Consolidation Of The Industry Not Over

Despite the consolidation that has already taken place in the pharmaceutical industry, the process is far from complete, and the reason is overcapacity, according to William Pursche of McKinsey & Co.

He estimates that in the USA alone overcapacity totals between $12.1 billion and $17.5 billion of annual spending, or around 26%-27% of the industry's total cost base. That is the equivalent of between $60 billion and $90 billion worth of net present value.

Putting this in perspective, Mr Pursche said that the total value of fulfilling all unmet, disease-based medical needs in the USA through drug use is around $120 billion NPV. It means that the potential savings from capacity rationalization account for up to 43% of the total value the industry can create.