Biopharma companies need to incorporate innovative elements in their business models to survive healthcare reform

Nov 7 2009

Those biopharmaceutical companies that are able to incorporate innovative and flexible elements into their business models will be best positioned to survive healthcare reform and maintain attractive long-term returns, according to a white paper published today by Cowen Healthcare Royalty Partners, a global healthcare private equity firm, and Health Advances, a leading healthcare strategy firm.

The paper, "Maintaining Attractive Biopharma Returns in the Face of Healthcare Reform", examines key issues at the center of the debate including access to care, controlling costs, drug pricing and value-based healthcare. In addition to discussing the increased pressures biopharma companies face, including the restrictive use of branded drugs for large patient populations and follow-on biologics, the paper outlines new solutions companies can implement to achieve the same levels of return for its investments as it has in the past.

Some of the paper's key findings include:

• Biopharma companies need to adapt their business models to maintain attractive ROIs such as exploring pay-for-performance relationships with stakeholders, cost-effective care solutions that align incentives, and investing in follow-on biologics and/or generics
• Investing in pharmacoeconomic competencies and integrating these into clinical development will mitigate reimbursement risk
• Investing in personalized healthcare and specifically biomarkers will be rewarded
• Highly differentiated products addressing niche markets will be the least vulnerable even if stringent regulation is passed

Gregory B. Brown, M.D., Co-Founder and Managing Director of Cowen Royalty, commented, "Healthcare reform is a serious issue for biopharma companies who are already feeling pressure from patent expirations, fewer drug approvals and growing development costs. We partnered with Health Advances to bring a new and unique perspective on the healthcare debate especially as it relates to biopharma companies -- the developers of many of our future medicines."