Emerging Business Models in the Pharmaceutical Industries ...

Long Term Strategies - Biotech and Genomics
Growth in Biotech
Out of the total drugs being developed, 30% of the drugs
are biotech.. In 2003 there were over 600 publicly traded
biotech firms worldwide, and drug discovery biotech
revenues were believed to be $27 billion, with R&D costs
approximately reaching 70%.
Successful biotech firms have focussed on narrow
portfolios, allowing them to more effectively manage R&D,
marketing and sales. While most breakthroughs in the
future are expected from biotechnology, the constraint of
mass production capacity is driving costs.
The commercial technology is not expected to be available
in the next five years, but players investing and developing
biotech now will emerge as winners in the future. Pharma
companies are entering into early alliances with biotech
companies. This saves higher premiums being paid in
acquisitions.
Complexity in Biotech
Biotech are more complex to produce compared to
conventional pharmaceuticals, resulting in a global
shortage of production capacity. As a result prices
continue to be high and biotech applications are often
limited to low-volume and high-need areas.
Coupled with advancement in nanotechnology, biotech
treatment delivery is heading for a complete revolution,
including telemedicine and biochips.
Market Drivers for Biotech Growth
• Increasing trend of predictive and preventive care
• Increased growth of biotech internationally
• Increased big pharma consolidation
• biotech to big pharma consolidation
• biotech to biotech consolidation
• Larger value realisation in partnering
• Bundling of products leading to growth in
personalised drugs as against block busters
• Approvals of generic biotech drugs
• Increased funding from investors and greater interest
in early stage investments, and doubling of biotech
IPOs by 2005.
Strategic Analysis of the Pharma Market, Future Revenue Models and Key Players 24