Formula For Healthy Pharmaceuticals Firms: Competition Equals Cooperation

ByDeborah Austin In the pharmaceuticals industry, today's preferred growth strategy is not working, suggests new research from market analysis company Datamonitor, London. Despite growing investment in current business practices -- most notably through mergers and acquisitions -- sales productivity actually is falling. With no significant economies of scale in sales activities or R&D investment, says Datamonitor, higher revenues haven't translated into greater profitability. To succeed, the firm says, the pharmaceuticals industry must shift to a networked business model. The networked pharmaceuticals firm will keep in-house only the intellectual capital critical to its competitive advantage and outsource the remainder in strategic alliances with more efficient and more progressive specialist peers and vendors. Successful networks will draw value from the links between partners, not just the partners themselves -- and network extension will hinge on expanding scope, not physical size. "In 2015, networking will be the industry's preferred competitive strategy, with peers working together to gain market share," say Jennifer Coe, Datamonitor strategy director.