Accenture study identifies mega-trends in German drug market and develops recommendations for the pharmaceutical industry
Frankfurt, September 27, 2001 – New customers and distribution channels, higher patient expectations, the creation of industry networks and the move toward tailored medicines will change the landscape of the German drug market by 2010, according to new Accenture research.
While the pharmaceutical industry is undergoing significant changes , financing the German healthcare system over the long term is the major concern of industry leaders, according to the study. The survey of executives at 85 pharmaceutical companies and industry organizations also revealed that an overwhelming majority believes that:
New legislation anticipated by 2005 will require manufacturers to conduct cost benefit research in order to receive new drug approvals By 2010, pharmaceutical companies but also wholesalers, pharmacies and hospitals will see progressive consolidation Pharmaceutical companies will form business networks along the entire value chain, engaging in alliances and partnerships to discover, develop and market drugs Cost and time-to-market pressures will have an increasing effect on research and development operating models
Despite these executives’ awareness of the coming changes, it remains open to what extent the pharmaceutical industry has started to implement both strategic and operational measures to respond to the challenges. "In Germany, the drug market is on the precipice of a fundamental paradigm shift, and numerous emerging trends will change the industry landscape forcing pharmaceutical companies to re-evaluate their strategies", said Gregor Wick, partner, Pharmaceuticals & Medical Products. In the future, new strategies will be necessary to compete in an industry which must leave so far successful formulas behind: pure power of scientific innovation won’t be based anymore on company size, increased investment in R&D won’t anymore guarantee an higher number of successful drugs, and a sales force expansion won’t automatically lead to a higher turnover in the future.
Pharmaceutical Industry Strategies: Getting to 2010
To help the industry respond to the challenges and opportunities revealed in this research, Accenture has developed a set of recommendations that include the following:
Industry leaders must focus less on product but more on customercentricity. Approaching physicians with purely science-based product information won’t be sufficient in the future. Doctors but also new target groups will force the industry to offer tailored, service-based solutions for a full range needs.
- Companies must focus consistently on profitable areas, as the market grows more complex and dynamic. Through the identification of core competencies and those considered as “non-core”, pharmaceutical companies can better allocate existing resources. Both a therapeutic or a functional focus can be successful.
- Companies must shift from being functional, fully integrated "loners" to specialized network players. New business models will evolve in which outsourcing “none-core” areas, specific functions or support processes such as finance and IT through shared-service models and other forms of external collaboration will become more widespread.
Accenture strongly stresses the need to re-orient marketing and sales, as new distribution channels increasingly supplement the traditional channel -- from manufacturer to wholesaler to regular pharmacies-- which today accounts for 80 percent of the volume in Germany. Legal reforms, such as the expected repeal of the ban on pharmacy chains, and the increase of electronic distribution channels will accelerate this trend.
"In the past, the doctor was the only customer for manufacturers of prescription drugs,” commented Wick. “As this changes, companies will have to fundamentally re-orient their market communication. New customer groups such pharmacies, insurance companies and patients – with the same level of importance as doctors - increasingly make target group-specific communication necessary. As an important element of professionalizing customer relationship management, companies can enhance their sales force efficiency through the greater use of information technology such as sales force portals.”
Conducted in the summer of 2001, the study, "The German Pharmaceutical Market in 2010 – New Strategies to Increase Competitiveness", questioned more than 120 top managers and sector experts from 85 companies and other organizations in the pharmaceutical industry. Executives at drug manufacturers and biotech companies accounted for 65 percent of those surveyed.
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