A: BUOYED BY A WAVE OF CHEAP MONEY from the banking system, urged on by short-term investors seeking returns, the biopharma industry has, since the Great Recession, experienced a wave of M&A and financial-engineering-driven deals such as corporate tax inversions that are often not focused on long-term innovation and real creation of sustainable value. Pricing excesses, especially prevalent in the so-called specialty pharmaceutical sector, are facing increasing curbs by regulation and negative media attention.
In 2017 you’ll see more focus on investment in R&D, operations, and education of physicians and patients. CEOs and senior executives should be focused on volume rather than price growth. Increasing attention should be on differentiated science, on improving decision making on internal R&D programs, and on clinical development excellence. In the final instance, CEOs should determine how much growth needs to stem from acquiring or licensing external R&D assets to drive successful long-term growth.
David is former chairman and CEO of Allergan, and he serves on the boards of Avery Dennison, Alnylam, BioMarin, Royal Philip, and a Governor of London Business School.