Change Is An Opportunity, SB Chief Tells IFPMA

The pharmaceutical industry worldwide is under pressure from all fronts, Jan Leschly, chief executive of SmithKline Beecham, told the recent 17th Assembly of the International Federation of Pharmaceutical Manufacturers Associations in Malmo, Sweden (see also Marketletters September 5 and 12). Research-based drugmakers are facing price controls through governments and managed care, tougher regulatory hurdles and escalating development costs. In addition, he said, there is generic substitution, therapeutic substitution and technological leapfrogging.

There are also changes in market growth trends, Mr Leschly told delegates. Between 1990 and 1993, compound annual growth rate averaged 8%. If this growth rate were to continue, by 2004 the market could be worth some L208 billion ($323 billion) but through these years CAGR could be as little as 2%, resulting in a market worth just L113 billion. He pointed out that reducing the number of scripts issued per capita would have an estimated 15% negative impact on the past CAGR, delisting -4%, generic substitution -11%, reference pricing -7% and shifting to world price levels -19%.

Looking at generics, Mr Leschly noted that in 1993, in value terms, generics accounted for just 7% of the market but 17% in terms of volume. By 2004, the figure for generics' value share will be 18% and for volume it will be 43%, he said.