Opportunities, risks and rewards

There are both considerable opportunities and challenges for companies wishing to excel in the Global Life Science and healthcare domain.

Opportunities are being driven from a strengthening science base, such as genomics, and new technologies, especially around integration (platforms, patient information & data). There is an escalating demand for medicines and services (changing demographics and an increasing number of treatments options) together with trade liberalisation.

The challenges are significant and include the poor record of scientific productivity and new products introduction, tighter regulations & standards for products in key market, and more difficult trading conditions. Healthcare provision around the world continues to rise and governments are seeking to restructure service and reduce overall costs. At the same time there is increasing competition for medicines and services.

Big Pharma, Generics and CRAMS

Large global pharma companies have responded to these challenges through focus on biologics. They seek growth through more sophisticated and effective science driven solutions and technologies.

Other companies have achieved considerable growth by focussing on emerging markets, over the counter products (OTC), contract manufacturing, and generics products created by going after the enormous "off-patent" market created by the tail end products of originator companies.

Global generics has had a long history of steady market growth, however formulation and delivery device technology is becoming more complex. This will bring challenges in both regulatory, compliance and supply chain management. Over the next few year between $20bn and $60 bn will go "off patent", each year.

CRAMS, the contract research and manufacturing market will continue to grow as large global business seek greater cost competitiveness and choose to outsource more and more high end research activities. Restraints to growth include getting the right organisational capabilities and expertise in place, addressing intellectual property (IP) protection concerns, as well as skill development and the retention of key personnel.

We anticipate continued acquisitions and joint ventures, but price & valuation will be challenging, and well executed post acquisition integration (PAI) strategies will be required.

All of this creates a complex business space where sound strategies and decision making is required to ensure success and manage risk. In addition, operational excellence in all parts of the company will be fundamental.