The pharma industry in the new decade

Marcel Velterop explains the rise of collaborative working in the industry.

2009 was a momentous year in many ways, but it will always be remembered for the economic turmoil that impacted almost every country and every industry across the globe. The pharmaceutical industry once considered itself largely safe from downturns and the macro economic cycle, but last year's events left none in doubt that there are few safe havens in such traumatic times. As the new decade begins, it seems the worst of the troubles from 2009 are beginning to dissipate and economies are returning to something that looks more like normality. But what legacy have these events left on the pharmaceutical industry and how does it move forward with confidence to meet the challenges of healthcare in the 2010s?

Some of the macro changes and trends have been openly discussed; there will be less dependency on the blockbuster model, with smaller therapeutic areas gaining much needed attention and 'pharmerging markets' becoming the key growth markets for the industry.

There is another level of re-alignment being undertaken by the industry. Long established norms are being challenged and replaced. The high cost to develop new drugs was once justified by high clinical attrition rates and supported by the generous rewards earned from blockbusters. Today the cost of drug development is seen as a target for reduction; how can clinical success rates be improved, materials be sourced more effectively and time lines be reduced?

Working capital is another example; historically it may not have been a frequently debated topic in pharma board meetings, but now our industry has de-stocked in both commercial and clinical phases. Nor do we expect to see manufacturing organisations rebuilding their inventory stocks and plant capacity just in case. However it is not just financial and research efficiencies that are being challenged, environmental and sustainability performance is set for radical reform. Pharma has long been aware of its need to manufacture with care, but it is now time to consciously reduce and eliminate waste by design.

How does the pharma industry address the seemingly impossible: produce more innovative pharmaceuticals, using less capital, in a shorter time, with the smallest possible ecological footprint? The refocusing of internal R&D resources is already apparent with many pharma companies looking to biotechs as a richer seam of new candidates. Conducting clinical primary and secondary manufacturing externally is simple and effective in reducing working capital and certain to continue as an outsourcing trend.

Greater attention will be given to life cycle management and outsourcing of commercial APIs and drug product manufacture to third parties to allow focus on the core activities of discovery and marketing. This strategy has the added advantage of opening up older products to newer chemical and processing technologies in-sourced at a lower overall cost. Collaboration with generic companies has become the new trend. Similarly, it is advanced technologies, such as catalysis and biotechnology and enhanced manufacturing capabilities, that will reduce the environmental burden from pharmaceutical manufacture.

Dr Reddy's Laboratories and its CPS business has withstood well the recent economic turmoil. Over the last year we have learnt that our inherent capabilities allow our customers to effectively outsource their clinical trial requirements and develop effective strategies for commercial phases and life cycle management. Also we see that that our technological capabilities, more now than ever before, are necessary to meet the increasing demands of economic efficiency and environmental responsibility and sustainability.

So how does the pharma landscape of 2010 compare with the previous decade? Certainly it is clear that the industry will be re-building itself in an innovative way; which is relevant and sustainable to meet future healthcare needs. But these new structures will require different foundations and support; Dr Reddy's CPS intends to be one of those foundations working even closer together with customers to enable the rapid development and supply of unique and relevant pharmaceuticals, at lower costs to meet the needs of existing and emergent patient populations.

Marcel Velterop is Vice-President of Global Head Sales and Business Development at Dr Reddys Laboratories S.A. Velterop joined Dr Reddy's Laboratories in January 2004 as  European Director of Sales and Marketing. He currently heads the global business development team for Dr Reddy's CPS business, which caters to innovator pharma companies.