Pharma execs are now spending as much time dealing with increasing levels of regulations as they spend on growing their businesses, according to KPMG.
In the 2012 pharmaceutical outlook survey, the USA audit, tax and advisory firm asked head honchos which initiative they would spend most time on this year. Both regulatory changes and investment in organic growth ranked the top time takers.
Over 60 per cent of the leaders quizzed also said regulatory pressures would hinder their companies’ growth over the next year.
A further 50 per cent admitted that navigating the regulatory environment is the top concern for their firm’s future, displacing last year’s biggest worry – patent expiries and generic competition.
"Pharmaceutical executives are struggling to grow revenue in the face of pricing and regulatory pressures, including fines, taxation, fees and reporting requirements," said David Blumberg, KPMG partner and pharmaceutical advisory sector leader.
“This is an especially difficult business environment, with no clear single path forward. So overall, we are seeing an unusual combination of tentativeness combined with pockets of creative experimentation.”
Speaking to in-PharmaTechnologist.com, Matthew R. Weinberg, CEO of The Weinberg Group – which helps firms to traverse FDA (US Food and Drug Administration) requirements and legislations – said the biggest “impediment” caused by the regulators is now related to market access, price controls, and distribution.
“When prices are artificially managed, it is near impossible to recoup investment,” he said.
“Companies have factored the scientific approval process into their strategic thinking. They know how to manage this effort or reach out to those who can help. The new layer of regulation imposed in the name of cost control adds a significant burden.”
He told us he believes it makes sense that CEOs are currently feeling the pressure of added bureaucracy, and that they feel the need to respond to it.
“What could be done to mitigate this burden is to use the advantage of a managed approach to the scientific approval process to maintain competitive advantage,” he added.
M&A down from last year
The report also flagged up a shift in plans for M&A (mergers and acquisitions).
Only 27 per cent of those asked noted M&A as a growth strategy, as opposed to 36 per cent in last year’s survey.
“While M&A and expansion into new markets are still critical drivers of growth, executives aren't lining up to make major acquisitions as readily as they did last year,” said Blumberg. “Again, there is a sense that they are holding back, while continuing to work on their own research portfolios."
It seems instead growth through R&D (research and development) is the big aim this year.
Fifty-three per cent of executives still said new therapies from their own stables will still be the biggest driver of growth in the next year with 47 per cent saying new products and services will be the number one destination for budgets.