Emerging Business Models in the Pharmaceutical Industries ...

** Companies working on average profit margins of 40%
will add up (2.5 x Cost reduced) of revenues; I.e.13.5%
reduction in cost will add upto 34%. though this
increase will not reflect in the annual reports as there is
no direct increase in revenues. The increase in profit
margins may further be compensated by increased
expenses in long term strategies.
Increased R&D expenses, biotech spending, and
increased marketing expenses to compete with the
post-patent generic situation will add to the cost
element. With cost savings of 13.5% of the revenues,
pharma companies can compensate for 34% of
increase in revenues. However revenues may decrease
due to patent expiry by as much as 40% by 2008.
Added revenues from value-added targeted treatment
solutions, in-licensing and out-licensing, and the new
forward integrated model have not been considered
while arriving at revenue equations.
***Adding the stimulating factors and negative factors
mean that the total net revenues will grow up to 53% by
2008 for the pharma industry.
New Revenue Model
Strategic Analysis of the Pharma Market, Future Revenue Models and Key Players 43