Finance transformation in the pharmaceutical industry
Developing the finance function across the product development life
The global pharmaceutical manufacturing industry generates more than $950 billion of revenue annually, with the U.S. accounting for 21 percent of that revenue. Pharmaceutical companies’ sales are soaring, and steady growth is projected in the upcoming years, but several challenges are emerging that impact your finances. Successful companies that begin as research and development (R&D) organizations require a long-term planning strategy to manage an increasingly difficult business model.
The development of a new drug can take between 8-15 years and can cost from $500 million-$1 billion from discovery to bringing it to market. The long-term approach of the pharmaceutical industry, with the most expensive stages at the beginning of the life cycle, often results in several challenges. These inherent difficulties have been compounded by multiple new issues, including:
- Increased scrutiny from regulators to reduce “evergreening” (a patent extension strategy) and to develop generic drugs
- Enhanced regulatory pressure on new and old drugs
- Decreased number of dominant insurance companies authorizing the use of new drugs that are too costly or only slightly more effective than alternatives
Developing new pharmaceutical drugs has become harder and more expensive; in response, companies must design a long-term road map beyond R&D. An often overlooked aspect of the evolution of a new drug is the role played by the finance function. Read our white paper to learn more about strategic considerations for your finance function throughout the development life cycle, from R&D to commercialization.