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March 3, 2014
A Bit More Realism in Consulting
That McKinsey piece I mentioned the other day, the one saying that big drug mergers have pretty much worked out just fine, has been pretty thoroughly torn apart in the comments section. A reader has sent along another report from one of their competitors in the high-priced consulting game, this overview from Deloitte.
Most readers won't find much in there that's new. But at least you won't find so many things in there that make you wonder what's in their water supply. And there are some non-rosy parts, for sure:
While, the U.S. Food and Drug Administration (FDA)
approved 39 new molecular entities in 2012, up from 31 in 2011 and the highest number since 199644 (Figure 4), a Deloitte United Kingdom Centre for Health Solutions analysis of the late-stage pipelines of the leading 12 life sciences companies indicates that R&D returns have been declining since 2010. Life sciences innovators are feeling the impact of rising costs and a decline in forecasted sales revenues driven by an age of austerity and the patent expirations of many blockbuster drugs. The cost of developing an asset from discovery to commercialization has increased by 18 per cent, from $1,094 million in 2010 to $1,290 million in 2013. Over the same time period, the forecasted peak sales (highest-value sales in a single year) of an asset have declined by over 40 percent, down from $816 million in 2010 to $466 million in 2013. Total forecast sales over the lifetime of a product have also declined since 2010 and, in 2013 are estimated to be $4.6 billion.
I don't know how much those estimates jump around under normal conditions, but those are certainly not good trends. The overall picture, while not relentlessly gloomy, is certainly not relentlessly happy. You can extract some combinations out of the report that sound good, though, sort of like those Hollywood movie-deal pitches - you know, "Ocean's 11. . .in space!". In this case, I think the pitch would be "Biosimilars. . .in China!".
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