Pharma cos. turn to product cycle management

Reduced returns from new products, weaker R & D pipeline and increasing competition from generic drugs are prompting the global pharmaceutical industry to turn to product lifecycle management and in-licenses as top priorities.

This is revealed in Capgemini's fourth annual Vision & Reality survey. Product lifecycle management is a holistic approach that addresses integrated operations such as marketing and sales.

Another concern pushing up product lifecycle management and alliances a few notches higher is reducing market exclusivity. For instance, market exclusivity for some drugs is less than a year with competing firms often entering the market to capture a greater share of sales.

But lifecycle strategies are often developed from a functional perspective, rather than across the organisation, thus their adoption is too late. Often, the imminent patent expiry triggers the adoption. The development of appropriate matrics is also a hurdle with many companies having no specific measures or key performance indicators in place for lifecycle management.

In fact, according to the Capgemini's survey, only 19 per cent of executives interviewed believed that their companies were currently doing an excellent job in implementing lifecycle management strategies.

Thirty five per cent of respondents rated their companies' efforts as being no better than average, while over 15 per cent believe they do a very poor job.

In terms of strategies for lifecycle management, in-licensing is expected to move ahead of indication expansion. In the recent past over 63 per cent said that indication expansion had a strong impact on profitability of the companies.

Looking to the future, 45 per cent of them favour in-licensing and alliances, compared to 31 per cent sticking to indication expansion.

This increased focus stems from concern over failure to roll out a steady stream of new blockbuster drugs. This leaves pharmaceutical organisations facing a dangerous combination of high costs and sliding revenues, as drugs live out the patent protection.

With the situation unlikely to be resolved in the short term, industry observers believe the only way pharmaceutical companies can survive will be through lifecycle management and alliances.

Observers said, the emerging scene assumes significance because in 2003 the global generics market was estimated to be worth $27bn. While this may seem modest compared to the total pharmaceuticals market of over $400bn, the impact is higher in prescription terms due to the price differentials in the generics market.

For instance, they said, in countries like UK and the Netherlands, generics account for over 50 per cent of pharmaceutical prescriptions.

CapGemini's report is compiled from an in-depth survey of 74 senior pharmaceutical industry executives in 12 countries, besides a survey of over 8,000 physicians, in the UK, France, Germany and the US.