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New York, February 24, 2004 — Product differentiation, increased M&A and alliance activities and targeted innovation are key growth strategies for large biopharma companies, according to Deloitte & Touche LLP’s latest study, "Growth Strategies for Large Biopharma Companies."
"Biotech companies have always faced a competitive environment, but the fundamental nature of this competition is changing in response to the convergence of therapeutic platforms used by large biotech and big pharma, as well as the resulting convergence of therapeutic areas pursued by these two groups," said John Rhodes, managing partner for Life Sciences with Deloitte & Touche LLP in the U.S. "To sustain growth, large biopharma companies will need to address these challenges while continuing to evolve their business models to anticipate tomorrow’s market trends."
Top-tier biopharmaceutical companies now face unprecedented challenges to further growth including technological developments, shifting patterns of supply and demand, and unresolved political and regulatory issues. The study points to three strategies to assist biopharma companies in tackling these challenges:
Improved commercialization Biopharma companies need to differentiate their products by showing how value is defined for multiple stakeholders and optimize product development for commercialization. A key differentiator among biopharma companies will be the ability to integrate a broader commercial understanding into the marketing and new product development processes.
Enhanced M&A and alliance capabilities To succeed in an even more competitive future environment, M&A and alliances should be viewed as a core strategy, rather than a supplement to internal research and development. Today’s riskier supply-base is impacting both the effectiveness and efficiency of new product development. Internal development is no longer economically optimal as the sole source of innovation. As companies look to other sources of innovation, they need to screen opportunities for competitive advantage, rethink due diligence to handle broader risks, and execute deals by integrating operations.
Targeted innovation To sustain long-term growth, biopharma companies need to evolve their business models to move beyond individual product development toward delivering integrated health care solutions, leverage intellectual property to extend care delivery and expand beyond existing core capabilities through an option-based approach.
"For the long term, leading companies must evolve their business models in anticipation of the challenges they will face tomorrow," commented Glenn Snyder, the study’s leader and principal with Deloitte Consulting LLP. "The most successful companies will recognize today’s issues, respond quickly, and support the innovation that will position them for continued success."
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