Although the pharmaceutical industry is facing all sorts of challenges, what with higher research and development costs, declining drug discovery success rates, patent expiries on several blockbuster drugs and the rise of cheaper generics, the sector offers “significant growth opportunity for participants that can build new strategic business models.”

That’s the view of analysts at Frost & Sullivan who say that the global pharmaceutical market, estimated to be worth $554 billion in 2004, is forecast to register an annual growth rate of 8.2% to 2011 to reach $967 billion. However, they warn that such expansion will be based on the ability of drugmakers to adapt to changes in patient populations “and target diseases of unmet medical need to maximise revenue potential.”

Specifically, an ageing population is poised to drive drugs for indications such as macular degeneration and Alzheimer’s disease, while drugs that address “rising multifactorial disorders” such as cancer, as well as lifestyle disorders like obesity, are also likely to sell well. Also, as patient groups become more fragmented and diagnostic methods improve, “the demand for evidence-based personalised treatments is likely to increase,” they add.

Phil Webster, healthcare analyst at F&S, claims: “It is essential for major pharmaceuticals companies to move from the blockbuster model and adopt new strategies that cater to specific diseases areas and populations,” adding that “to grow in this new era of evidence-based personalised medicine, companies should generate a sustainable product pipeline characterised by improved productivity and diversity.”

At the same time, he argues that less investment will be lost through late-stage candidate failures as more compounds succeed in clinical trials, because “more novel techniques to identify toxic or ineffective drugs early in the development process such as the use of biological models, bioinformatics and biomarkers will drive down development costs, increase revenues and improve overall Industry productivity.”

F&S says that as companies try to enhance their drug development pipelines, “mergers, acquisitions and licensing agreements for individual compounds are likely to gain appeal,” and concludes by noting that strategic collaborations to invest in existing leads “are also likely to diffuse the cost of potential failures, thereby preventing the draining of company resources.”