The Hindu Business Line : Pressure on drug makers to work together: PwC

The healthcare-ecosystem involving patients and regulators, among others, are demanding more value for the money they spend, following the economic downturn.

P.T. Jyothi Datta

Mumbai, Nov. 6 Big pharma will have to morph itself into a different organisation from what it was earlier, with the market becoming more “demand-driven” following the economic downturn, say industry experts.

But the healthcare and life-sciences sector will be the first to bounce back out of the recession, when it comes to sectors that funds will flow back into, they add.

The healthcare-ecosystem involving patients and regulators, among others, are demanding more value for the money they spend, following the economic downturn. And this is putting pressure on drug-makers to increase collaboration, says Mr Simon Friend, Partner with PricewaterHouseCoopers (UK).

Collaborations

Companies operate in different segments, such as branded pharma, diagnostics or generics and they will look to collaborate with other players in the healthcare arena to maximise benefits that they can provide, he observed. These secondary collaborations could even be with food or fitness companies, he added.

“Most big pharma companies have traditionally done everything from research and development to commercialisation themselves. But we predict that, by 2020, this model will no longer work for many organisations,” says PWC’s recent report on pharmaceuticals and life-sciences.

“If they are to prosper, they will need to improve their R&D (research and development) productivity, reduce their costs, tap the potential of the emerging economies and switch from selling medicines to managing outcomes – activities, few, if any, companies can accomplish on their own,” the report says.

Bounce back

But no such additional squeeze will be felt in the healthcare and life-sciences sector, when it comes to the flow of venture capital (VC) funds into the sector, observe experts. The risk-profile of the sector has remained unchanged before, during and after the recession, says Mr Friend.

So, when VCs, who shied away from all sectors during the downturn, evaluate opportunities again, healthcare and life-sciences look promising. In fact, this sector will be first out when compared to other sectors that are still seen to be risky, he added.

No plan

But, VC representatives observe that while the money will follow good science, the country still needs its proposals to be more broad-based to be fundable. There is innovation but not at a stage that firms may want to invest in, said Dr Sunny Sharma, Managing Director (Asia) of OrbiMed Advisors India Private Ltd. While the country’s expertise in chemistry is in place, they are “woefully” lacking in biology, he added.

HSBC Private Equity Advisors’ (India) Investment Director, Mr Alok Gupta emphasised the need for a complete package involving a clear plan and viable execution. Ms Deepanwita Chattopadhyay, Managing Director and Chief Executive of Hyderabad’s IKP Knowledge Park agreed that more efforts were required to make academic proposals more broad-based to make them fundable.

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