July 8, 2024
Biopharma companies reinvent themselves every decade, driven by the treadmill of Loss of Exclusivity (LOEs) that spurs innovation and transforms entire portfolios. This constant evolution is not just a testament to the industry's resilience but also a reflection of its dynamic nature.
Key Findings from a Decade of Change
Shifting Best-Sellers
Analyzing the top-selling drugs of major companies from 2013 to 2023 reveals some key insights. Most companies have a completely different set of top-selling medicines today compared to a decade ago. Of the 15 drugs analyzed across 5 companies, only Humira and Januvia remained top sellers in both 2013 and 2023. However, even these stalwarts are expected to drop off soon. Humira faced competition in the US starting last year, and Merck's settlements with generic manufacturers mean Januvia will face competition in the US market by 2026. This shift underscores the transient nature of pharmaceutical dominance.
Portfolio-Level Changes
Beyond individual drugs, there have been substantial changes at the broader portfolio level regarding which therapeutic areas (TAs) drive sales. Except for Novo Nordisk, all companies analyzed experienced significant shifts in their therapeutic focus. This indicates a broader trend of companies pivoting their strategies to adapt to market demands and scientific advancements.
Downstream Effects of Portfolio Churn
The constant churning of portfolios has several downstream effects on other parts of the business.
Sales Teams
For sales teams, this usually means cultivating new sets of physician relationships, often in entirely different areas of practice. Building these relationships from scratch requires significant effort and adaptation, as sales strategies and knowledge bases must be updated to align with new therapeutic areas.
Consumer Brand Awareness
Consumer brand awareness also needs to be rebuilt from scratch. This challenge is further compounded by the fact that pharmaceutical brand names are often difficult to pronounce and remember. Re-establishing brand recognition and trust in the market is a critical but arduous task.
R&D and M&A Decisions
Portfolio changes significantly impact R&D and M&A activities. Decisions in these areas are often guided by whether a company is active and has future plans for a given TA. Companies must continuously evaluate and realign their research priorities and acquisition targets to stay competitive and relevant.
Novartis: A Case Study in Strategic Focus
One interesting approach to managing this constant change is exemplified by Novartis. The company has defined specific indications within four broader TAs where it intends to be active. By centralizing related decisions at the corporate level, Novartis ensures consistency and strategic alignment across its portfolio. This focused approach allows the company to streamline its efforts and maintain a clear direction amidst the industry's inherent volatility.
Conclusion
Biopharma's ability to manage such drastic change relatively well on a consistent basis is both impressive and not to be taken for granted. The industry's resilience and adaptability are key to its ongoing success. As biopharma companies continue to evolve, their strategies and innovations will undoubtedly shape the future of healthcare.
