The Expanding Pharmaceutical Desert

Most of us probably have a sense that the overall opportunity set in pharmaceuticals is shrinking. But exactly where isn’t so clear.

Boston Consulting Group has tried to clarify matters — mapping a growing desert over what was formerly highly fertile pharmaceutical ground. The two basic changes: productive land in the most lucrative market, the US, has been dangerously over-farmed; and over-farmed fields in Western Europe and Japan have now slipped into dustbowls.

Therapeutically speaking, the problems are the major primary care markets on which Big Pharma has built itself. Diabetes, cholesterol, hypertension and outpatient anti-infectives have all, in the last decade, gone, from “attractive” to “at risk” or worse – that is, markets awash with relatively substitutable generics.


It’s therefore probably no surprise, in BCG's examination of 530 clinical projects, that drug companies have substantially re-tooled their pipelines to focus the majority of their efforts on BCG’s green zone – cancer, big parts of neurology, antivirals, and immunology--where markets with high unmet needs reward innovators with attractive, long-term pricing (the wider the bars, the more projects the companies are working on).


We also wanted to see if BCG’s analysis accorded with our Strategic Transactions database. Sort of, but not quite.


Dealmaking values are indeed growing fastest in cancer and slowest in cardiovascular (both of which would be predicted by BCG data) – but deal values in metabolic (ID'd by BCG as a troubled area) are growing faster than in neuro, a hot area for pharma’s internal investment.