Winning strategies for companies to succeed in ever-changing pharma market

Deep diving into these shifts, KPMG’s recent white paper ‘Pharma Outlook 2030: From evolution to revolution’ looks at the potential 2030 scenario examining trends that are expected to have a dramatic impact going forward. 

Downward pressure on pricing

With a change in the balance of power across the healthcare value chain, patients and governments will take centre stage, pressuring pharmaceutical companies to reduce prices; greater transparency around drug pricing has become the demand of the hour. The healthcare system is moving towards an outcome-based care where fees are expected to be dependent upon the success of drugs and procedures through measurable outcomes. 

These market dynamics have led pharmaceutical companies to think of transformative ways that could replace traditional blockbuster drugs, increase innovation, and shift from physician-preferred models to patient-centric models.

From treatment to prevention, and beyond

The emergence of ground-breaking new therapies, advances in technology and the consumerisation of health through increased access to data by patients are expected to augment the shift from treatment of symptoms to prevention measures and complete cures by 2030. Patients are expected to play an important role in driving this change as they gain more access to data, understand their conditions better and get more involved in managing themselves/their curative process. 

With this change, new players are also expected to enter the market, both from inside and outside the industry - putting the traditional business model under immense pressure.

Strategies for pharmaceutical companies

A few pharmaceutical companies have started to recognise the impact of the two major shifts discussed above, which upset the existing status quo and open the doors to new competition. The following strategies could help pharmaceutical companies to respond to the disruptions: 

Emergence of three pharmaceutical archetypes

Pharmaceutical companies can adapt to disruption through shifts in business models and refocus on new fields of play. However, even these changes are unlikely to generate the kind of growth and revenue that shareholders demand. Adopting the above-mentioned strategies can lead to complete organisational transformation that can help companies maintain influence and earnings. This situation could lead to three types of ‘archetype’, which are expected to prevail in the future pharmaceutical industry.

These three pharmaceutical archetypes are:

Currently, in India, we see that the portfolio decisions or focus areas of pharma companies already reflect some of these trends. We are also observing inorganic growth via acquisition, and growing portfolios as a strategy to combat downturns in income due to price control regime and regulatory scrutiny.

Action required by pharma leaders 

To adapt to the emerging changes, pharma leaders need to take swift steps to get ahead of changes. CEOs may not be able to predict the future. However, they can test potential solutions in think-tanks or laboratories. CEOs can prepare for the future in a way by setting up fully independent, integrated Pharma 2030 experimental laboratories to test new archetypes and business models, and accordingly determine which new organisational capabilities are needed and, accordingly develop a balanced transition map. By preparing for this future now, leaders can reduce the risk of declining income, while creating new opportunities for growth.

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Utkarsh Palnitkar is partner & head (infrastructure, government & healthcare, and life sciences practice) at KPMG India Pvt Ltd

(The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG in India)