Biotech to outpace pharma, says Deloitte

Related tags Life sciences Life Medicine

The boundary between the pharma and biotech industries will become
incresingly blurred over the next 10 years, with the latter
enjoying stronger growth, writes Phil Taylor.

According to a white paper released today by the Life Sciences and Health Care practice at Deloitte, which was developed in collaboration with the Economist Intelligence Unit, the fastest growth will be seen in Asian markets.

"Widespread pressure to lower prices, along with increased competition, will speed up consolidation and convergence in the sector. Firms can no longer rely on internal resources to achieve their objectives," said Stuart Henderson, life sciences partner at Deloitte.

He said companies must establish a 'new ecosystem' through acquisitions, mergers, alliances and exploratory relationships in emerging markets. A viewpoint that is backed up by a survey published in the report which found that 92 per cent of life sciences executives expect further consolidation in the next decade, with 82 per cent expecting 'significant M&A activity'.

Most survey respondents expect biotechnology revenue to grow in excess of 15 per cent annually over the next 10 years, compared to less than 10 per cent growth for pharmaceuticals, mainly on the back of greater innovation from small, young biotech companies.

Consolidation and pharma-biotech convergence will stem from pressure - from consumers and governments - to slow the growth of health care costs.

More than 70 per cent of survey respondents said stricter regulation of drug pricing and reimbursement will have the biggest negative impact on the industry in the next decade. Established firms will face strong competition from emerging markets, as companies in these markets evolve from outsourcers and generic drug producers to become formidable competitors.

Asian life sciences markets will expand faster than those of the USA and Europe, according to the white paper. Roughly half of survey respondents believe revenue growth in China and India will exceed 15 per cent a yeary over the next decade, outpacing growth rates in the USA, Japan and western Europe, which are projected to increase at 10 per cent or less annually, held back by pricing resistance.

The recent decline in the industries' reputation is a matter of great concern to the executives. A third of survey participants believe erosion of corporate reputation will affect long-term revenue growth and a lower proportion were worried it could result in more government regulation.

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