Skip to main content Accessibility help
×
Hostname: page-component-78c5997874-fbnjt Total loading time: 0 Render date: 2024-11-09T20:05:06.241Z Has data issue: false hasContentIssue false

2 - The Pharmaceutical Sector

Published online by Cambridge University Press:  24 February 2020

Lawton Robert Burns
Affiliation:
Wharton School, University of Pennsylvania
Get access

Summary

Strategy and structure in the current biopharmaceutical industry are a legacy of business conditions that no longer exist. As conditions change, strategy and structure must adapt. The typical large biopharmaceutical company accounts for a tiny (about 1 percent, and shrinking) share of total global biomedical innovation, yet fills its development portfolio with its own internal discoveries. Companies are spending heavily on their own leads, rather than on the best leads, with resulting high failure rates in late stage development. Companies often insist on manufacturing their products in-house, leading to low asset utilization rates, under-investment in new manufacturing technologies, and volatile gross margins. Pressure on gross margins is amplified by the recent and relatively sudden loss of real US pricing power. Communicating product attributes to patients, physicians, and payors has shifted from traditional one-way (e.g., print, TV, radio) media in which companies could control messaging to two-way (e.g., Internet, social media) channels in which companies’ voices must share bandwidth with other points of view. These and other profound changes in biopharmaceutical companies’ operating environment call for similarly profound changes in strategy and structure. The challenges are significant, but entirely addressable, and in several cases, successful transitions in other industries (e.g., integrated circuits, film) may be instructive.

Type
Chapter
Information
Publisher: Cambridge University Press
Print publication year: 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×