It's no secret that Big Pharma's traditional research and development (R&D) engine needs a complete overhaul. Faced with patent expirations, rising expenses, competition from generics and pressure on branded drug prices, Big Pharma's revenue gap could balloon to almost $100 billion by 2014. For the top 20 biopharma companies in the world, this represents an annual earnings decline of 8%. Most companies find that even shopping for innovation externally cannot help close the gap. A recent Bain & Company analysis of 6,000 biotech projects available for late-stage licensing shows that only about 200 are likely candidates for a large pharma company. Of these, fewer than 100 show potential to become top-sellers, and taken together they account for only about $30 billion in potential revenue.
Pharma companies are striving hard to stave off the R&D crisis through mergers and acquisitions, geographic expansion, and diversification into areas like consumer health and animal health. But they recognize...
