Dr RB Smarta, Managing Director, Interlink, talks about the changing scenario in the pharma sector , the growth trends and the issues that need to be tackled to ensure sustainable progress
Today and in the near future, the world is likely to face volatility, uncertainty, ambiguity and complexity (VUCA) along with ‘black swans’ (unpredictability). VUCA is a managerial acronym for the current situation in world. VUCA world expresses the systemic failures and behavioural failures, leading to organisational failure. The VUCA world is driven by digitisation, sustenance and rise of the developing world. This situation can be translated to various industries such as pharma, automation, nutrition etc.
Today, the pharma industry on one hand needs to be prepared to face the unexpected future and on the other hand it should accept the challenge to go beyond research and tailor-make solutions for total care of the patients.
Future concerns
Apart from the VUCA world, the industry is also faced with various other issues that may affect its growth.
- Generic revolution: The pharma industry is at the crossroads today, of generic revolution, with the patents going off the cliff. The demographics differ from country to country and we can see that emerging markets have come to the forefront to provide growth drivers.
- Ageing population in developing countries: The number of ageing population in the world is increasing and they are looking at lifestyle diseases. This ageing population is the active healthcare seeker today.
- Modern medicines: The modern medicines industry is facing criticality and constraints as the younger generation wants to be more fit and healthy by balancing nutrition. As a solution, the pharma industry needs to attain a higher level of competition, limitation, collaboration and consolidation.
- Genetic predisposition/ damage: Genetic predisposition along with consciousness about health has led to predisposition profiling. Integration of genomics and gene therapy methods with pharma products would increase market size for pharma products and services. These personalised or customised medicines would compel the industry to move towards faster improvisation and innovation on new therapies.
- Research and development: In developing countries there is a demarcation in the society in terms of high and low class. In spite of this demarcation, the pharma industry is focusing its R&D on lifestyle diseases. The pharma industry needs to shift its focus to R&D on antibiotics in order to sustain itself in the coming years.
- Innovation and technology: Diagnosis, micro surgeries, emerging role of traditional medicines are pushing the industry towards innovation where ‘Big Pharma’ has decided to spend huge money equivalent to a small country’s GDP to work on blockbuster medicines. On one hand we can see that big pharma companies cannot come out of this traditional mind set, while on the other hand small biotech companies, along with academicians, are working on innovative solutions and bringing new hope for the industry. It has been observed that the last five to six years have been years of add on medicines!
- Behavioural justice: Today’s patient is more aware of his health and the services offered by healthcare providers to him/her. The patient is no longer helpless and wants value/ justice for the money he is spending on healthcare facilities.
- Medical nutrition: Industries within the health and life science sectors are moving towards one another leading to new avenues like the medical nutrition sector. Convergence of these industries plays a crucial role of shaping new markets for pharma products. This birth of medical nutrition has shown the pharma industry a dual path of relying on product and service.
Can sustainability be achieved?
In order to achieve sustainability, we need to focus on approaches that address innovation and capability building, drive leadership and define market tailored and defective business strategies for each market segment.
The industry has seen growth over a period of years. But now the growth is declining due to lower prices of generics which have led to reduced value, no new blockbuster drugs, demographics and no real R&D in the developed countries.
As a result, we need to look out of the domain markets viz. the emerging markets for survival and sustainable growth.
Emerging markets
The pharma industry is mainly driven by emerging markets, as according to certain industry estimates the total expenditure on healthcare in these emerging markets is expected to grow upto $499 billion by 2020. The scientific and technological advances together with socio-demographic changes along with increasing demand of medicines and trade will revive pharma’s fortune in another 10 years and deliver dramatic improvements in patient care.
Unleashing the potential of India
India, today has a great talent pool of skilled workforce, with over 8.5 million qualified scientists, around 35,000 students graduating from medical and pharmacy colleges, low set-up costs, contract research and manufacturing, genetically diverse patient pool, low treatment costs as compared to developed nations, recent growth friendly government policies etc. All these factors can add to the potential of India as an emerging market for pharma and biopharma. As well as, these various factors make India a lucrative market for investment in pharma and biopharma. This can happen provided we manage sustainable growth.
Growth of biopharma
Many of the pharma companies have hastened their efforts to strengthen their presence in the emerging markets by means of R&D investment, licensing deals, acquisitions or other partnerships. However, with global markets facing dynamic demographic and disease trends, changing market demands, and evolving regulatory requirements, it has been hard for manufacturers to devise the strategies needed for success in each of these areas. Apart from this, the rise in issues such as patent cliff/patent expiry majority of the pharma companies are looking at diversifying into biopharma industry by developing biosimilars and getting into joint ventures with the manufacturing companies. The major lobbying areas in the biotechnology industry in India are research and development, support activities, marketing, innovation and new drug discovery etc.
It has been observed that opportunities in the biopharma sector are quite huge and growing rapidly. Pharma and health biotech are some of the fastest growing segments in India. Biopharma accounts for around 64 per cent of India’s biotech industry. It is currently valued at around $2-3 billion and is growing at a CAGR of ~20 per cent. Vaccines and biosimilars constitute the largest component of the Indian biopharma market. The growth in biopharma market can be mainly attributed to the exports as the domestic market is far less as compared to the exports market.
The biopharma sector has the potential to become mainstream in the near future. The efficacy and safety of biopharma products, combined with their ability to address previously untreatable conditions, allows companies to grasp higher prices for innovative drugs. Biopharma products have redefined the concept of blockbuster drugs, with drugs such as Humira (anti-inflammatory) generating sales of more than $10 billion a year.
A multi-pronged approach for sustainable growth
In today’s times, it is important for pharma companies to adopt a multi-pronged approach to address diversity, lifestyle and behavioural issues such as doing justice to the emotions of patients, demographic dividend of emerging markets, biotech innovations and utilisation of stem cells. This multi-pronged approach for effective healthcare is necessary to come up with innovative solutions for sustaining the pharma industry in the coming years.
Should the pharma industry avoid the trap of uncertainty and, in this new world, consistently improve and innovate new solutions through this multi-pronged approach?
References:
1. Pharma Emerging Markets 2.0, Strategy&, Booz and Company
2. Development of Biopharmaceuticals Industry in India, Dr. Bhaswat S. Chakraborty, Sr. VP & Chair, R&D Core Committee, Cadila Pharmaceuticals Ltd.
3. Unlocking Pharma Growth