Report sees bleak future for research-based SMEs
medium-sized research-based pharmaceutical companies over the next
12 years, as they will simply not have the R&D muscle needed to
survive, says a new report from Decision Resources (DR).
Their most likely fate will be to be snapped up in merger and acquisition activity or to transform themselves into new guises, perhaps as generic or niche players. For some, the next few years could see their demise, according to the report, entitled 'The Outlook for the World Pharmaceutical Industry to 2015'.
DR believes that only the top 15 or 20 companies will have the ability to cope with the changing operating environment for pharmaceuticals.
"It's really a numbers game," said Tracy DeGregorio, a director at DR. "R&D expenditure for each of the top 12 companies approached or exceeded $2 billion, and for some it was well over $3 billion. An annual investment of this magnitude can be made only by a very limited number of firms, and is probably the lowest threshold for a company that wishes to stay in the game indefinitely."
DeGregorio believes that mid-tier European pharmaceutical companies are at particular risk, as they are too numerous and too small. In contrast, small research-only firms following the 'biotech' model could continue to flourish; last year, they accounted for 11 of the 29 new active substances (NAS) introduced onto world markets.
Companies with annual sales of less than $5 billion are unlikely to be able to keep up with the demands of drug R&D, which requires significant investment in technologies such as combinatorial chemistry, high-throughput testing, genomics, and proteomics. And although these methods have immense potential, their success cannot be guaranteed, so only the largest companies can handle the risk involved in tapping them.
For more information on the DR's Outlook for the World Pharmaceutical Industry to 2015 (No 03OV02), visit the publisher's website or contact Tim Daley.
