The Future of Big Pharma OpEd by John Mack

Pharmaceutical “vendors” often cringe at that term and would rather be called solution providers or partners. Sometimes, however, they offer solutions for problems that the pharma industry does not have-yet!

The pharmaceutical industry is doing very well, thank you! Even with all its problems, profit margins are pretty high, maybe historically high. If that’s a problem that needs a solution, then “bring ’em on!”

Whatever side of the argument about prices and profits you are on, the current situation cannot go on forever. Prices will have to come down and margins will drop. I think a lot of the pressure to improve ROI is really the industry’s desire to maximize profits before the hammer falls. This puts pressure on the solution providers to come up with more proven solutions rather than more innovative ones.

Other problems loom for the industry. Fewer blockbuster drugs, political pressure to reduce prices, scant pipelines, are just a few that come to mind. Mergers will only help so much. Eventually, a few of the dysfunctional means by which pharma companies do business will no longer be glossed over by good times. Pharmcos will have to change the way they do business and they will need innovators to help them do it.

Take compliance, for example. Everyone knows that it is cheaper to keep current customers than to acquire new ones. But despite all the knowledge and innovative compliance solutions offered by vendors, pharma is not quick to adopt them. Why not? They simply don’t have to! Plus, there are business structural reasons why it is difficult for pharmcos to seek greater sales through compliance.

Pharma can’t long depend on “replacement customers” like the tobacco industry does. The pharma industry, unlike the tobacco industry, is in the business of keeping its customers alive! Pharmcos need to recognize that they are healthcare solution providers, not merely drug manufacturers and marketers.

While at a recent conference, I was struck by the fact that most speakers-especially vendors-often were pretty critical of the industry. I hear there are too many silos, too much focus on short-term results, “not invented here” mentality, etc., etc.

What a great idea it would be to get all these smart people together and write a book that looked ahead to where the pharma industry might be in five or ten years. Bring all these innovative ideas into it and describe the pharma company of 2010. Call it “Healthy Pharma 2010!”™

Vol. 3, No.4: April 2004
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