Transformation of Big Pharma Business Models

DOI: 10.20542/0131-2227-2022-66-3-81-89
A. Bereznoy,
National Research University Higher School of Economics, 11, Myasnitskaya Str., Moscow, 101000, Russian Federation.

Received 08.11.2021.

Acknowledgements. The article was prepared within the framework of the Basic Research Program at the National Research University Higher School of Economics (HSE).

Abstract. The article explores the main directions and drivers of transformation of Big Pharma business models over the last quarter century. Key features of the traditional blockbuster model are revealed in the context of the main trends in pharma business environment that might have an adverse impact on this model effectiveness, in particular skyrocketing R&D costs, massive patent cliffs and tightening regulatory pressure on drug prices. The author analyzes various adaptive strategies used by Big Pharma firms, including mega mergers and acquisitions, intensive globalization and expansion into emerging markets, and makes the conclusion that these strategic moves had a limited effect in bringing about lasting change. The key solution to industry challenges had been found on the way of reconsidering the dominant players’ business model. The author relates the emergence of the new specialty pharma model to the serious changes in the basic architecture of customer value creation, delivery and capture mechanisms. The rapid growth of specialty care drugs in the portfolios of Big Pharma companies led to dramatic shifts not only in the target customer audience but also in the fundamental approach that these firms had to take regarding customer interaction, promotion and distribution systems, as well as the way of making profit. Even more significant changes could be observed in R&D sphere where Big Pharma companies have been intensively developing symbiotic relationships with innovative biotechnological firms. Given their effective and flexible R&D mechanism, the dynamic biotech firms have already become the most attractive participants of Big Pharma emerging innovation ecosystems. The author concludes that most of today’s Big Pharma companies represent a hybrid business model meaning parallel development of the traditional blockbuster and the new specialty pharma models. This combination allows pharmaceutical giants to retain effective control over the rapidly changing global industry marketplace. 

Keywords: global pharmaceutical corporations, blockbuster business model, specialty pharma model, biotech sector, innovation ecosystems


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For citation:
Bereznoi A. Transformation of Big Pharma Business Models. World Eonomy and International Relations, 2022, vol. 66, no. 3, pp. 81-89.

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