A study conducted by Roland Berger of 50 top drug industry executives showed a pattern of large pharmaceutical companies moving away from development of patented drugs as concern about the returns from future innovation mounts. The survey showed significantly different approaches to diversification, with 67% viewing diversification as a potential solution. France’s Sanofi-Aventis is among the companies that have generally moved furthest in diversifying, increasing non-patented drug sales from 5% to 12% from 2004 to 2009. Some companies with similar patent concerns have diversified far less, and others have concentrated on pharmaceutical operations. Almost half felt current R&D investments would lead to a negative return, though two-thirds felt future scientific advances could result in positive returns throughout the next decade. The negative attitudes toward innovation indicate the view of the financial markets, which are valuing more diversified companies more highly. Most companies are focused on minimizing risk by expanding into genetics, consumer health and vaccines. While these steps are beneficial to increasing sales and expanding into emerging markets, the report indicates greater results could come from diversification into more innovative areas, such as personalized healthcare and diagnostics.

Source: Financial Times