Pharmaceuticals, Medical Devices and Consumer Products - an evolving mix

Pharmaceuticals, Medical Devices and Consumer Products - an evolving mix

by Pininvest Analysis

Pharmaceuticals Majors on pininvest.com

  • 16 constituents
  • 19.7% 1y performance
  • 25.8% volatility
Check the investment theme exit_to_app

For major pharmaceutical firms, the strategic choices underpinning the mix between drugs, medical devices and consumer products – and the changing overall profile - are in many ways indicative of the broad trends commanding the pharmaceutical industry

Pharmaceutical research is undoubtedly a challenge
Discovery of new molecules is not likely to be a timely process to replace drugs losing patent protection but more often a breakthrough releasing a wave of new medical solutions
Research in very large laboratories raises complex management issues, resulting sometimes in a costly loss of focus with scientists pursuing ‘pie in the sky’ projects
Drugs with broad appeal – and large sales potential – seem ever more difficult to develop and complex treatments (such as required by the expanding field of immunotherapy) or rare diseases are both much more costly to implement and of more limited scope
The hold of generic drugs under pressure of public and private health insurance systems forces difficult arbitrage decisions, defending market share in this expanding low-margin segment or withdrawing. View our theme for Pharma Generics

Medical devices and diagnostics
Because of the sales potential of medical devices in hospitals, the pharmaceutical firms have been encouraged to leverage strong partnerships by broadening their product range
The approach has contributed to pay for an often costly sales force and, by strengthening their relevance in the medical world, may have helped keep competitors at bay


Consumer products
Over-the-counter medication and health formulas have been the main stay of some pharmaceutical majors, capitalizing on brand recognition established over decades
New markets (Eastern Europe, developing countries) and targeted marketing have contributed to grow the sales of consumer divisions but, by bridging the gap between pharmaceuticals and ‘feel-good’ consumption, the effort may be stymied by food conglomerates such as Nestlé , equally in a sales segment supporting higher margins