Emerging Business Models in the Pharmaceutical Industries ...

Drivers Leading to Network Model
Traditional Big Pharma companies with internal
research departments have been posing themselves
as research companies, resulting in low research
productivity over the last few years.
The industry has begun to transform its business
model into a networked structure, which in effect is
breaking apart the traditional pharma value chain. New
model pharma companies are adopting the network
research model, which works on the basis of alliances
and outsourcing to multiple small and big research
organisations and biotech companies.
Current Model Future Model
Lower Success Rates in R&D Higher Success Ratesin R&D
No Modifying diseases Disease Modifying
Sequential Integrated Production Product Life Cycle Management
Insourcing Outsourcing
10 to 12 years 3 to 4 years
Inhouse Integrated R&D Network R&D
Low Productivity High Productivity
Source: JSB Intelligence
The Network Model
In the network R&D model, the company will have the liberty
to choose the right product at the right price. Early target
identification and validation will save considerable time and
reduce the risk of last stage failures.
Collaborative R&D gives pharma companies a broader
product pipeline with stronger and wider therapeutic focus.
Companies can leverage technology and benefit from faster
time-to-market and cost savings.
Presently 20-25% of research is done through contract
companies and this figure is expected to increase to 50% in
the near future. The sales division is also being outsourced
through CSO - Contract Sales Organisations. Some pharma
companies are also outsourcing the developing and
manufacturing of drugs.
Strategic Analysis of the Pharma Market, Future Revenue Models and Key Players 29