Current trends seem poised to reverse the last decade’s pattern of revenue stagnation and operating profit decline.
It is hard to ignore the potential of the healthy innovation we are seeing in Pharma. Current trends seem poised to reverse the last decade’s pattern of revenue stagnation and operating profit decline. Consider this: Although specialty drugs for targeted disease states have replaced the blockbuster drugs of the past, New Molecule Entity (NME) approvals have sprung back to life. Just as in the blockbuster years of 1996-2004, there has been an average of 31 NME approvals a year in the last five years. And that number is expected to reach an average of 40 as we move ahead. All of this adds up to a growth rate for top pharma firms that is expected to rebound to three to five percent in the next five years.
There is a challenge to reaping the rewards of this robust and unprecedented environment, however. At the same time as growth is rising at a promising rate, research & development costs are increasing at double to triple that rate. Compounding funding challenges are payer cost pressures and winner-takes all competitive dynamics. All of this adds up to an undeniable resourcing crisis. If companies don’t address the scarcity of resources within both the R&D and commercial functions, all of the promise of growth and profitability in the years ahead could be squandered.
For companies seeking to tackle resourcing challenges with strategies that help enhance profitability and ROI, KPMG’s most recent thought leadership piece for life sciences should provide some insight. Take a look at A Bittersweet Pill: While welcoming responsibilities for breakthrough innovation, Pharma must tackle a resourcing crisis.