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Time to change

Bringing outcomes to market in a new era of breakthrough science

AN INDUSTRY SPECIALIZING IN PATIENTS

The pharmaceutical industry has entered a new era with more and larger specialty products than ever before–generating a wave of exciting new science that has driven it back to profitable growth.

Top performers are focused on delivering superior outcomes for patients, better value for the system and enabling data-driven, digitally-powered enterprises. But our economic analysis indicates that innovative products alone will not be enough to succeed.

High performers will bring their new science to market in the form of outcomes that improve patient health in an economically viable way.

Our 2017 High Performance Business study of the biopharmaceutical industry reveals new insights into the market climate today, the opportunities and challenges ahead and what the High Performers are doing to outperform the market.

The key question for pharma companies today in their pursuit of high performance is:

“What sort of business do I need to have to ensure my new science delivers quantifiable value to patients, the broader healthcare community and investors?”
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KEY FINDINGS SUMMARY

Our research reveals four new insights into the market climate today.

  1. THERE IS A PROFOUND SHIFT TO SPECIALTY DRUGS BACKED BY A STRONG PIPELINE.
    The proportion of NME approvals in specialty indications increased from 46 percent in 2009 to 77 percent in 2016.

  2. REVENUE GROWTH IS BACK AND PROFITABILITY IS IMPROVING, BUT VALUATIONS ARE DOWN.
    Peer group revenue growth accelerated from 0.7 percent in 2015 to 3.7 percent in 2016 after four years of decline or stagnation from 2011-14.

  3. AFFORDABILITY AND PRICING CONCERNS PRESENT A CHALLENGE TO NEW LAUNCHES.
    There is a $30B affordability gap between 2016-21 analysts’ sales projections for NME launches and the net budget increases forecasted in developed markets.

  4. HIGH PERFORMERS DEVELOP BREAKTHROUGH SCIENCES, BUT BRING OUTCOMES TO MARKET.
    High Performers have greater product strength in their portfolio and pipelines, but are also backed by robust outcomes value data compared to standard of care today. Meanwhile, the rest of the peer group are in different stages on this path.

HIGH PERFORMANCE FOUR WAYS

High Performers have greater product strength in their portfolio and pipelines, but are also backed by robust outcomes value data compared to standard of care today. In an increasingly crowded and competitive market where a faster pace of product substitution is squeezing the product life cycle, product alone will often not be enough to differentiate.

High Performers are outperforming their peers in four key areas:

1. BUILDING MARKET DOMINANCE
Creating dominant positions in select therapy areas and/or business segments through continuous portfolio assessment of the best science.

2. SHIFTING FROM VOLUME TO VALUE
Organizations are shifting from being pure product companies to companies that deliver better value and improved patient outcomes.

3. BUILDING PATIENT EMPOWERMENT
Creating a rich patient interface and understanding of consumerism.

4. CREATING NEW SIMPLIFIED BUSINESS MODELS
Transform core operations to build new simplified businesses that meet unmet patient and healthcare system needs.

BACKGROUND

Accenture’s study of the Biopharmaceutical industry is in its 12th year and has analyzed the long-term performance of “pure-play” pharmaceutical companies (those with more than 75 percent of their revenue derived from pharmaceutical products).

Our 2017 update is based on trailing 12-month Q4 2016 financials and analyzes 16 of the largest pure-play pharmaceutical companies in the world over an 8-year period along with June 2016 industry-wide data. Collectively, the pure-play companies studied had $428 billion in aggregate global revenue, representing nearly half the global pharmaceutical market by net sales. The results have been compared with our 2016 and 2015 studies to identify relative movements in the performance rankings. The analysis pro forma adjusts for the impact of major M&A deals (but not smaller bolt-on deals) and removes the impact of exceptional costs to reveal a normalized picture of ongoing core business operations.

A detailed analysis of historic financial performance averaged over one-, three-, five- and seven-year time-frames is combined with consensus analyst forecasts to gain a forward-looking global picture of forecasted revenue growth from portfolio and new product launches as well as to gauge the impact of patent expirations and mature products.

CONTACT

Anne O’Riordan


Anne O’Riordan
Senior Managing Director, Global Life Sciences


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