Wednesday, December 5, 2012

The Need To Go With “What It Knows” - A Look At Big Pharma’s Patent Expirations



Pharmaceutical companies are beginning to face a new world. An environment where patents for blockbuster drugs are expiring and where there is not much hope of replacement drugs in the pharmaceutical company’s pipelines. These companies will be forced to deal with major revenue losses. For example, 50% of AstraZeneca’s revenue is expected to lose patent protection over the next five years.[i] The looming patent expirations are particularly frightening because of the extremely long development time for bringing a new drug to market. In order to combat revenue loss and bulk-up their pipeline, AstraZeneca will likely need a strategic acquisition. AstraZeneca is not alone when it comes to approaching patent expirations on blockbuster drugs.  Novartis and Sanofi are under the same pressures AstraZeneca.

In “G.E. Goes With What It Knows: Making Stuff”, Steve Lohr describes G.E.’s strategy for dealing with the financial crisis. G.E.’s post-financial crisis success can be attributed to its willingness to revamp their strategy by relying on the strategy that made them successful at their beginning.[ii] I think that in order for AstraZeneca and other big pharmaceutical companies struggling to build their pipeline in the wake of patent expirations, they will need to continue to look for strategic acquisitions to replenish, diversify and renew their pipelines. Although the lack of blockbuster drugs to generate revenue is a new hurdle for these companies, the acquisition strategy they have used is one that will lessen the impact of these losses.

How do you think pharmaceutical companies should deal with their blockbuster drugs going off patent?


[i] Hodgson, Jessica. "Big Pharma Tries to Look Past 'Patent Cliff'" The Wall Street
Journal. N.p., 24 Oct. 2012. Web.
[ii] Lohr, Steve. “G.E. Goes With What It Knows: Making Stuff,” The New York Times, December 2010. 

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