Review Pharma Products, Customers, and Trends

Learning Objectives

After completing this unit, you’ll be able to:

• Describe the pharmaceutical sector’s main products and services.
• Identify the pharmaceutical sector’s most common customers.
• Identify major trends impacting pharmaceutical companies.

Pharmaceutical Products

If we were to list all the drugs on the market today, we’d need a while, because there are thousands! Instead, let’s talk about the different drug classifications. 

Generic or Brand Name

A drug by any other name would work as well. Who knew a reference from Romeo and Juliet could also explain generic drugs? They have the same active ingredients, safety, strength, and quality as their brand-name counterparts. The only difference between the two is the patent.

A pharmaceutical company holds a patent on a drug for up to 20 years. When a patent is close to expiring, other drug manufacturers apply for the right to produce that same drug, which is then considered a generic version. Because it doesn’t take decades of development and a large budget to produce a generic version, manufacturers sell it at a significantly reduced cost.

Small Molecule or Biologic

If remembering molecules from high-school chemistry is a struggle, don't worry. Basically, small molecule drugs are those manufactured in a lab by mixing different chemicals until the right compound is formed. Small molecule drugs treat common conditions like infections, high blood pressure, diabetes, or high cholesterol. 

Biologics, on the other hand, are much more complex. They’re discovered and manufactured in living organisms, like plant and animal cells. They’re used for conditions like cancer, multiple sclerosis (MS), and hepatitis C. There’s more to know, but that’s it for now.

Specialty Drugs

Specialty drugs treat rare or complex illnesses like cancer, rheumatoid arthritis, or hemophilia. Specialty drugs are often biologics—drugs derived from living cells—that doctors administer through a needle or catheter. Others are oral medications taken through the mouth. 

Keep an eye on this category. Specialty drugs are the fastest growth area for the pharma sector. In the mid 1990s, there were fewer than 30 specialty drugs. By 2015, there were 300 on the market. And now specialty drugs make up more than 50% of the overall pharmacy drug spend.

There are several other ways to classify drugs, but this is a great start. Now, let's talk further about pharmaceutical services.

Provider and Patient Services

In addition to drugs and treatments, the pharma sector offers services to both providers and patients. Providers may need direct support from pharmaceutical companies for reasons related to a clinical trial or for more information on a particular medication.

What about patient support? Let’s say a patient needs to self-inject a rheumatoid arthritis drug. Some pharma companies offer a service where a nurse trains the patient to administer the drug properly. Other companies build programs to increase awareness of diseases and advocate for patient access to drugs. It’s also a little-known fact that pharma companies sometimes help with the co-pay on a prescription. It’s all part of the new healthcare industry that revolves around patients.

Pharmaceutical Customers

There are four main customers in the pharma sector.

• Physicians prescribe the drugs to patients.
• Payers pay for most of the prescription cost—the patient pays the other portion in the form of a co-pay.
• Patients take the drugs or receive the treatments.
• Distributors store and distribute the drugs.

The first three are influencers who create demand for specific drugs. The last one does most of the actual purchasing. 

Distributors purchase products directly from pharmaceutical companies and store them in warehouses and distribution centers. In the US, the Healthcare Distribution Alliance (HDA) describes these customers as “technology innovators, information management experts, and efficiency professionals.” Wholesale drug distributors connect pharma companies to the pharmacies where patients fill their prescriptions. A distributor ensures that prescription medications are delivered safely and efficiently daily to healthcare practitioners and pharmacies.

Can you think of any other sector where getting the right product to the right place at the right time for the right patient is more important? As you can imagine, the distributors’ business model is pretty complex. 

Pharmaceutical Trends

Look at the pharmaceutical sector trends and see why change is a constant for pharma companies. Let’s review some significant pharma trends and diagnose why they matter.

Trend: Increased focus on patient-centricity

Why it’s happening:

• Educated patients are taking a more active role in their treatment.
• Value-based care focuses on outcomes instead of fee-for-service.

Why it matters:

• Everyone benefits when pharma companies concentrate on patient outcomes instead of just delivering the products.

Trend: Development of cost-effective, innovative solutions

Why it’s happening:

• Specialized therapies contribute to pharma companies’ pipeline and their future success, but they aren’t blockbuster drugs.
• Companies need to cut costs and shorten their drugs’ time to market.
• Revenue declines as drug patents expire. This is also known as a patent cliff.

Why it matters:

• Positive results come from getting safe therapies and medications to patients faster.
• The patent clock starts at the time of application, not at drug approval. The faster the drug gets to market, the longer the pharma company exclusively sells before it goes generic.

Trend: Integration of digital transformation

Why it’s happening:

• To succeed in this changing market environment, companies must think about a true digital transformation across all their departments and lines of business.

Why it matters:

• New roles, processes, and technology are being created across all levels of the business to help this transformation.
• Frequent priorities include automating manual processes, integrating systems, replacing legacy systems, and delivering self-service solutions or platforms.

All these trends together require a change in pharmaceutical company culture and business operations. Most large pharma companies have been around for more than 100 years. So implementing change is likely the greatest challenge to this mature sector, mainly because of the regulatory nature of this industry.