Key Business Strategy Tools to Survive a Patent Cliff in the Biopharmaceutical Industry

Abstract

This case study presents the research gathered in seeking to identify a number of key business strategy tools that biopharmaceutical companies have used to revitalize their growth following the patent cliff. Consequences on net income post patent expiration of blockbuster drugs from 2007-2012 are examined relative to Biogen, Novartis, and Sanofi and their corresponding oral therapies to treat patients with multiple sclerosis. Research has been gathered from financial statements, clinical publications, corporate press releases, and other articles speculating on the effects of the patent cliff for companies that were able to survive beyond it without collapsing. The business strategy tools most commonly utilized are identified as mergers and acquisitions of companies or products, investing in research and development, academic collaborations, and expanding business exposure in emerging markets. The degree to which each of these key tools, among other select strategies, was utilized and successful varies per company; each company used more than one of these tools during the selected timeframe. The patent cliff examined may be the one with the largest impact on revenues to date, but it will not be the last. Companies must be more strategic and proactive to take steps to ensure their portfolios and pipelines are resilient and suit their business needs.