Recession forcing strategic changes in pharma industry

Major pharmaceutical companies are being forced to change tact in order to prosper in a continuingly strained industry, finds a report by business intelligence specialists GBI Research.

The new report states that as the global economic crisis rolls on, swingeing cuts made in R&D and manufacturing by the pharmaceutical industry’s big players is affecting the way the sector looks at future development.

While these companies are addressing the issue of workforce reduction in different ways, a number of common tactics have emerged, including a greater focus on emerging markets, the outsourcing of activities regarding drug discovery and the building of closer links with academic institutions.

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Firms are supporting this new emphasis on external productivity by setting up incubators on company premises to support emerging new companies and supporting life science research through the development of innovation funds and venture capital groups.

The financial decline that followed the huge expansion enjoyed by global pharmaceutical companies in the 1990s and early 2000s has resulted in significantly weakened R&D budgets and numerous site closures.

Since 2009, the US has seen the closure of 18 R&D locations and the EU has seen the shutdown of 14.

Notably, the UK has been particularly hard-hit with the closure of six sites, representing 19 percent of the worldwide total.

According to limited information attained from the Pharmaceutical Research and Manufacturing Association’s (PhRMA) 2008 and 2009 Annual Membership Surveys, personnel cuts have hit all areas of R&D, with the exception of Phase II research.

The results shows that as these major pharmaceutical powers are forced to slice large chunks from a vital area, resources are being focussed on improving the information available at the proof-of-concept stage while allowing less promising.

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