Problems Facing the Pharmaceutical Industry and Approaches to Ensure Long Term Viability

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University of Pennsylvania

ScholarlyCommons
Master of Science in Organizational Dynamics Theses 5-4-2010 Organizational Dynamics Programs

Problems Facing the Pharmaceutical Industry and Approaches to Ensure Long Term Viability Donald A. Baines
University of Pennsylvania, djtz00@aol.com

Submitted to the Program of Organizational Dynamics in the Graduate division of the School of Arts and Sciences in Partial Fulfillment of the Requirements for the Degree of Master of Science in the Organizational Dynamics at the University of Pennsylvania Advisor: Richard Bayney This paper is posted at ScholarlyCommons. http://repository.upenn.edu/od_theses_msod/33 For more information, please contact repository@pobox.upenn.edu.

PROBLEMS FACING THE PHARMACEUTICAL INDUSTRY AND APPROACHES TO ENSURE LONG TERM VIABILITY

By

Donald A. Baines

Submitted to the Program of Organizational Dynamics in the Graduate division of the School of Arts and Sciences in Partial Fulfillment of the Requirements for the Degree of Master of Science in the Organizational Dynamics at the University of Pennsylvania

Philadelphia, Pennsylvania

2010

PROBLEMS FACING THE PHARMACEUTICAL INDUSTRY AND APPROACHES TO ENSURE LONG TERM VIABILITY

Approved by:

___________________________________________________ Richard Bayney, Ph.D., Advisor

___________________________________________________ Keith Hornbacher, MBA, Reader

____________________________________________________ Martin, Stankard, Ph.D., Reader

ABSTRACT

This paper examines the Pharmaceutical (Pharma) industry and the changes that have occurred particularly over the last 10 years as a result of the overall economic downturn, the rising cost of healthcare and the costs associated with the development and sales of pharmaceuticals. One response of big Pharma to this has been the recent spate of partnerships, mergers and acquisitions, consolidation, diversification, licensing agreements and downsizing in both human and capital resources. Four major challenges facing the complex Pharma industry are highlighted and discussed. These include the decline in the discovery, approval and marketing of new chemical entities (NCE) with fewer and fewer blockbuster drugs making it to the market, competition from generics drugs, regulatory pressures and the weak growth in the US market (the largest market) and therefore the need to explore other markets to name a few. In addition to the research driven aspect of the paper, a summary of the interviews conducted with executives and other industry practitioners (to get their personal views) is presented. Finally referencing some of the strategies adapted by some companies, this thesis identifies Organizational Dynamics areas of concentration and the role they can play within companies in their plans to ensure long term viability. The analysis focuses on the commercial aspects of the industry and offers some steps that will be useful in changing the current business model and setting the stage for future success. iii

ACKNOWLEDGEMENTS

My appreciation is extended to Dr. Richard Bayney my capstone advisor as well as my two capstone readers, Keith Hornbacher MBA and Dr. Martin Stankard for their advice and input during the writing of this paper. I would also like to thank my fellow classmate Tara Lukievics who partnered with me in the interview section for the capstone as well as my cohorts who shared this learning experience with me. A special thanks to my family, Junette, Tariq and Zoei for their patience and encouragement as I spent long hours away at class or at home working on class assignments and projects.

iv

LIST OF TABLES

TABLE

Page

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Actions Taken by Pharmaceutical Companies in Recent Years Results of Interviews on the Pharmaceutical Industry Grouping of Big Pharma Companies by M&A Growth Strategy M&A Overview (1999 –2014) Key Steps to Address Limited Approval of New Products Key Steps to...
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