In 1899, German dye-maker Bayer started the manufacture of synthetic acetylsalicylic acid. Sold under the brandname Aspirin, the company’s tablets, complete with embossed logo, ushered in a new model of standardized medicines, produced and distributed on an industrial scale. It was a model that built the global pharmaceutical industry into a giant. Worldwide prescription drug sales reached $777 billion in 2016, for example.
More than a century later, is this model beginning to crumble? Overall, the pharma business seems healthy enough. Prescription drug makers are expected to enjoy continued annual growth of 5 percent or more over the next three years, and sales are forecast to pass the trillion-dollar mark by 2020. The industry is facing pressure from multiple directions, however, forcing companies to rethink some of their most well-established processes.
The symptoms are well understood. Demand for healthcare products and services is rising faster than society’s ability to pay for them. Ageing populations and the rapid rise in noncommunicable, lifestyle-related diseases are stretching the health services of developed countries. In emerging regions, billions of people now expect – and deserve – access to better healthcare. The very success of the global healthcare business is compounding the pressure. As new products and treatments become available, people naturally want the best available, regardless of the price.