Mapping the Healthcare Landscape Bringing pharmaceuticals into focus

Mapping the Healthcare Landscape Bringing pharmaceuticals into focus published by Datamonitor in November, 2009. This report consists of 117 pages and the price starts from US $ 7600.

Introduction

Abstract

Introduction

Courtesy of the patent cliff, the pharmaceutical industry is set for a dramatic slow down in revenue growth from 2011. Industry players are therefore looking to implement strategies which will cushion them against the anticipated revenue short-fall, with diversification away from pharmaceuticals into other healthcare sectors one avenue under consideration.

Scope of this research

• Analysis of Big Pharma' s current business model, and the mergers, acquisitions and divestments which have shaped it.
• Classification of the human and animal healthcare landscape.
• Analysis of ten healthcare sectors using market size, operating margin, and indicative profit potential.
• Assessment of the healthcare landscape, with key recommendations for pharma companies looking to make future M&A decisions.

Research and analysis highlights

The average operating margin of pharma-focused companies tends to be higher than that of those with a more diversified business model, implying that increasing pharma-focus is the best strategy to drive profit growth.

Both the market size and operating margin associated with pharmaceuticals makes it the most rewarding of all ten healthcare sectors under analysis, and suggests that diversification on the part of Big Pharma will tend to end in profit dilution.

Patents are key to the high rewards associated with pharmaceuticals, and are also responsible for making the medical device/diagnostics sector the third most attractive sector under analysis, with branding playing a similar role for consumer/over-the-counter health.

Key reasons to purchase this research

• Understand how Big Pharma' s business model has evolved, and how this has impacted on operating margin.
• Identify the major sectors within the healthcare landscape, and understand how they relate to one-another.
• Analyze the attractiveness of each sector as a target to diversify into, based on market size, operating profit, and indicative profit potential.

Table of Contents

EXECUTIVE SUMMARY

• Strategic scoping and focus
• Related reports
• Upcoming related reports
• Key findings
  • Big Pharma set for dramatic decline in revenue growth through 2014
  • A conceptual framework for profitability
  • Diversification as a tool to counter Big Pharma' s forecast slowdown
  • Destinations for diversification within the healthcare landscape
  • Assessing the relative attractiveness of each sector within the healthcare landscape
  • Recommendations to maximize operating profit growth

2. HISTORICAL TRENDS IN DIVERSIFICATION

• Key findings
• Overview of Big Pharma' s business model
• Historical M&A and divestment analysis, 2000 - Q2 2009
  • Analysis of mergers, acquisitions, and divestments over time
  • Analysis of mergers, acquisitions, and divestments by type

• Big Pharma' s current business model
  • Historical prescription pharmaceutical revenue growth rate justifies Big Pharma' s focus to date
  • Big Pharma' s pharmaceutical focus varies considerably at the company level
  • Correlation between operating profit and pharma focus

• Company case studies
  • Prescription-focused companies
  • Diversified companies
  • Exiting companies

3. DEFINING THE HEALTHCARE LANDSCAPE

• Key findings
• The 10 sectors under analysis
• A focus on diversification within the life sciences sector
• Healthcare products and provision represents the primary division in human healthcare
  • Payers, hospitals, and drug supply chain intermediaries represent the key healthcare providers
  • Healthcare products classified as either pharmaceutical or non-pharmaceutical

• The primary divider in animal health is ‘companion' versus livestock
  • The provision of healthcare services in animal health is identical for companion animals and livestock
  • Consumer health is the key product differentiator between companion animals and livestock

4. SIZING THE HEALTHCARE LANDSCAPE

• Key findings
• Healthcare landscape overview
  • Prescription branded pharmaceutical market
  • Over-the-counter/consumer health market
  • Health insurance market
  • Medical devices and diagnostics market
  • Retail pharmacy market
  • Hospital market
  • Generics market
  • Prescription benefits management market
  • Pharmaceutical wholesaler market
  • Animal health market

5. ASSESSING THE HEALTHCARE LANDSCAPE

• Key findings
• Healthcare landscape overview
  • Healthcare products present a more lucrative alternative to healthcare provision
  • The product-provision division should not be breached
  • The branded pharmaceuticals sector cannot be bested
  • Strategic diversification - small, incremental moves within the product landscape
  • Strategic diversification - small, incremental moves within the provision landscape
  • Strategic diversification - parallel moves can provide synergies with minimal costs

6. BIBLIOGRAPHY

• Publications and online articles
• Datamonitor reports

APPENDIX

• Exchange rates

TABLES

• Table: Market size, operating margin and indicative profit potential for the healthcare landscape
• Table: Big Pharma' s mergers, acquisitions, and divestments by sector type, 2000 - Q2 2009
• Table: Notable divestures of non-core pharma assets by Bristol-Myers Squibb, 2005 - 09
• Table: Financial performance of Johnson & Johnson' s key divisions, 2005 - 08
• Table: Notable divestments by Bayer, 2004 - 09
• Table: The relative importance of mail order pharmacy services to the top three prescription benefits management companies in the US, 2008
• Table: Retail pharmacy chains associated with wholesaler operations in the UK, 2006
• Table: Prescription and over-the-counter product classification
• Table: Consumer health and diagnostics/medical device classification
• Table: Prescription and over-the-counter product classification
• Table: Non-pharmaceutical animal health services
• Table: Global prescription branded pharmaceutical market, 2008
• Table: Operating margin for the leading prescription branded pharmaceutical companies, 2005 - 08
• Table: Indicative Profit Potential for the prescription branded pharmaceutical market, 2008
• Table: Global over-the-counter/consumer health, 2008
• Table: Operating margin for the leading over-the-counter/consumer health companies, 2005 - 08
• Table: Indicative Profit Potential for the over-the-counter/consumer health market, 2008
• Table: US health insurance market, 2008
• Table: Operating margin for the leading US health insurers, 2005 - 08
• Table: Indicative Profit Potential for the health insurance market
• Table: Global medical device and diagnostics market, 2008
• Table: Operating margin for the leading medical devices and diagnostics companies, 2005 - 08
• Table: Indicative Profit Potential for the medical devices and diagnostics market, 2008
• Table: Global retail pharmacy market, 2008
• Table: Operating margin for the leading US retail pharmacies, 2005 - 08
• Table: Indicative Profit Potential for the retail pharmacy market, 2008
• Table: US hospital market, 2008
• Table: Operating margin for the leading US hospitals, 2005 - 08
• Table: Indicative Profit Potential for the US hospital market, 2008
• Table: Global prescription generics market, 2008
• Table: Operating margin for the leading generics companies, 2005 - 08
• Table: Indicative Profit Potential for the generics market, 2008
• Table: US prescription benefits management market, 2008
• Table: Operating margin for the leading US prescription benefits management companies, 2005 - 08
• Table: Indicative Profit Potential for the prescription benefits management market, 2008
• Table: Global pharmaceutical wholesale market, 2008
• Table: Operating margin for the leading US pharmaceutical wholesalers, 2005 - 08
• Table: Indicative Profit Potential for the pharmaceutical wholesale market, 2008
• Table: Global animal health market, 2008
• Table: Operating margin for the leading animal health companies, 2005 - 08
• Table: Indicative Profit Potential for the animal health market, 2008
• Table: Examples of human to animal drug cross-over
• Table: Currency exchange rates, 2008

FIGURES

• Figure: Big Pharma' s projected sales growth decline through 2014
• Figure: Profit at the company and sector level
• Figure: Big Pharma mergers and acquisitions by sector type, 2000 - Q2 2009
• Figure: The spectrum of Big Pharma' s business diversification, 2008
• Figure: The correlation between Big Pharma' s prescription focus and operating margin, 2005 - 08
• Figure: The ten healthcare sectors, 2009
• Figure: Market size across the healthcare landscape, 2008
• Figure: Average operating margin across the healthcare landscape, 2005 - 08
• Figure: Indicative profit potential across the healthcare landscape, 2008
• Figure: Big Pharma' s potential responses to the patent cliff
• Figure: Optimizing operating margin growth
• Figure: Big Pharma mergers, acquisitions, and divestments, 2000 - Q2 2009
• Figure: Big Pharma mergers and acquisitions by sector type, 2000 - Q2 2009
• Figure: Big Pharma' s divestments by sector type, 2000 - Q2 2009
• Figure: Big Pharma' s focus on prescription drug sales, 2001 - 08
• Figure: The spectrum of Big Pharma' s business diversification, 2008
• Figure: The correlation between Big Pharma' s prescription focus and operating margin, 2005 - 08
• Figure: The diversification profile for Pfizer, Novartis, Eli Lilly, Johnson & Johnson, Bayer, and Bristol-Myers Squibb, 2007
• Figure: Pfizer' s prescription focus and operating margin, 2001 - 08
• Figure: Eli-Lilly' s prescription focus and operating margin, 2001 - 08
• Figure: Bristol-Myers Squibb' s prescription focus and operating margin, 2001 - 08
• Figure: Johnson & Johnson' s prescription focus and operating margin, 2001 - 08
• Figure: Novartis' s prescription focus and operating margin, 2001 - 08
• Figure: Bayer' s prescription focus and operating margin, 2001 - 08
• Figure: Pharmaceuticals sales for Procter & Gamble, 2004 - 08
• Figure: The ten healthcare sectors, 2009
• Figure: The human and animal healthcare divide within the life sciences sector
• Figure: The product-provision division running through human healthcare
• Figure: The organizations responsible for human healthcare provision
• Figure: The pharmaceutical, non-pharmaceutical divide in human healthcare products
• Figure: The subcategorization of pharmaceutical products
• Figure: The subcategorization of non-pharmaceutical products
• Figure: The over-the-counter-consumer health spectrum
• Figure: The companion - livestock divide in animal health
• Figure: Classification of service provision in animal healthcare
• Figure: Animal healthcare products for companion animals and livestock
• Figure: Market overview for the global healthcare landscape, 2009
• Figure: Market size, operating margin and indicative profit potential for the ten healthcare sectors
• Figure: The companion animal-livestock split in animal health, 2004
• Figure: Indicative profit potential of the human and animal health care sector
• Figure: A comparison of the size and profitability of individual sectors within the healthcare landscape, 2009
• Figure: Drivers and resistors for prescription to over-the-counter switching

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