The pharmaceutical industry is facing significant changes due to rising chronic diseases, evolving regulatory environments, and the shift towards personalized medicine. Major companies are consolidating and engaging in mergers and acquisitions to maintain growth, while the focus is moving towards developing cost-effective and targeted treatments driven by advances in science and technology. The market demands adaptability in pricing and marketing strategies, emphasizing the importance of relationships within healthcare networks.

1. Claudia Karnbach
Head - Global Business Development & Licensing Specialty Medicine
Bayer HealthCare
What The Future Holds For Pharma

2. • Quo vadis HealthCare?
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Industry Big Picture Perspective

3. Goldman Sachs:
„Two roads to travel“
Disease-focused powerhouses/innovators:
• Split, divest, consolidate and re-emerge as disease focused innovators
Healthcare consolidators, cash flow generators, and cost
efficiency producers:
• consolidate, remove redundancies and focus on lowering the cost of healthcare
by providing more cost-effective products to payors/consumers (e.g., generics,
OTC)
Source: Broker Report Goldman Sachs –September 22, 2014 - “global Pharma get better not bigger”
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4. The Option Space Defined by GS
“We think businesses focused on both ends of the spectrum are likely to
succeed, but it is those in the middle of the road with no strong direction that
have the potential to underperform long-term“
Source: Broker Report Goldman Sachs – September 22, 2014 - “global pharma_get better not bigger”
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5. Industry Challenge
NOVARTIS CEO:
Big Pharma Has To Move Beyond Just 'Selling The Pill‘
Fundamental dynamics the industry faces that are reshaping the pharmaceutical
marketplace:
• Chronic disease is soaring
• Healthcare policy makers and payers are increasingly mandating what doctors
can prescribe
• Pay-for-performance is on the rise
• The boundaries between different forms of healthcare are blurring
• The markets of the developing world, where demand for medicines is likely to
grow most rapidly over the next 13 years, are highly varied
• Governments are beginning to focus on prevention rather than treatment
• Regulators are becoming more risk-averse
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6. Industry Challenge
Drivers of healthcare change grouped into four key categories
Appliance of Science
• Science and technology is fuelling a greater understanding of medical profile of the
individual and its impact on their health
Industry Squeeze
• The bar is being set higher for the industry on all levels: regulatory approval,
demonstration of clinical cost effectiveness and requirements for trust and transparency
New World Order
• The growth of populations and income in emerging markets is increasing economic
power but also increasing issues of resource sustainability
Wealth to Burden of Health
• The advances of the 20th century are leading to real issues now for care for the elderly
and management and prevention of chronic disease
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7. Industry Challenge: R&D
In the next five to ten years, the pharmaceutical industry will begin to experience
major changes in R&D
The revolution in science will transform the pharmaceutical marketplace with
advances in biological and genetic sciences
• Increasing power of the consumer in the health care marketplace will be the primary drivers of these
changes.
Two broad themes emerge in the pharmaceutical marketplace
• Increase in the segmentation of products and markets
• Importance of relationships
Advances in science will allow innovative new drugs to treat specific populations
based on their genetic makeup.
• Industry will deliver these drugs to patients based on their preferences and will tailor specific
treatment regimens supporting their lifestyles and behaviors.
• Consumers will receive highly targeted and specific marketing messages based on their use of
technology, health status, ethnic and racial background, gender, age, and interests and activities.
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8. Industry Challenge: Commercial
Pharma and Biotech will need to stop the aggressive marketing focusing only
on the product of the current model
• Recognize the interdependence of the payer, provider and pharmaceutical
value chains
• Invest in developing medicines the market wants to buy
• Adopt a more flexible approach to pricing
• Develop plans for marketing and selling specialist therapies
• Manage multi-country launches and live licensing
• Form a web of alliances to offer supporting services
• Create cultures that are suitable for marketing specialist healthcare packages
• Develop marketing and sales functions that are fit for the future and a
knowledge based commercial organization
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9. Industry Challenge
How to ensure sustainability…….in a changing environment
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10. Industry Challenge
Key Trends Identified in Biopharma M&A Activity Over The
Last Five Years
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11. Industry Challenge
Are M&A Replacing R&D In Pharma?
Since 2013, the concentration and consolidation in the industry has been its main source of growth. In
2013, there was $174 billion spent on M&A. In April 2014, $118 billion was spent in just one month. The
numbers for Q1 2015 are just as impressive, reaching over $95 billion for the year already.
• In 2015, Pharmacyclics was a hot commodity in the lifesciences arena. Three major companies,
including Pfizer, made pitches to purchase the organization. What is notable about this incident of
pharmaceutical M&A? Pharmacyclics had only few products that were under development. This
cancer drugmaker was able to secure a $21 billion bid in shares and cash, a 60% premium, for just
one major marketed asset.
• Roche just paid a little over $1 billion to gain a controlling stake in Foundation Medicine for the
privilege of investing an additional $150 million to advance their personalized cancer therapy research
• Johnson & Johnson recently signed a licensing deal with a Swiss agency, AC Immune, that is
reportedly worth over $500 million. The deal allows Johnson & Johnson to collaborate on research into
new Alzheimer's disease treatments that have potential
The strategy is simple: secure strategic assets backed by solid science now so that there is still hope for
the future. Pfizer has led this M&A bandwagon with over $200 billion in activity since 1994. Large
drugmakers are taking big gambles on biotech companies that face regulatory approval because tlarge
drugmaker’s products are still in the experimental stage.
.
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12. Industry Challenge
Development Stage Biopharma Deal Activity Has Increased
Significantly in The Last Three Years
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13. Industry Challenge
US Large Cap M&A Strategies
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14. Industry Challenge
US Large Cap M&A Strategies
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15. Thank you!