Most large pharma companies have managed to muddle through the patent cliff through a combination of strategies including M&A, deep cost-cutting, and simply managing Wall Street expectations. Now that we have largely refactored and resized for this new world of fewer blockbusters, there is a race to own specialty markets.
Therapeutic specialization has the potential for liberating the profit engine in many companies. The benefits of R&D focus and strategic alliance leverage to staff expertise to targeted marketing offer a level of productivity and efficiency not available to large unfocused companies with a Chinese menu of products. Hence, there will be a continuation of focus and specialization around therapeutic areas, patient types, and geographical markets.
Business development and strategic alliance offices have grown headcount and executives are piling up global frequent flier miles looking for new products and companies. The challenge is that many of the leading global markets are getting more sophisticated in their own right, with regulatory restrictions and pricing limits altering the balance of power between manufacturers and markets. Innovation and strong IP are critical to success. For this reason, this move towards specialty products will require a fierce adherence to one’s positioning and a skeptical eye towards opportunism.