Biopharma Needs to Adopt 'More Radical' Cost-Cutting, Says Capgemini

It’s no surprise that biopharma faces problems not shared by most other industries who are dealing with the current economic woes; biopharma’s growth was slumping, and its asset base was contracting well before the past year. In a survey and analysis completed this month by Capgemini (New York), the consulting firm found that industry leaders expect a turnaround within the next 24 months. A new round of cost-cutting will be experienced in the mean time.

SURVEY RESPONDENTS IDENTIFIED SUPPLY CHAIN (INCLUDING SOURCING AND MANUFACTURING) AS AN AREA OF GREATEST POTENTIAL COST SAVINGS. credit: Capgemini Consulting

When respondents were asked what the likely cost-reduction areas would be, the clear leader is supply chain (Figure). “For pharmaceutical companies the blockbuster decade allowed supply chain inefficiencies to creep in, with companies striving to get each product to market as quickly as possible almost regardless of cost,” says Capgemini.

Looking down the road, it expects that current efforts in personalized medicine will lead to targeted treatments, and that will necessitate a redefinition of supply chain practices in to a lean and nimble supply network.

On the sales side, biopharma should be looking at three distinct options for managing this function: innovative product offerings; customer focus; and cost leadership. The customer focus should allow for close collaboration with insurers and governments, even to the point of sitting down and working out prices and volumes prior to launch. Interfacing with prescribing physicians will shift to collaboration with payers.

Personalized medicine

Looking ahead, Capgemini sees great potential for personalized medicine and targeted therapies to revitalize the biopharma business, but changes will have to occur to take advantage of the tend: “These approaches will force a full redesign of all operations across the value chain, affecting all stakeholders. Operations (including supply chain and distribution) will need to adapt from mass production to the provision of complex molecules in much smaller batches. Marketing and sales activities, too, will change their emphasis from marketing a product to promoting a complete health solution (including diagnostic, treatment and monitoring). This trend will also alter the role of professionals, including pharmacists: with the development of genetic testing as a means of selecting the most appropriate therapy, the advisory roles of these professionals are likely to become increasingly important.”

The full report is available for download at capgemini.com. PC