case eBooks Click Here >> |
|
