The global pharmaceutical market will more than double in value to $1.3 trillion by 2020, according to a new report, but the industry needs to transform itself to make the most of the opportunities.

The report, published by PricewaterhouseCoopers and entitled Pharma 2020: The Vision – Which Path Will You Take?, says that the increase is driven by “soaring worldwide demand for medicines and preventative treatments as the population grows, ages, becomes more obese and more prosperous”. It also notes that by 2020, the ‘E7 countries’ - Brazil, China, India, Indonesia, Mexico, Russia and Turkey - could account for as much as one-fifth of global pharmaceutical sales.

However, PwC warns that the current industry business model “is both economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets.” Pharmaceutical companies are facing a dearth of new compounds, relatively poor financial performance, rising sales and marketing expenditures, “increased legal and regulatory constraints and challenges and tarnished reputations,” while “health care payers and providers everywhere have recognised that current health care expenditure levels are also unsustainable.”

Steve Arlington, principal author of the report, said that “the core challenge for the industry is a lack of innovation”, adding that “over the next decade, the industry must shift its investment focus more toward research and less on sales and marketing.” He also claimed that “pharma’s traditional strategy of placing big bets on a few small molecules, marketing them heavily into primary care with the aspiration of achieving blockbuster sales, will no longer suffice”.

Shift from treatment to prevention

The PwC report notes that the focus will shift from treatment to prevention, saying that the latter “represents a huge opportunity for both health care providers and the pharma industry”. Currently only 3% of health care spending on Organisation for Economic Co-operation and Development countries is used for prevention, yet the World Health Organization says up to 80% of heart disease, stroke and diabetes and 40% of cancer could be prevented.

New technologies will drive R&D, the study claims, noting that the role of genetic-based diagnostics in the development of personalised medicines has increased and “further research into the human genome will open up a new world of opportunities in molecular science and new ways of looking at targets." PwC also argues that “the current linear phase R&D process will give way to in-life testing and live licensing,” which will see the industry “conduct smaller, more focused clinical trials, continuously sharing results with regulators.” This means that if testing confirms that a medicine is safe and effective, a live licence will be issued permitting the company to market the drug on a restricted basis and further in-life testing will extend the licence.

The report also claims that “there may well be one global regulatory system by 2020,” which would help to reduce the spiralling costs of regulatory compliance and reduce time to market and argues that the blockbuster sales model will disappear. “It will be replaced by a smaller, smarter and more effective sales force, led by key account managers who will negotiate tender based contracts on therapeutic benefit and outcomes. The imperative will be who can add the most value, not who can sell the most pills,” PwC concludes.