In their latest global research report Increasing the lifetime value of pharmaceutical products , Capgemini Life Sciences have found that the majority of pharmaceutical companies are missing vital opportunities to maximize their products lifetime value. The report, developed in collaboration with the Economist Intelligence Unit, points to a need for a more integrated approach to Product Lifecycle Management (
Rapidly changing market
Given the success of pharmaceutical companies in bringing major blockbuster products to the market, investment in
Here are some of the stark figures:
- By 2007 more than US$40 billion in US sales will be lost at the top 10 pharmaceutical companies as a result of the slowdown in research and development (R&D) innovation and the expiry of patents on major products;
- Capgemini estimates that 150 medium sized new drugs will be required to plug the gap to arrest the drug pipeline shortfall by 2007-8 in the
- The market erosion to generics has the potential of costing Pfizer 20 percent of 2003 sales by 2008
- Future pharmaceutical industry growth is expected to be between 4 and 8 percent. Historically industry growth has been double digit.
"The pharmaceutical industrys success to date has been built on a consistent flow of high earning innovative products," says Paul Nannetti, Global Life Sciences leader. "However, as the industry faces up to the challenge of weaker R&D pipelines and likely reduced returns from new products, there is an imperative to drive greater value from existing portfolios. It is therefore not surprising that
The work included Capgemini interviews with over 70 senior pharmaceutical industry executives in 12 countries about their views on
A key survey finding revealed that 90 percent of pharmaceutical companies believe that
- Many of the traditional
PLMstrategies are losing effectiveness as they "fall out of favor" with physicians, payers and regulators;
- Major inconsistencies exist in how firms define
PLMand how they implement it; PLMopportunities are not adopted early enough in a products life;
- Lifecycle plans and strategies are developed from functional perspectives, rather than taking an overall business perspective;
- Many organizations do not apply hard bottom-line criteria to the planning and evaluation of
The definition and objectives of
- An overly narrow focus for lifecycle management activities;
- The lack of clear targets and performance measures;
- A silo-based approach preventing effective cradle-to-grave product management;
- No clear governance model to drive lifecycle management.
Tangible benefits make
There is little doubt that adopting rigorous lifecycle management practices will be a challenge for the industry. Although some companies have pockets of good practice, none have approached the level of sophistication seen in other industries such as automotive, aerospace, high-tech or consumer goods.
The highly successful business model of pharmaceutical companies - based on bringing a steady stream of blockbuster products to the market - has meant that investments in lifecycle management have not been a priority. However, faced with increased financial and pipeline pressures, pharmaceutical firms now have an opportunity to fully unleash the returns locked in their products, and to deliver the profitability and growth needed to sustain their financial well-being.