In 2012 challenges abounded for the pharma industry and nowhere more so than in Europe, so says a new report from Booz & Co.

Mandated austerity measures across the region resulted in drug price reductions in Finland, Ireland and Italy; while in other countries, including Spain, the larger co-pays established by governments led to a significant drop in prescription drug sales.

And all this was set against a backdrop of loss of exclusivity among popular prescription medicines – $250bn of global sales risk between 2012 and 2015.

Despite this the Booz & Co report 2013 Life Sciences (Pharmaceuticals) Industry Perspective urges us to look at the positives – a host of significant changes that should benefit most companies in the sector.

These include: exciting advances in scientific technology; further steps forward in reinventing the industry's R&D model; stronger cooperation in real-world evidence and patient engagement and significant investments in high-growth emerging markets, including Russia and China.

However, as the report cautions, all of these require major human and financial resources and this leads to the final trend of 2012, fiscal retrenchment.

'…you are already fatigued from prior cost-cutting efforts, but in 2012 you once again took a sharp pencil to your budgets. But it doesn't feel like you've added much breathing room; your budgets will be squeezed further and you have not yet created a sustainable path to future growth or profitability,' the report states. 

So, where to next? Few, if any, are in doubt that there is a need to reinvent current business models – or, at the very least, to take a disruptive new approach.

In this context Booz & Co suggest that winning companies will do three basic things in ensure growth in 2013 and beyond:

• Find the missing headroom: in essence the market share you don't have minus the market share you likely will never get

• Focus on distinctive capabilities: being that a capability is your ability to reliably and consistently deliver a specified outcome through a combination of processes, tools, knowledge, skills and organisation

• Hold a mirror up to your operating model: staying focused on a few key capabilities and bringing them to scale – it is critical to have the right organisational design.

So, not much to concentrate on in 2013 then!

By Clare Bates, editorial director - PMGroup