Background and Project Approach

PharmaFutures 2 moved from hypothetical futures to explore current challenges by bringing together sixteen pension fund managers, sell and buy-side analysts, pharmaceutical executives (from branded and generic firms) and industry experts to review the value drivers for the industry and analyse how societal expectations would shape them. Their deliberations over a twelve-month period were enriched by interviews with 23 external experts. The group discussed a range of issues relevant to a successful, long-term pharmaceutical industry including innovation, adaptive leadership, the emerging markets, access to medicines in developing countries, intellectual property protection, marketing, information and advertising, pricing, societal expectations, government health provision and demographic changes.

The first PharmaFutures 2 Workshop examined four core value drivers of the industry: R&D, SG&A, top line revenue and trust. Discussions focused on current approaches to manage these value drivers and how and whether a focus on the delivery of long-term value would lead to change. It acknowledged the considerable challenges facing executives attempting to balance investor demand to maintain high quarterly returns with the investment needs of an industry with long lead times.

During Workshop 2, pharmaceutical management and investors examined the interplay between market forces and societal expectations and its potential impact on value creation. It reviewed a spectrum of existing and possible management responses to the changing operating environment and the likely investor reaction to such decisions.

The initiative closed with the publication in 2007 of PharmaFutures 2 which concluded that three trends will determine the industry’s future value: R&D productivity, value for money and the emerging markets. The report reviews these trends, their social consequences and how industry and investors might address them so as to meet both shareholder and societal needs. In addition, the report highlight Challenges to the industry and features a clear investor statement of the information investors would find valuable in assessing how the industry managing its social contract.

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Comments

The structured, two-way communication enabled by PharmaFutures helps to improve levels of trust, understanding and a greater alignment of interest between investors and pharmaceutical executives.

Daniel Summerfield, USS