Pharmaceutical companies are facing unprecedented pressures including revenue loss due to the patent cliff and growing healthcare cost containment measures introduced in most developed markets. As a result, they have been forced to reassess their strategies, with diversification beyond branded small molecule products and branded pharmaceuticals in general representing an obvious route.
Features and benefits
- Analysis of the historical merger, acquisition and divestment trends of the top 10 pharmaceutical companies.
- Insight into the main diversification strategies employed by pharma, as well as analysis of the top 10 sectors pharma is diversifying into.
The branded prescription pharma sector is the most profitable healthcare sector. Provided that profit margins associated with innovative drug development remain high, pharma companies that have been successful in replenishing their pipelines with new drugs that lead to successful launches can do no better than to stick with what they do best.
While the innovation-driven diversification results in greater profitability, companies facing an imminent revenue drop due to weak launch portfolios are turning towards de-risking diversification, which enables them to close the revenue gap by entering low risk sectors such as consumer health and generics.
Divestment deals have been dominated by pharma’s strategy to strip out manufacturing in order to become more focused on R&D and marketing, as well as to cut costs, while divestments in other non-pharma sectors have largely involved the sale of certain assets rather than the divestment of an entire unit or exit from a particular sector altogether.
Your key questions answered
- What are the key drivers and resistors driving pharma companies towards becoming increasingly diversified?
- Which healthcare sectors offer the greatest synergies?
- What are the benefits and draw backs of innovation-driven diversification and de-risking diversification?