Social pressures, declining research-and-development productivity and the soaring costs of developing, launching and marketing drugs are just a few of the challenges facing the life sciences industry -- all at a time when shareholders' expectations are increasing.
In our report 'Pharma 2010: The threshold of innovation', IBM Business Consulting Services forecasts only 5.3 percent compound annual growth for the industry -- if it sticks with its current 'one-size-fits-all' approach. In our report we argue that a new business model based on targeted treatment solutions is needed to cross the 'threshold of innovation' -- the pricing line that governments and insurers are no longer able or willing to cross for 'me too' medicines. We go on to predict that pharmaceutical companies will be well rewarded for embracing this new model, with potential shareholder value growth in the range of 400 percent to 600 percent -- more than was achieved in the halcyon days of the early and mid-1990s.
To enhance cost-containment strategies and improve responses to market conditions, pharmaceutical companies worldwide are broadening their outsourcing of key enterprisewide processes, such as HR, finance, procurement and customer care. We expect the focus on reducing costs to continue as the industry manages the near-term trough and attempts to build a future based on product innovation and cost-effective, streamlined operations.
Our most recent publications on the pharmaceutical industry, including 'Pharma 2010: The value-creating supply chain, extend the Pharma 2010 vision.