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Healthcare manufacturers must evolve faster to stay ahead

Tom Toth
PA Consulting Group Financial Times, page 10
7 August 2009


From Mr Tom Toth.

Sir, Andrew Jack’s article “Emerging market for medicines” (August 4) leaves the pivotal question unanswered – whether global pharma businesses are acting fast enough and whether their manufacturing and business structures are flexible enough to adopt more aggressive strategies to respond to these threats.

The downward trend in return on sales, equity and assets in the sector as a whole suggests they are not.

Other sectors such as electronics and automotive have responded more radically to the changing global economy. Large healthcare sector businesses are predominantly centred in domestic, high-cost economies with, on average, only around 20 per cent of their workforce based in the emerging markets. This compares with nearly 50 per cent for Volkswagen.

Similarly, over the past eight or so years over 50 per cent of new automotive plants were built in the emerging markets and recent studies have also shown that for western European automotive suppliers, 85 per cent of all plants are foreign.

Large healthcare manufacturers need to evolve much faster to stay ahead. They need to leverage learning and insight from other sectors to move more rapidly towards more diverse and flexible structures.

This means creating global networks of product development, supplier, manufacturing, logistics and sales and marketing partners in closer proximity to their growing markets and their competition.

Tom Toth,
Manufacturing in Healthcare,
PA Consulting Group,
London SW1, UK

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