With the changing market scenario, pharmaceutical companies are faced with a lot of strategic alternatives with respect to the New Product Development (NPD) process. Companies need to consider a host of internal and external factors before making NPD decisions as these decisions have the potential to impact the future of the company.
The pharmaceutical companies are faced with enormous
challenges in the wake of the changing landscape of
the pharma market. Intensifying competition, imminent
expiry of the patents on numerous blockbusters, very
few potential blockbusters in the pipeline, longer approval
times and threat of personalized medicine, which is
becoming more real everyday, and the advances in biotechnology—all
these forces are making the pharma majors rethink their
New Product Development (NPD) strategies. Moreover,
a shift in the balance of power in favor of consumers
and the payers has led to their specifying the sort
of innovations they want and the price they are willing
to pay for them, which has further added to the woes
of the pharma companies.
The
pharma industry has not been helped by the fact that
as the need for developing new drugs has become more
acute over the past few years, the productivity of their
R&D expenditure has declined steadily. According
to an estimate by Goldman Sachs, though the R&D
expenditure by industry leaders has doubled from 1997
to 2001 to touch a high of $35 bn, the output of new
drugs has declined. In 2001, the US Food and Drug Administration
(FDA) approved just 24 New Molecular Entities (NMEs),
fewer than in any of the previous six years—and
this downward trend seems set to continue. On the other
hand, the time to develop a new drug in the US, from
pre-clinical testing to approval has increased from
11 to 12.9 years during the last two decades. |
