A recent IMS Health study indicates a worldwide $1.1 Trillion drug and device business by 2014. We have been talking about taking Revenue Management global with our recent product release, and a recent Pharma Commerce article provides further proof that manufacturers cannot simply focus on the US market.
Pricing pressures are being felt across all segments. I particularly liked the quote in another Pharma Commerce article about a recent IMS Health survey by IMS' Murray Aitken: “While the 32 innovative products launched last year brought important new treatment options to patients . . . they drove only a limited increase in drug spending.” So a healthy drug pipeline -- a scarce commodity these days -- is no longer sufficient to increase margins and shareholder value.
All signs point to a strategic need for drug and device manufacturers to look at their revenue-centric processes and systematically eliminate the revenue leakage. Our experience indicates a 4-12% of the revenue is wasted every year. If we are looking at a trillion dollar industry by 2014, even a marginal improvement can fund plenty of research for new blockbuster drugs. In fact, a strategic investment in Revenue Management is the equivalent of reaping benefits from a blockbuster drug -- without having to go through the ordeal of clinical trials.
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