How will the credit crunch affect R&D strategy in the pharma industry?

In a constantly evolving economic landscape, companies of all shapes and sizes are adapting their product development strategies to the constraints of the credit crunch and the pharmaceutical industry is no exception. R&D is increasingly focusing on drugs that will provide maximum sales returns and sector analysts at Global Insight have examined what this will mean for the future of niche medicine, and where new opportunities for innovation will be created.

In its wake, are a growing number of companies that are facing an uncertain future. Their main fear is not having enough access to credit to pursue business development. Drugmakers operating within the brand-name sector are by no means exempt from these fears, although pharmaceutical and biotechnology firms are each facing their own unique challenges.

Within the pharmaceutical industry, it seems that bigger is currently better when it comes to surviving the financial crisis. As a rule of thumb, Big Pharma is not as reliant on cheap credit for funding as other businesses. This has been demonstrated through several recent large-scale acquisitions. For example, the $8.8-billion takeover of US firm Millennium Pharmaceuticals by Japanese drug giant Takeda was financed as an all-cash tender offer, with Takeda's only fundraising move being the acquisition of 1.24% of its own shares. The cash-rich nature of Big Pharma players puts them at a decided advantage when it comes to seeking growth through acquisitions, and also helps provide continued funding for R&D.