Pharmaceutical Industry Faces Dual Challenge: Soaring Costs and Patent Expirations
The pharmaceutical industry is grappling with a perfect storm of challenges, including soaring costs and patent expirations, which threaten to wipe out $300 billion in potential sales by 2030. According to McKinsey estimates, the cost per launch for new drugs has grown exponentially, reaching an estimated $4 billion per launch in 2022.
The rising cost of raw materials and supply chain disruptions have squeezed margins for pharma companies, who are also facing intense pressure from countries like the US to control drug costs. At the same time, a wave of expiring patents is allowing generic and biosimilar alternatives to flood the market, leading to a sharp decline in branded drug sales - a patent cliff.
The industry's woes are compounded by the increasing demand for personalized services from patients and healthcare providers. "The pharmaceutical industry is facing a dual challenge: soaring costs and patent expirations," said an expert from Globant, a company that has developed agentic AI technology to address these challenges. "We believe that our breakthrough algorithm can help transform commercial pharma by optimizing the development of new drugs and reducing costs."
Globant's agentic AI technology uses machine learning algorithms to analyze vast amounts of data and identify patterns that can inform decision-making in drug development. According to Globant, their technology has shown promising results in reducing costs and improving efficiency in the pharmaceutical industry.
The patent cliff is a major concern for pharma companies, which are losing billions of dollars in potential sales as generic alternatives enter the market. By 2030, around $300 billion in potential sales could be lost due to generic alternatives entering the market. Meanwhile, the cost of developing new drugs is increasing exponentially, reaching an estimated $4 billion per launch in 2022.
The industry's challenges are not limited to financial losses. The rising costs and patent expirations also pose a threat to patient access to life-saving medications. "We need innovative solutions that can help reduce costs and improve efficiency in the pharmaceutical industry," said an expert from McKinsey. "Agentic AI technology has the potential to transform commercial pharma by optimizing the development of new drugs and reducing costs."
As the industry grapples with these challenges, experts are calling for a more collaborative approach to address the patent cliff and reduce costs. Globant's agentic AI technology is seen as a promising solution, but its adoption will depend on the willingness of pharma companies to invest in innovation.
In conclusion, the pharmaceutical industry faces a dual challenge: soaring costs and patent expirations. While there are no easy solutions, innovative technologies like agentic AI have the potential to transform commercial pharma by optimizing the development of new drugs and reducing costs. As the industry navigates these challenges, experts will be watching closely for signs of progress.
Sources:
MIT Technology Review
McKinsey estimates
Globant
This story was compiled from reports by MIT Technology Review and MIT Technology Review.
