The pharma industry looks to the next decade with trepidation. Growth in many sectors is flat. Generic expiries loom. Trust in the industry is at rock bottom. Whatever the Obama administration does will do little to address the excessive costs of the system. Most developed economies face a prolonged lean period of budget deficit which will limit their ability to invest in healthcare to meet increasing demand.

There are some rays of sunshine. Emerging markets will provide the industry with most of its immediate growth. As we all live longer, we will survive to create new unmet health needs.

Here’s 10 industry predictions for the decade to come:
1. Payer power
For a long time we’ve focused all our love and affection on patients and physicians. The next decade will be the decade of the payer. Smart companies will get to know them really well.

2. Part of the solution, not the problem
We’ll become better at persuading payers, providers and patients that we are part of the solution, not the problem. We’ll stop fighting health reform and start focusing on how we can deliver real value.

3. Going for volume over price
We’ve priced new products so high that they’re affordable only when all others have failed or to a lucky few who can afford them. We’ll start to price competitively to maximize patient access, with chronic therapies priced nearer $1,000 per patient per year than the current $10,000.

4. Demonstrating real world value
Clinical trials against placebo are of little interest to the economic buyer. We will increasingly use real world demonstration of head-to-head superiority to achieve price premiums. New methodologies will emerge and gain reluctant regulator acceptance.

5. Sharing the risk becomes the norm, not the exception
We will choose to become more accountable for the outcome of our therapies, be paid for the results and not the inputs and to cap the risk for payers.

6. Services at the center—not on the side
Pill seller or provider of solutions? The time has come for us to make up our minds. We will invest more in services and become partners in the delivery of care. Like the IT industry, expect the industry to earn 25-50% of its revenues from services.

7. End of the sales automaton, birth of the care delivery partner
On a like-for-like basis, sales forces will more than halve in size. We will develop stronger institutional selling capabilities and work more closely with care delivery partners to optimize patient pathways.

8. Accelerated diversification to spread the risk
Investing in core pharmas is risky. More companies will diversify faster and commit over half of new investment money into OTCs, generics and other related sectors.

9. Emerging markets move center stage
This is where the action is going to be in the next 5-10 years. Head of emerging markets will be a board seat role as important as the head of the US. The second corporate headquarters will be in Beijing. There will be a talent drain toward Shanghai, Bangalore, Mexico City, Moscow, Istanbul, Johannesburg and Rio.

10. A Chinese pharma in the top 3
You don’t really think that the Chinese government will allow a US or European company to be #1 in the soon-to-be largest pharma market in the world, do you?

Michael Thomas is a principal, global pharma and healthcare practice at A. T. Kearney

From the February 01, 2010 Issue of MM+M - Medical Marketing and Media