Report: Narrowing focus to a few drugs boosts revenue

We know the pharma industry’s in the midst of a sea change, but here’s an interesting smidgen of info: The larger companies that just focus in on a few therapeutic areas tend to deliver higher returns, a new Deloitte report says here: “Company size matters,” the report says, because “the larger the company, by revenue or […]

We know the pharma industry’s in the midst of a sea change, but here’s an interesting smidgen of info: The larger companies that just focus in on a few therapeutic areas tend to deliver higher returns, a new Deloitte report says here:

“Company size matters,” the report says, because “the larger the company, by revenue or R&D spend, the greater the cost to develop each asset and the lower the returns.”

Focusing in on a single, but strong, therapy area also helps on the branding and commercialization side: Understanding a disease and its patient set, from the management down, helps inform the marketing policy and ultimately the sales – it’s not all about the product, it’s about the people.

On top of that, the pharma companies that diversify, adding a bunch of disparate cogs into their pipelines without disciplined portfolio management costs a fortune with little payout.

The report fortified the concept that Bureaucracy kills within larger life sciences companies – and outsourcing work to the smaller biotechs will remain a prevailing trend.

“In fact, 58 percent of the entire cohort of late stage pipeline innovation (by forecast revenues) is sourced externally,” the report reads. On top of that, these outsourced assets are definitely more profitable than those grown in-house: On average, they’re 6 percent higher and for orphan and breakthrough status drugs, the outsourced drug revenues are significantly higher.

 

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