Pharma 2020: The vision

Which path will you take?

Demand for effective medicines is rising, as the population ages, new medical needs emerge and the disease burden of the developing world increasingly resembles that of the developed world. The E7 countries - Brazil, China, India, Indonesia, Mexico, Russia and Turkey - are also becoming much more prosperous, with real gross domestic product (GDP) projected to triple over the next 13 years. By 2020, the E7 could account for as much as one-fifth of global sales.

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Yet the biopharmaceutical sector (Pharma) will find it hard to capitalise on these opportunities unless it can change the way in which it functions. Its core problem is lack of productivity in the lab. Several external factors have arguably exacerbated the industry's difficulties, but the inescapable truth is that it now spends far more on research and development (R&D) and produces far fewer new molecules than it did 20 years ago. The shortage of good medicines in the pipeline underlies many of the other challenges Pharma faces, including its increasing expenditure on sales and marketing, deteriorating financial performance and damaged reputation. At the start of the decade, many people thought that science would come to the industry's rescue and that molecular genetics would reveal numerous new biological targets, but the human genome has proved even more complex than anyone first envisaged. It is no longer the speed at which scientific knowledge is advancing so much as it is the healthcare agenda that is dictating how Pharma evolves.

The first part of our report highlights a number of issues that will have a major bearing on the industry over the next 13 years. The second part covers the changes we believe will best help pharmaceutical companies:

• operate in this new milieu
• realise the potential the future holds; and
• enhance the value they provide shareholders and society alike.

A growth market

Demographic, epidemiological and economic shifts are transforming the pharmaceuticals market. The population is growing and aging; new areas of medical need are emerging; and the diseases from which people in developing countries suffer are increasingly like those that trouble people living in the developed world. These changes will generate some huge opportunities for Pharma.

The global population is projected to rise from 6.5 billion in 2005 to 7.6 billion in 2020. It is also aging rapidly; by 2020, about 719.4m people - 9.4% of the world's inhabitants - will be 65 or more, compared with 477.4m (7.3%) two years ago. Older people typically consume more medicines than younger people; four in five of those aged over 75 take at least one prescription product, while 36% take four or more. So the grey factor will boost the need for medicines dramatically.

Clinical advances will reinforce this trend. The improvements of the past few decades have already converted some previously terminal illnesses into chronic conditions, thus increasing long-term demand for therapies to manage such diseases. The number of deaths from heart attacks has declined by over 50% in most industrialised countries since the 1960s, for example, while fiveyear survival rates for US patients with cancer (expressed as an average for all sites) have risen from 53% in the mid-1980s to 66% today.

Demand for new anti-infectives is also mounting, with the development of drug-resistant strains of some existing illnesses. The US Centers for Disease Control and Prevention (CDC) estimates that more than 70% of US hospital infections are resistant to at least one of the antibiotics most commonly used to treat them.  And medical research has exposed problems that were previously unidentified - including risk factors like metabolic syndrome and conditions like chronic fatigue syndrome, which recent evidence suggests is linked to changes in gene expression in the white blood cells.

Meanwhile, new diseases, including mutated forms of old diseases, are surfacing. Urbanisation and greater mobility have contributed to the introduction of new pathogens, some of which spread very fast and are very difficult to treat. SARS moved from Asia to North America and Europe in a matter of days. Similarly, the H5N1 avian flu virus has spread from China and South East Asia to the Middle East. The human cost has been tiny so far, but the impact of an avian flu pandemic could be enormous.

Global warming could also have a major effect on the world's health. In February 2007, the Intergovernmental Panel on Climate Change (IPCC) reported that the global average temperature had increased by about 0.2°C per decade between 1990 and 2005. The IPCC projects that the average temperature will increase by another 0.2°C per decade for the next two decades, even if the concentration of all greenhouse gases remains constant at year 2000 levels, and that it will "very likely" increase still more, if mankind's output of greenhouse gases continues to rise.

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