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    Global Pharma Strategy

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    Dr Amit Rangnekar
    The strategic responsiveness of big pharma companies has led to consolidation in the industry. The top 10 companies now occupy dominant positions in most therapeutic segments. The surviving big pharma companies from 1995-2004 employed strategies like organic growth, mergers and acquisitions, co-promotions, and strategic alliances to maintain market share leadership. They launched more new drugs and faced fewer patent threats than companies that did not survive in the big pharma ranks.

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    Global Pharma Strategy

    Uploaded by

    Dr Amit Rangnekar
    325 views15 pages
    The strategic responsiveness of big pharma companies has led to consolidation in the industry. The top 10 companies now occupy dominant positions in most therapeutic segments. The surviving big pharma companies from 1995-2004 employed strategies like organic growth, mergers and acquisitions, co-promotions, and strategic alliances to maintain market share leadership. They launched more new drugs and faced fewer patent threats than companies that did not survive in the big pharma ranks.

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    The strategic responsiveness of big pharma companies has led to consolidation in the industry. The top 10 companies now occupy dominant positions in most therapeutic segments. The surviving big pharma companies from 1995-2004 employed strategies like organic growth, mergers and acquisitions, co-promotions, and strategic alliances to maintain market share leadership. They launched more new drugs and faced fewer patent threats than companies that did not survive in the big pharma ranks.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    325 views15 pages

    Global Pharma Strategy

    Uploaded by

    Dr Amit Rangnekar
    The strategic responsiveness of big pharma companies has led to consolidation in the industry. The top 10 companies now occupy dominant positions in most therapeutic segments. The surviving big pharma companies from 1995-2004 employed strategies like organic growth, mergers and acquisitions, co-promotions, and strategic alliances to maintain market share leadership. They launched more new drugs and faced fewer patent threats than companies that did not survive in the big pharma ranks.

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    Strategic responsiveness

    of the survivors of Big Pharma


    companies

    DIIS Seminar, Copenhagen


    2nd October, 2006

    Amit Rangnekar
    NMIMS-PhD-2004
    Industry Brief
    US Europe Japan
    Origin Pharmacies, dyes Pharmacies, dyes Pharmacies
    Wyeth, BMS, Lilly, Roche, Hoechst, Ciba, Takeda
    Merck, Pfizer, Sandoz

    Traditional Pharma, healthcare Chemicals,agro,dyes, Pharma


    focus on Pfizer, Merck, drugs, OTC- Hoechst, Takeda,
    Wyeth, J&J Bayer, Ciba, Sandoz Sankyo

    Drivers / Pricing, marketing, Price controls, non Cost controls


    resistors innovation,generics harmonisation
    Market share 44% 29% 11%
    Local Strong US sales More US sales (43%) Dominant,
    companies (60%), but low than European (34%), 8 of the top 10,
    Europe sales (25%) except SanofiAventis account for
    75% of local
    sales
    Key Growth Elements In Top 10 Markets

    Year Price Volumes New Products Total


    2001 2.5 8.1 2.8 13.4
    2002 2.3 4.3 2.6 9.2
    2003 2.9 4.5 2.6 10
    2004 2.2 2.7 2.3 7.2
    2005 1.6 1.8 2.3 5.7
    Average 2.3 4.3 2.5 9.1

    IMS-Health MIDAS, December, 2005


    Dynamics of the 21st century pharma

    Drivers Resistors
    • Demographics • Drug discovery
    • Biologicals • Patent expiries
    • Emerging markets • Generic onslaught
    • Innovation • Attrition rates of new molecules

    ?
    Concerns Opportunities
    • Drug safety • Therapy niches
    • Drug prices • Lifestyle diseases
    • Industry credibility • Unmet needs
    • Outsourcing
    Big Pharma Marketshare (1995-2004)

    Strivers
    Big Pharma v/s World Pharma Growth %
    Big pharma growth (%) World pharma growth (%)

    Big Pharma on an average, has grown at 67% more than


    the world pharma industry growth rate between 1995 and
    2004
    Big Pharma- Growing dominance
    • Rx oligopoly of the Top 10 Pharma companies
    • 5 each from the US and EU
    • Occupy Top 2 positions in every key therapeutic segment
    • 6500 sales force employed in the critical US market (average
    per Big Pharma)
    Big Pharma driven strategic Shifts
    1995 2004
    • Fragmentation • Consolidation
    • R&D focus • R&D Outsourcing
    • Organic growth • Inorganic growth
    • Domestic dominance • Global reach
    • Technology • Innovation
    • Healthcare / Chemicals- focus • Pharma focus
    • Prescription drugs • Generics
    • Ownership • Partnership
    Big Pharma Survivors (In red)
    Rank 1995 Rank 2004
    1. Merck 1. Pfizer
    2. Glaxo 2. GlaxoSmithKline
    3. Bristol-Myers Squibb 3. SanofiAventis
    4. Hoechst 4. Johnson & Johnson
    5. Roche 5. Merck
    6. SmithKlineBeecham 6. AstraZeneca
    7. Pfizer 7. Roche
    8. Ciba Geigy 8. Novartis
    9. Sandoz 9. Bristol-Myers Squibb
    10. Bayer 10. Wyeth
    Big Pharma 2004- Market shares since 1997

    Survivors of Big Pharma Other Big Pharma


    Big Pharma Geographical Ranking
    Region WMS No 1 No 2 No 3
    %
    North America 47 Pfizer GSK J&J

    Europe 29 SanofiAventis GSK Novartis

    Japan 10 Takeda Pfizer Astellas

    Asia 10 GSK Pfizer Novartis


    (minus Japan)
    Latin America 4 Pfizer Novartis GSK
    Increasing Pharma Focus (%)

    •Bayer decreased focus, lost MS, confirming lack of focus results in MS decline
    •EU Big Pharma increased pharma focus thrice as much as the US companies
    Strategies of Survivors
    Origin Organic M&A Co- Strategic Alliances
    growth promotion stake
    Pfizer US ++ +++ + ++
    Merck US +++ + +
    BMS US + + +++
    GSK Eur ++ +++ +
    Roche Eur ++ ++ ++
    Novartis Eur +++ + ++ +

    Use of strategy: High +++, Moderate ++, Low +


    Performance differentiators of Survivors

    Origin Block New Patent Key segment Lucrative


    Busters Drugs threats presence Niche
    presence
    Pfizer US +++ ++ +++ +++ +
    Merck US ++ ++ +++ ++ ++

    BMS US + + +++ + +

    GSK Eur +++ +++ ++ ++ ++

    Roche Eur ++ ++ + +++ +++

    Novartis Eur ++ +++ + +++ ++

    Impact of strategy: Maximum +++, Moderate ++, Minimum +


    Key facts 1995-2004
    • The survivors launched 7 new molecules per year against 4
    new molecules for the stayers and the fringers
    • Pfizer, GSK, Merck and BMS spent an average $5 million per
    year between 1998 to 2004 on lobbying costs
    • The survivors occupy the Top 2 positions in every key therapy
    segment except CNS and GI

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