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Changing dynamics in the pharma and biotech industries
November 2012
by Jennifer Brice  |  Email the author
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The pharma and biotech industries are currently in a state of transition. One of the biggest challenges and reasons for this transition is due to the patent cliff approaching this industry, and it started with the patent expiration of Novartis AG, Roche. The therapeutic areas currently dominating the pharma and biotech industry include central nervous system, oncology, cardiovascular and antibiotics/antivirals. However, areas such as cardiology, central nervous system conditions and respiratory drug sales are expected to decline throughout the forecast period due to patent expiration of top participants.  
 
In 2011, Pfizer was at the top of the pharma and biotech leader board as a result of sales from a number of blockbuster products, including Lipitor, Norvasc, Celebrex, Lyrica, Viagra, Prevnar, Enbrel, Zyvox, Selzentry, Toviaz, Advil, Centrum and Robitussin. Pfizer's strategic acquisition of King Pharmaceuticals for $3.6 billion in 2010 was key in providing the company with a broader portfolio and pipeline, especially in the area of pain, to make up for potential losses to generic competition. However, Pfizer lost exclusivity to a number of products due to patent expiration; this includes Lipitor, the top product in terms of sales in the United States in 2011.  
 
Novartis ranked number two for pharma/biotech sales in 2011. A large contributing factor to Novartis' success in 2011 can be attributed to its product approval and launches, including Gilenya for multiple sclerosis and the Arcapta inhaler for chronic obstructive pulmonary disorder. Novartis' generic arm, Sandoz, also contributed greatly to 2011 revenue, especially with its anticoagulant, enoxaparin, which garnered more than $1 billion in sales. Novartis also completed its acquisition of Alcon in 2010.   
In 2011, Merck was ranked third for pharma/biotech sales in 2011. Highlights for the company included U.S. and EU approval for Victrelis (for the treatment of hepatitis C) and its combination diabetes drug, Juvisync.  
 
Despite the occurrence of patent expirations, several new brand-name drugs that have recently entered the market have blockbuster potential, including Pradaxa (for atrial fibrillation), Gilenya (for multiple sclerosis) and Victoza (for type 2 diabetes). In addition, more emphasis will continue to be placed on complex disease areas where there remains a large unmet need. For example, there have been a number of advances in the oncology industry, including new technologies such as next-generation sequencing and companion diagnostics that are contributing to its overall growth.
 
Antibiotics/antivirals will also continue to be a large focus for pharma and biotech companies, especially in emerging markets. Other industry drivers include the launch and growth of biologics and continued expansion in "pharmerging" markets. "Pharmerging" markets is one area with growth opportunity in the pharma and biotech market due to high unmet needs for treatment, greater government investment in healthcare and potential for growth in contract markets such as contract research and manufacturing organizations. Examples of "pharmerging" markets include China, Brazil, Russia and India.  
 
Reorganization, mergers and acquisitions (M&As), consolidation and portfolio changes are being evaluated to maintain growth centers in the face of a myriad of serious challenges. Overall, companies are looking to align with areas of growth opportunity as well as new business strategy and product development paradigms. For instance, pharma and biotech companies are increasingly forming partnerships in areas such as research and development (R&D) and manufacturing to contract research and contract manufacturing outsourcing companies.  
 
Merck, Roche, Sanofi, Novartis, Bristol-Myers Squibb Co., Bayer AG's $21.5 billion acquisition of Schering AG in 2006. Pharma and biotech consolidation has resulted in portfolio prioritization, reductions in R&D and fewer drug approvals.  
 
Another area with growth opportunity includes personalized medicine. Pharma is now focusing its attention on diseases that are much more complex to treat. The days of pharma companies placing big bets on a few molecules/blockbusters and focusing on easy-to-treat conditions are over. This has resulted in fewer drug approvals.   
 
For instance, in 2007, the Frost & Sullivan's Life Sciences global program manager. Her industry expertise includes a strong network of key opinion leaders and senior executives within the pharmaceutical and biotechnology segments. Jennifer also has an experience base covering a broad range of sectors within the life-sciences space, including infectious diseases, biosimilars, rheumatology/inflammatory diseases and ophthalmology. She earned her bachelor of science degree from <a ="lib="" modules="" linktrack.php?="" url="http://www.ramapo.edu/%20&quot;" target="_blank">Ramapo College and her mini-MBA from Rutgers University.  

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