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Market insight: The changing biopharma risk equation
August 2016
by Economist Intelligence Unit  | 
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From the Economist Intelligence Unit, sponsored by MilliporeSigma
 
MilliporeSigma in June announced survey results of 250 global biopharmaceutical executives on how their companies will manage new risks associated with the changing biopharma landscape. The survey, sponsored by MilliporeSigma, was conducted by the Economist Intelligence.
 
“As pharma companies expand, they are looking more and more to biologics for their next potential blockbusters. However, this class of product—ranging from well-established large-molecule drugs to truly novel therapies—poses major challenges because of their scientific complexity and sophisticated development requirements,” the preface to the report notes, adding: “Furthermore, expanding the drug pipeline isn’t the only growth strategy most companies are pursuing: They are also planning to expand geographically and expect to face various risks doing so, including unfamiliar regulatory environments, shifts in pricing and customers’ ability to pay.
 
“All this means that risk management is rising in pharma executives’ agendas. To manage risks, companies are developing strategies that involve both building internal capabilities and reliance on external expertise.”
 
Study highlights include:
  • 48 percent of respondents are developing or will develop novel therapies, such as gene and cell therapies
  • Biopharmas anticipate entering South Korea, Indonesia and Taiwan in the next five years
  • Regulatory uncertainty tops the list of risks that biopharma executives think might disrupt their company’s strategy in the next five years (32 percent)
  • 80 percent of respondents are highly optimistic about their company’s ability to bring new drug products to market over the next five years.
 “In response to the uncertainty and disruption facing the biopharmaceutical industry, MilliporeSigma has moved beyond old risk-management models and has adopted and is applying new strategies at the earliest stages of development and seeing them through to commercialization,” according to Udit Batra, CEO of MilliporeSigma and a member of the executive board of Darmstadt, Germany-based Merck KGaA, MilliporeSigma’s parent company.
 
The executive summary for the report notes that with rapid advances being made in the development of new therapies, including stem-cell derived therapies and gene therapies, and a growing cohort of potential customers in the burgeoning middle classes of emerging markets, expansion into both new product categories and geographic regions is a priority for most companies.
 
“In many ways, the industry has never had it so good,” the report quotes Andrew Baum, managing director of equity research at Citi. “It’s got great science, helpful regulators and a growing elderly patient population.”
 
And from Steve Bates, chief executive of the UK’s BioIndustry Association: “People think there’s lots of exciting science that can be translated into new products and services.”
 
The survey found that companies are pursuing different classes of new biopharmaceuticals (or biologics) as part of their expansion. These drugs fall into two distinct categories. First, large-molecule biologics, such as monoclonal antibodies used to treat chronic diseases including, diabetes, cancers and rheumatoid arthritis. Although these complex therapies have been in use for more than 30 years and are already well established, the category continues to experience significant growth based on scientific and technical innovation. Second, novel therapies that are truly cutting-edge, such as gene and cell therapies. Therapies in this category are still largely in experimental phases and not readily available to the market. However, expectations of widespread adoption are at the core of many visions of personalized medicine.
 
In terms of geographic expansion, companies report that they are typically following a two-pronged approach, with a relatively even mix of expecting to grow market share in other countries and expecting to increase production and development capacity there.
 
To download the report and access additional content on the changing nature of biopharma, visit www.gobeyondbiopharma.com.
 

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