Overall Findings

PharmaFutures: Prescription for Long-Term Value is a pension-funded dialogue between the pharmaceutical industry and its investors about how to manage productivity challenges, hanging societal expectations, developments in technology and the growth in importance of the emerging markets.

The project discussed the market environment into which the drugs in early stage development today will be launched. Specifically, it reviewed three trends, their social consequences and the means by which industry and investors might respond to them in such a way as to meet both shareholder and societal needs.

Critically, PharmaFutures also discussed the means by which the industry communicates its strategies to manage these challenges to investors and how investors in turn signal what it is they want to know.

The R&D Landscape

PharmaFutures discussions underlined the critical importance of R&D and the hiatus in productivity today. Assessments of current levels of R&D productivity differ depending on whether they are made on the basis of today’s pipeline or today’s output. Judged against the former, changes in the management of R&D have combined with advances in molecular and cellular biology and biochemistry to produce promising results, and early stage projects have experienced very robust growth.

Judged against recent output, productivity over the past ten years – the annual number of new molecular entity (NME) approvals of the US Food and Drug Administration (FDA) – has fallen slightly, while R&D expenditure has almost doubled.

The project discussed whether the industry has achieved the optimal balance between significant, risky innovation and the less hazardous policy of maximising returns on areas of known research and the challenges in successfully managing R&D.

Changes in the Payer Landscape

PharmaFutures discussions concluded that the manner in which the industry responds to demands for more evidence-based reimbursement will be an important determinant of future success. Payers in all markets face significant pressures caused by ceilings in budgetary allocation to healthcare, growing demand for medicines for an aging population, the increase in chronic diseases requiring long-term treatment and increasing healthcare costs, including pharmaceuticals.

Consequently, payers everywhere – private and public – are seeking to understand better the drivers of healthcare expenditure and to implement reforms to contain them as far as possible.

This trend towards evidence-based reimbursement is particularly strong in Europe. PharmaFutures discussed the importance of using new pharmacoeconomic metrics to establish a broad definition of value and not solely to cut costs.

Emerging Economies

PharmaFutures concluded that it is important for the pharmaceutical industry to adopt a strategic approach to the emerging markets although in the short to medium term the significance of the USA, Europe and Japan remains undiminished.

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Comments

This is such a vital industry, with a strong and complex social contract. Hopefully, PharmaFutures can contribute to improved communications and a better alignment between society and shareholder needs.

Sophia Tickell, Director of PharmaFutures