The Pharmaceutical Industry in 2016


In previous years, the pharmaceutical industry was able to demand high prices for its patent protected drugs. Physicians prescribed medications, and patients accepted treatment without reservations while insurance companies paid the bill. Therefore, the pharmaceutical industry’s primary marketing strategy was to focus on physicians. As patents have expired and patients have become more informed, the industry has undergone tremendous change. These developments continue to have a profound effect on the pharmaceutical industry. Below are the industry trends anticipated for 2016.

Emphasis on Cost Containment

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The cost of pharmaceuticals has increased more rapidly than the GDP over the past 20 years. As patents have begun to expire, insurance companies, employers and patients are turning to generic drugs as an alternative. Generic pharmaceuticals provide greater affordability and accessibility to health care than brand name drugs. The increased competition has forced many pharmaceutical companies to find ways to contain costs and provide more value in treatments. In addition, the payers now have greater control over the industry and exert price pressure by restricting reimbursement or capping prices.

Corporate Consolidations

The pharmaceutical industry experienced a 94 percent increase in acquisitions and mergers in 2015 over the previous year. Larger pharmaceutical companies often have the resources to bring new drugs to market while smaller, innovative companies are usually at a deficit. As a result, there is an increasing trend of start-ups and minor biotech firms undertaking the research and clinical development phase before major pharmaceutical companies step in to navigate the regulatory and commercialization process. While there may be fewer large corporate consolidations, a substantial number of acquisitions are expected in 2016 as well.

Research Partnerships

Research partnerships were prominent in 2015 with collaborative efforts in areas such as oncology, neuropsychiatry and dermatology. The increasing cost of research and development has led to shared risk and resources among some of the largest companies in the pharmaceutical industry. As the industry continues to be transformed throughout 2016, partnerships for clinical trials and innovative strategies for the development of novel drugs will increase.

Biosimilar Drug Launches

Biosimilar drugs are biological products that are approved based on the fact that they are similar to a previously approved biological drug and have proven to be clinically no different. Biosimilar drugs are a much more affordable option. The FDA has been slower to adopt biosimilars than regulatory agencies in other countries. However, the first biosimilar drug was approved for use in the US in 2015. This will likely outline the approval process for other biosimilars in 2016.

Increased Patient Participation

Today’s patients are much more informed about health care and pharmaceuticals than in previous years. Pharmaceutical companies have begun to see the advantage of involving patients in the drug development process. Many feel that their participation in designing the trial can lower costs and decrease time to market. At least one organization plans to launch a program to educate patient representatives in 2016.

Expansion into Developing Nations

As large pharmaceutical companies search for new ways to increase profits, they continue to expand into developing nations. It is predicted that emerging markets will account for over 30 percent of the pharmaceutical market worldwide by the end of 2016. This trend is expected to continue over the next several years.

Technology Advancements

Technology continues to play a major role as the pharmaceutical industry looks for ways to reduce costs. Apps and wearables to monitor a patient’s condition outside of the clinical setting have become common. An ingestible sensor was recently approved by the FDA. Technological advances show no sign of slowing and they will continue to provide solutions for the pharmaceutical industry through 2016.