Pharma's focus on growth "unsustainable" says report

The pharmaceutical industry is failing to increase efficiencies in core areas of its business - such as clinical trials and sales - because of an enormous pressure from investors to drive revenues, according to Datamonitor.

This is the conclusion of a newly published report​ that claims the drug industry is sacrificing return on investment to hit investors' growth targets and on the whole is pursuing an "unsustainable growth strategy."​

Datamonitor believes the industry's core business model is essentially flawed - focused on double-digit growth and sales, instead of aspects such as profitability, process optimisation, and intelligent marketing techniques. Merger and acquisition strategies are held up as potential solutions to the industry's problems but will not generate significant promotional returns and are untenable in the long term, according to Datamonitor analyst Tony Hart.

The industry should look to innovative licensing models to fill the revenue gaps caused to R&D failing, in order to provide sufficient novel compounds to fill companies' pipelines, says the report. In the meantime, US Food and Drug Administration (FDA) rulings will drive investment in sophisticated storage and access technologies, since pharmaceutical companies are required to maintain all relevant data related to drug development and clinical trials.

Future strategies will involve in-licensing, which will drive investment in target-validation technologies in conjunction with trusted partners, such as biotechnology firms, according to Hart. He also predicts that pharmaceutical companies will seek integrated customer relationship management (CRM) tools to improve promotional effectiveness.

Although wholesale process re-engineering and integration are not a high priority, Datamonitor predicts there will be increased investment in sales force automation tools enabling the effective targeting of physicians.