If you're not an eternal optimist, don't read A.T. Kearney's new report on the pharmaceutical industry. The management consulting firm takes a hard look at current trends, concluding that much of the work drugmakers have done to combat their well-known woes is just rearranging deck chairs on the Titanic.
Pedal-to-the-metal marketing? An expensive approach that's delivering lower returns all the time. Megamergers and other forms of industry consolidation? Concentrating the problem rather than solving it. Cost-cutting? A temporary fix. Long-term, even "[f]orecasts for flat sales may be optimistic," according to the report Pharmaceuticals Out of Balance: Reaching the tipping point.
Kearney posits that pharma is on the verge of overwhelming, painful change. Think volcanic eruptions making new rock and heaving up new mountains. And that's the best-case scenario. Quoting former Army Chief of Staff General Eric Shinseki, the report says, "If you don't like change, you're going to like irrelevance even less."
We've heard some of Kearney's prescriptions for that change before; for instance, lots of industry observers/analysts/strategists are saying that drugmakers need to become more about payers and less about prescriptions. Rather than focusing on selling to docs and consumers, companies ought to be soft-soaping insurers and governments to get treatment guidelines and reimbursements to go in their favor. And to impress payers, pharma needs to see each product as part of an overall treatment model, working with patients on compliance and lifestyle choices, too.
Kearney's other recommendations involve looking globally at mass markets and less-expensive meds, and blurring company boundaries to connect with more and more outside partners and contractors. We'll let them explain the fine points. Read through to the end if you're prone to discouragement; there's a five-point to-do list that's easier to wrap your head--and hope--around than you might think.
- see the Kearney report