Challenges Facing The Pharma Industry

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Industry Forces

Within the industry there are several challenges that pharma companies face. Of the challenges, three significantly impact the industry and most certainly shapes how companies like Actavis strategically position themselves within the changing global marketplace.

Innovation within the value chain is on the decline from decreased R&D productivity
Persistent regulatory pressures both in the US and global markets
Loss of revenue due to generic competitors and new industry players such as biotech startups Drug innovation is one of the key challenges facing the pharma industry. R&D focused pharma companies currently invest approximately $12.6 billion a year in new drug development. This figure historically has doubled every five years and it typically takes a company 10 years to recoup the amount invested on one patent protected approved drug, after which competition in the generic sector erodes profit margins by about 80%. Pharma companies will spend between $350 million and $1 billion on new drugs over a period of 15 years. This number is staggering considering that “95% of experimental medicines that make it to human trials fail to be safe or effective.” Once a drug makes it to market, pharma companies have a finite amount of time to capitalize on the sales, distribution and marketing due to patent expiration. Additionally, something else pharma companies, especially generic focused companies should worry about is due to lower rates of successful
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