This article outlines six risks that threaten pharmaceutical manufacturers’ recovery from COVID-19 in 2020-21. In 2021, the pharmaceutical industry will likely recover from one of the most chaotic years on record. However, despite recovering consumer confidence and the end of the pandemic being in sight, it still faces significant risk. The covid-19 pandemic uncovered weaknesses within the international pharmaceutical delivery chain. Despite a recent increase in consumer confidence, it is still below average. The Industry is likely to face several significant risks through the end of the year, including lower-than-average consumer confidence, pharmaceutical fraud, patent cliffs and growing customer expectations.
These six factors are outlined below:
1. Decreased demand for prescription medicine
Though the end of the pandemic may be in sight, it is not over yet. The COVID-19 virus currently infects millions of people globally, and major outbreaks continue to occur in India. We may not know what the recovery process will look like until later in the year when vaccines are more widely available. The effects of COVID-19 are expected to continue to impact the pharmaceutical industry through the end of the year, as consumer confidence remains low and unemployment rates stay high. The future looks promising for pharmaceutical businesses that can weather the last few months of lower-than-average demand. Some industry observers predict that pharmaceutical growth will return to pre-pandemic levels as the pandemic recedes and the economy recovers. Increased prevalence of chronic conditions and ageing populations contribute to this expected growth.
2. The entry of generic pharmaceuticals into the market has created a competitive marketplace.
Major pharmaceutical manufacturers will face some tough choices as they face patent cliffs. Some will find it difficult to replace their top-selling drugs, while others will be able to develop generic versions of the medicines in question, which may be cheaper for consumers. Several major pharmaceuticals will lose their US exclusivity this year, including Lucentis (an eye medication) and Bystolic (a treatment for high blood pressure), with sales valued at more than $2 billion in 2020. For major manufacturers, these patent cliffs will pose a significant risk. For the rest of the Industry, the effect will likely be significantly disruptive and could open up new opportunities for smaller manufacturers.
3. Pharmaceutical fraud is a serious crime.
The pharma sectors continue to face challenges in combatting fraud, which may have been even extra great at some stage in covid-19. Experts predict that recoveries from health care fraud-related pandemics will be higher than average this year. The US government has recovered $8 billion from Purdue Pharma, a multibillion-dollar pharmaceutical company, in connection with the manufacture and distribution of prescription opioid drugs. Health care fraud laws in the United States include the False Claims Act, which encourages whistle-blowers to approach the government with evidence of potential average sales price fraud, clinical trial fraud, good manufacturing practices (GMP) fraud and Industry kickbacks. Implementing anti-fraud measures can help reduce the amount of pharmaceutical fraud; however, there will likely be several significant recoveries throughout the year, which could have a significant disruptive impact on the industry at large.
4. The rise of social media has changed how companies manage their brands.
Poor brand health due to incidents of fraud can be detrimental to pharmaceutical companies, which are already facing increased scrutiny from customers. For the rest of the year, brand management may be more critical than usual. In addition, consumers are becoming more conscious of the cost of pharmaceuticals and are increasingly reluctant to purchase medicines whose value they perceive as inadequate. Pharmaceutical companies must manage consumer expectations and be prepared to respond to brand crises throughout the year, such as issues that may arise as supply chains continue to be disrupted by COVID-19.
5. Data breaches and other cybersecurity threats
The pharmaceutical industry is especially vulnerable to cybersecurity threats as consumer data becomes more valuable. According to IBM’s Cost of a Data Breach Report, cyberattacks cost pharmaceutical companies more than $5 million the previous year, making it the fourth most-impacted Industry, just behind health care, energy and finance. As manufacturers rely more heavily on internet-connected technology, such as industrial IoT sensors, their facilities may become more vulnerable to cyberattacks. As cyberattacks become more frequent and costly, companies should invest more in cybersecurity. These companies will also need better policies for office workers and remote staff members to protect the company. And since the Internet of Things (IoT) has many vulnerabilities that have been proven time and time again, suppliers of IoT products should invest a substantial number of resources into security.
6. Supply chain disruptions can adversely affect pharmaceutical companies.
Despite the pressures of COVID-19, global pharmaceutical supply chains were not so severely disrupted that they collapsed. However, pharmaceutical logistics weaknesses were exposed due to the pandemic. As time passes, the supply chains that industries have cultivated over several decades are at risk of breaking down due to several factors. For example, if an issue with production is caused by an event such as a pandemic, it may take longer than expected for a company to re-establish its supply chain. The supply chain operation may also be vulnerable to cybercrime since cybercriminals can cause disruptions by destroying or manipulating data in the supply chain. Moreover, poor visibility and transparency in the supply chain make it difficult for businesses to identify and deal with these problems.
How may manufacturers need to adapt in the future?
Although the economy is expected to improve, pharmaceutical manufacturers will continue to face risks through the end of the year. Manufacturers will face several challenges in the coming years, including fragile global supply chains, increased incidents of health care fraud, and weak demand. Manufacturers investing heavily in innovative technology will also have to contend with growing cyberattacks. Managing these challenges will likely be critical to retaining a competitive edge in the pharmaceutical Industry.
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Sangeetha brings 20 years of experience in Information Technology which includes Solution architecting, building micro services, research, and evaluation of business applications, integrating apps.