The pharmaceutical space is under a microscope as consumers, insurers, and the government demand greater transparency and accountability. That, along with emerging competition for pharmaceutical brands and the lingering impacts of a global pandemic, has made it more difficult to navigate than ever. As these forces all combine, organizations are left to find ways to manage threats to the pharmaceutical industry.
What are some of the challenges facing the pharmaceutical industry?
- Decrease in demand for prescription drugs
- Increase in competition from generic drugs
- Clinical trial delays
- Product liability
- Liability for opioid addiction
- Supply chain disruption
- Keeping up with technology
Next, we’ll take a closer look at each one of these industry challenges, their consequences, and how the pharma industry will need to manage these looming threats.
Top 7 threats to the pharmaceutical industry
#1: Reduced demand for prescription drugs
Among the myriad impacts of the COVID-19 pandemic was a change in how consumers sought out and interacted with healthcare practitioners. Initially deterred by lockdowns, caution, and inconvenience or lack of access, some individuals may continue to avoid visiting a doctor for months to come. Still others may have lost trust in the medical establishment or pharmaceutical companies more generally, although the quick rollout of COVID-19 vaccines had an overall positive effect on consumer trust. While demand for medical services and prescription drugs is likely to pick up as more people are vaccinated, restrictions are relaxed, and unemployment rates drop – meaning more people in the US are insured and able to proactively address their health – pharmaceutical organizations may suffer in the short term.
#2: Increase in competition from generic drugs
Intellectual property and the expiration of patents are the usual concerns of a pharmaceutical company. This becomes an even bigger threat when you consider the fact that many consumers are in search of lower prices on medicine. The majority of adults in the U.S support several different actions to reduce the cost of prescription drugs.
In fact, 88% support making it easier for generic drugs to come to market. Generics make up 90% of the drugs dispensed in the country, and those making brand-name drugs will need to keep a close eye on the sentiments surrounding generics.
#3: Clinical trial delays
Between March and May of 2020, many people who would normally participate in clinical trials did not do so because of the pandemic. While some of the impacts of the pandemic are now in the past, clinical trial delays may be something the pharmaceutical sector needs to contend with for an extended period.
This is particularly true for new trials. As part of their most recent COVID-19 and Clinical Trials Response report, Medidata asked clinical site personnel to weigh the impact of COVID-19 on their ability to initiate new trials, with 5 being a great deal and 1 being not at all. The weighted average of the responses was 3.26. There are also concerns that the people who would participate in trials pre-pandemic will continue to choose to shy away from them in the coming years.
#4: Product liability
Law firms that specialize in litigation against drug companies are attuned to any potential problems that pop up in the pharmaceutical sector. This can pose a serious threat to a pharmaceutical organization that doesn’t put enough thought into its own risk management or has a better insights management strategy. If you want to avoid the consequences of pharmaceutical product liability, you need to ensure good practices in every stage, from development to manufacturing and adhering to standards for compliance in the pharma industry or requirements for regulatory affairs in the pharma industry.
#5: Liability for opioid addiction
The opioid addiction epidemic is one that the U.S has struggled to get a handle on for years and the pharmaceutical industry is feeling the impact. Multiple lawsuits have alleged that drug makers are exaggerating their benefits while encouraging doctors to over-prescribe to achieve financial gain.
Now, the Department of Justice is taking action by creating a task force to investigate the manufacturers and distributors of prescription opioids. The DOJ will also assist in the prosecution of lawsuits against the drug makers when possible.
#6: Supply chain disruption
Recent supply chain troubles have had far-reaching implications for all sectors and the pharmaceutical industry is no exception. Supply chain disruptions will continue to be an issue to contend with, as a lack of resources and slow global travel continue to cause problems.
According to one study, 70% of industry leaders said that the pharmaceutical supply chain was vulnerable to ongoing problems caused by the continuation of the pandemic. Many pharmaceutical firms are still prone to these supply chain challenges and they don’t have the best tools and systems in place to relieve some of that burden.
#7: Keeping up with technology
Technology transforms the way we do things in our daily lives and work. It’s also changing the way that patients seek out and receive medical care. Disruptive innovation in pharma, along with the rapid adoption of new technology that isn’t well understood, can end up being harmful to the industry – pharmaceutical organizations must take care to be measured in their approach.
Now, the pharmaceutical industry also needs to find ways to stay on top of the technology landscape and find a way to embrace digitalization or risk falling behind as well as defend itself from cybersecurity threats. The real challenge is in figuring out where to invest time and resources because digital transformation can take many different forms. Due to COVID-19 disruptions, companies have already invested in virtual advisory board solutions for better engagement. Others are exploring how to apply big data in the pharma industry and improve operations.
Responding to and overcoming threats to the pharmaceutical industry
Over the past two years, pharma companies across the globe have become more aware of the risks they face. Now, the question is, what’s the best way to respond? Risk management will be a key to success moving forward. This makes assessing and understanding these trends critical. While it is a trying time, it’s also a unique opportunity to reshape operations and improve processes. To understand more about how better insights management can reduce risk, read our blog post.