You are on page 1of 15

Strategic responsiveness

of the survivors of Big Pharma


companies

DIIS Seminar, Copenhagen


2nd October, 2006

Amit Rangnekar
NMIMS-PhD-2004
Industry Brief
US Europe Japan
Origin Pharmacies, dyes Pharmacies, dyes Pharmacies
Wyeth, BMS, Lilly, Roche, Hoechst, Ciba, Takeda
Merck, Pfizer, Sandoz
Traditional Pharma, healthcare Chemicals,agro,dyes, Pharma
focus on Pfizer, Merck, drugs, OTC- Hoechst, Takeda,
Wyeth, J&J Bayer, Ciba, Sandoz Sankyo

Drivers / Pricing, marketing, Price controls, non Cost controls


resistors innovation,generics harmonisation
Market share 44% 29% 11%
Local Strong US sales More US sales (43%) Dominant,
companies (60%), but low than European (34%), 8 of the top 10,
Europe sales (25%) except SanofiAventis account for
75% of local
sales
Key Growth Elements In Top 10 Markets

Year Price Volumes New Products Total


2001 2.5 8.1 2.8 13.4
2002 2.3 4.3 2.6 9.2
2003 2.9 4.5 2.6 10
2004 2.2 2.7 2.3 7.2
2005 1.6 1.8 2.3 5.7
Average 2.3 4.3 2.5 9.1

IMS-Health MIDAS, December, 2005


Dynamics of the 21st century pharma

Drivers Resistors
• Demographics • Drug discovery
• Biologicals • Patent expiries
• Emerging markets • Generic onslaught
• Innovation • Attrition rates of new molecules

Concerns
• Drug safety
? Opportunities
• Therapy niches
• Drug prices • Lifestyle diseases
• Industry credibility • Unmet needs
• Outsourcing
Big Pharma Marketshare (1995-2004)

Strivers
Big Pharma v/s World Pharma Growth %
Big pharma growth (%) World pharma growth (%)

Big Pharma on an average, has grown at 67% more than


the world pharma industry growth rate between 1995 and
2004
Big Pharma- Growing dominance
• Rx oligopoly of the Top 10 Pharma companies
• 5 each from the US and EU
• Occupy Top 2 positions in every key therapeutic segment
• 6500 sales force employed in the critical US market (average
per Big Pharma)
Big Pharma driven strategic Shifts
1995 2004
• Fragmentation • Consolidation
• R&D focus • R&D Outsourcing
• Organic growth • Inorganic growth
• Domestic dominance • Global reach
• Technology • Innovation
• Healthcare / Chemicals- focus • Pharma focus
• Prescription drugs • Generics
• Ownership • Partnership
Big Pharma Survivors (In red)
Rank 1995 Rank 2004
2. Merck • Pfizer
3. Glaxo • GlaxoSmithKline
4. Bristol-Myers Squibb • SanofiAventis
5. Hoechst • Johnson & Johnson
6. Roche • Merck
7. SmithKlineBeecham • AstraZeneca
8. Pfizer • Roche
9. Ciba Geigy • Novartis
10. Sandoz • Bristol-Myers Squibb
11. Bayer • Wyeth
Big Pharma 2004- Market shares since 1997

Survivors of Big Pharma Other Big Pharma


Big Pharma Geographical Ranking

Region WMS No 1 No 2 No 3
%
North America 47 Pfizer GSK J&J

Europe 29 SanofiAventis GSK Novartis

Japan 10 Takeda Pfizer Astellas

Asia 10 GSK Pfizer Novartis


(minus Japan)
Latin America 4 Pfizer Novartis GSK
Increasing Pharma Focus (%)

•Bayer decreased focus, lost MS, confirming lack of focus results in MS decline
•EU Big Pharma increased pharma focus thrice as much as the US companies
Strategies of Survivors
Origin Organic M&A Co- Strategic Alliances
growth promotion stake
Pfizer US ++ +++ + ++
Merck US +++ + +
BMS US + + +++
GSK Eur ++ +++ +
Roche Eur ++ ++ ++
Novartis Eur +++ + ++ +

Use of strategy: High +++, Moderate ++, Low +


Performance differentiators of Survivors

Origin Block New Patent Key segment Lucrative


Busters Drugs threats presence Niche
presence
Pfizer US +++ ++ +++ +++ +
Merck US ++ ++ +++ ++ ++

BMS US + + +++ + +

GSK Eur +++ +++ ++ ++ ++

Roche Eur ++ ++ + +++ +++

Novartis Eur ++ +++ + +++ ++

Impact of strategy: Maximum +++, Moderate ++, Minimum +


Key facts 1995-2004
• The survivors launched 7 new molecules per year against 4
new molecules for the stayers and the fringers
• Pfizer, GSK, Merck and BMS spent an average $5 million per
year between 1998 to 2004 on lobbying costs
• The survivors occupy the Top 2 positions in every key
therapy segment except CNS and GI