The Hindu Business Line : As drugs go off patent protection — Pharma sector turning to product lifecycle management

PRODUCT Lifecycle Management (PLM) is fast gaining recognition among the global pharma companies to bridge the gap between high costs and falling revenues as drugs fall out of patent protection.

More than 90 per cent of senior executives believe that PLM is important for their future prosperity, with 60 per cent stating that its importance will increase significantly in their organisations over the next five years.

The increased focus stems from the concern over the failure of research and development activities to maintain a steady stream of new blockbuster drugs.

This leaves pharmaceutical companies with high costs and falling revenues as drugs fall out of patent protection, said the fourth annual `Vision & Reality' report from Capgemini, a global consulting company.

The data is compiled from an in-depth survey of 74 senior pharmaceutical industry executives in 12 countries and interviews with selected industry experts.

"The importance of this issue should not be underestimated,'' said Mr Paul Nannetti, Global Life Sciences Leader, at Capgemini.

"The pharmaceutical industry's success to date has been built on a consistent flow of high earning innovative products.

"However, as the industry faces up to the challenge of weaker R&D pipelines, and likely reduced returns from new products, there is an imperative to drive greater value from existing portfolios," he said.

Increasing competition from other branded products and from generics and declining market exclusivity for some drugs, in some cases as low as one year, are other concerns driving the industry towards PLM.

The global generics market, estimated at $27 billion in 2003, might seem to be a speck in the total $400-billion pharmaceuticals market.

But due to its price differentials, generics have a much bigger market share in prescription terms than the value comparison suggests. The companies must develop lifecycle strategies rather than the current approach of basing the aspect from functional perspectives.

Also, executives expect in-licensing and alliances to become the leading strategies with 45 per cent stressing their increasing importance.

Such strategies seek to bolster pipelines and also contribute to the creation of therapeutic franchises and establishment of market leadership positions in key areas.