Waking the Giant: Business Model Innovation in the Drug Industry

Executive Summary

The drug industry has reached the limits of its traditional business model, having collectively destroyed shareholder value since 2000. Companies' responses -- cost reductions, portfolio rationalization, productivity enhancements, bigger dealmaking -- are too little, too late. It's not enough to do business more efficiently; the industry needs to adopt new business models. Problem is: it's almost unprecedented to change models in the drug industry, though companies in other industries have done it under similarly challenging circumstances. Now it's time for Pharma to get moving. Since no company has yet taken a convincing stance on business model innovation, there's significant opportunity for one or more players to take the lead and create strategic advantage in doing so.