Biotech and pharma set to converge.

The distinction between biotech and pharmaceutical firms will erode over the next decade, according to a white paper released recently by the Life Sciences and Health Care practices of Deloitte Touche Tohmatsu (DTT), comprised of industry experts from certain Deloitte Touche Tohmatsu member firms. The report, which was developed in collaboration with the Economist Intelligence Unit, predicts biotech and medical device firms will grow more quickly than pharmaceuticals, with the fastest growth in Asian markets.

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The white paper, entitled The future of the life sciences industries, combined three research initiatives: an online survey completed by 206 senior industry executives from around the world; in-depth interviews with executives; and an executive forum that brought leaders together to discuss survey and interview results. The research asked senior executives to define strategic priorities over the next decade, identify the main challenges, and share how they intend to seize opportunities.

Widespread pressure to lower prices, along with increased competition, will speed up consolidation and convergence. "Convergence is inevitable; the industry must evolve into a new business model that further leverages external relationships to spur innovation and growth," says Richard Lee, a partner at Deloitte. "Firms can no longer rely on internal resources to achieve their objectives. They must establish a new ecosystem through acquisitions, mergers, alliances, and exploratory relationships in emerging markets."

Most survey respondents expect biotech revenue to grow in excess of 15% annually over the next 10 years, expecting more innovation from biotech, with small, young companies leading the way.

"Companies positioned to sustain strong revenue growth and exceed shareholder expectations in the coming years will be those that harness both the innovative culture typical to biotech companies, and the operating capabilities and management processes more characteristic of pharmaceutical firms," says Lee.

For more information visit www.deloitte.ca.