Emerging Business Models in the Pharmaceutical Industries ...

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Outsourcing The network approach allows pharma companies to focus on their core capabilities. The pharma industry follows a combination of models by outsourcing part of the research, the entire development and manufacturing supply chain, or clinical data management. While many players in the mid-cap segment are gearing up for the expected rise in outsourcing and contract-research and manufacturing services (CRAMS), it is expected that the entire process outsourcing model will soon replace the outsourcing of individual tasks. Companies in the West are considering moving part of their R&D activities to countries like India, which offer research services at less than one-fifth of the cost. Main Players Opting for Outsourcing India is a favoured outsourcing location for companies like Novartis, Pfizer, Sanofi and Eli Lilly. Pfizer recently doubled its clinical research investment in India to US $13 million. GSK is planning to increase global offshore clinical trials from 10% to 30 % by 2005. In a recent interview with Business Week, GSK CEO Jean-Pierre Garnier said, “We do about 60,000 patients in total trials each year – so the saving per person if you switch, say 20,000 of those patients to India, is in excess of US $10,000 per patient. That’s a saving of US $200 million right here.” The Network Model According to Bruce Schneider, executive vice-president and chief of operations for Wyeth Research, “Recent successes in discovery have produced an explosion of data coming into Clinical Development systems. It’s critical that we transform our clinical development operation to handle that volume. This arrangement is a logical next step in the evolution of pharmaceutical outsourcing.” Strategic Analysis of the Pharma Market, Future Revenue Models and Key Players 30
Licensing Overview Major differences exist in the in-licensing behaviour of the larger pharma companies. Over 10% of the approved in-licensed drugs have achieved block buster status as opposed to approximately 5% of internal drugs. Biotechnology companies are considering early outlicensing of product rights to access funds to move their pipeline products closer to commercialisation. Agreements between licensing companies are based on different options depending on the net sales accrued. Ligand Pharmaceuticals and Lilly have entered into a similar agreement about royalties payable to Lilly for Ontak Drugs. Growth in In-licensing and Out-licensing Licensing deals will become the largest drivers for big pharmaceutical companies by 2010, and almost 50% of revenues in major pharma will emerge from licensed compounds by 2005-2010. Nine of the top 10 companies have in-licensed more than 40% of their pipeline products. In terms of strategies for life cycle management, in-licensing will show major growth. The Network Model Glenmark Pharmaceuticals has out-licensed the development of its molecule to treat asthma, to US-based Forest Labs. Glenmark will receive $190 million (Rs. 850 crore) over a five/six-year period, subject to the development process crossing certain key milestones. In the current quarter Glenmark has received $10 million as an upfront payment. While Forest has commercial rights for North America, Glenmark will receive royalties from sales. Glenmark will also supply the active pharmaceutical ingredient to Forest. Bristol Myers Squibb’s (BMS) experience in providing marketing support to licensed products will be an asset in future as it becomes more dependent on such collaborations for short term growth. 100% 80% 60% 40% 20% 0% Percentage of Biotech Projects Licensed in by Pharma Companies Source: JSB Intelligence AstraZeneca Strategic Analysis of the Pharma Market, Future Revenue Models and Key Players 31 Pfizer Merck & Co Novartis BMS GSK Aventis Abbott Roche J&J
Page 1 and 2: Emerging Business Models in the Pha
Page 3 and 4: Table of Contents Introduction…
Page 5 and 6: Acronyms Big Pharmas The top global
Page 7 and 8: Introduction Pharma Industry Overvi
Page 9 and 10: Market Segmentation Getting Blurred
Page 11 and 12: Growth in the Pharma Market The pha
Page 13 and 14: Factors Restraining Pharma Market R
Page 16 and 17: Geographic Overview Introduction No
Page 18 and 19: Trends in the Pharma Industry Short
Page 20 and 21: Long Term Strategies - Forward Inte
Page 22 and 23: Long Term Strategies - Targeted Tre
Page 24 and 25: Long Term Strategies - Biotech and
Page 26 and 27: Long Term Strategies - Biotech and
Page 28 and 29: Overview of the Network Model The n
Page 32 and 33: Many of BMS's key drugs are from ot
Page 34 and 35: Growth in Semi Block Busters Even i
Page 36 and 37: Short Term Strategies - Pre- and Po
Page 38 and 39: Short Term Strategies Against Paral
Page 40 and 41: There are two main types of M&Q act
Page 42 and 43: The Revenue Model The market dynami
Page 44 and 45: Short Term and Mid Term Strategies
Page 46 and 47: Top 10 Pharma Companies - Major Mar
Page 48 and 49: Benchmarking - Top 20 Drugs by Sale
Page 50 and 51: Benchmarking by Percentage Growth i
Page 52 and 53: Benchmarking by Geographic Revenue
Page 54 and 55: Rank 1 2 3 4 5 JnJ GSK Company Pfiz
Page 56 and 57: Altace® Biaxin® Zofran® Brands A
Page 58 and 59: Introduction Pfizer is the world's
Page 60 and 61: Introduction GlaxoSmithKline (GSK)
Page 62 and 63: Introduction Merck & Co. develops,
Page 64 and 65: Introduction Aventis’ core busine
Page 66 and 67: Introduction Bristol-Myers Squibb C
Page 68 and 69: Strategic Direction The company aim
Page 70 and 71: Strategic Direction JnJ has been fo
Page 72 and 73: 15% Percentage Revenues by Segment
Page 74 and 75: 12 10 8 6 4 2 0 The Americas Revenu
Page 76 and 77: 20 15 10 5 0 Novartis revenues by S
Page 78 and 79: Strategic Direction Eli Lilly focus
Page 80 and 81:
New Revenue Models New revenue mode
Page 82:
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