6 Critical Risks Facing the Pharmaceutical Industry

Drug manufacturers face legal, regulatory and technology-related challenges every day.

By: Katie Dwyer | June 29, 2018

The pharmaceutical industry is under scrutiny from the government, health insurers and consumers, all calling for greater transparency and accountability. It’s also facing competition from both internal and external forces.

1) Increased Competition from Generic Drugs

In 2017, the FDA began a push to get lower-cost generic drugs out to market faster.

Once a new brand name drug is approved, it’s granted a 180-day period of exclusivity, during which time generic versions cannot go to market. But, a backlog of generic applications has stretched that 180 days much longer. The FDA’s renewed effort to clear that backlog and get generic applications through the approval process faster will flood the market with cheaper versions of high-cost drugs.

According to the FDA, the entree of two competitive generic versions knocks down the price of a brand name drug by 52 percent. The price falls another 30 percent once nine generics are on the market.

2) Legal Liability for Opioid Addiction

Opioid manufacturers are under fire for feeding the epidemic sweeping the nation. Hundreds of lawsuits filed from the local to the federal level accuse drug makers of misleading the public about the addictive properties of opioid painkillers. The suits additionally allege that drug makers exaggerating their benefits and urged doctors to over-prescribe for the sake of increasing revenue.

Now the Department of Justice is getting involved.

Attorney General Jeff Sessions announced the creation of a task force to investigate manufacturers and distributors of prescription opioids. He also said the Department will provide assistance to the prosecution of lawsuits against the drug makers where it can.

3) Product Liability

Beyond promoting competition from generic drugs, the FDA is also urging pharmaceutical companies to cut down the cost of new drugs by streamlining and speeding up the research and development process, which should eliminate some overheard expenses.

While this makes drugs more affordable for consumers, it also means medications spend less time in testing, increasing patient safety risk and regulatory risk.
Policy makers will weigh access to medicines with the desire to encourage biopharmaceutical R&D, which relies on regulatory efforts to streamline clinical research, ensure product quality, and achieve more efficient oversight.

4) Keeping Up with Technology

The study of human genomics is paving the way for personalized medicine, in which drugs are built to work with an individual’s unique set of genes, increasing their effectiveness and safety. 3D printers could emerge as top competitors for manufacturers; the first printed drug was approved by the FDA in 2015. The explosion of personal data collected by wearable devices could enhance the quality of clinical studies and help researchers synthesize results more efficiently.

Nanotechnology could take data collection a step further than wristwatches. Clothing made from nanoparticles could detect more health parameters like internal body temperature, sweat rate, blood pressure, hydration status and more. Medication delivered directly to the cells via nanoparticles in the bloodstream could also revolutionize the way medications are designed.

Failure to keep up with these technology advancements could open the door for non-traditional players to enter the market and infringe on pharmaceutical companies’ market share.

5) Counterfeit Drugs and Global Quality Control

The flow of foreign counterfeit drugs into the American market continues to be a problem, especially as manufacturers move operations overseas.
Multinational pharma companies have to ensure they meet U.S. quality standards while adhering to all local regulations abroad, and are also responsible for blocking for illegal trafficking of counterfeit medications.

This requires stringent standards for all vendors and third parties involved in the manufacture and transportation processes. Brexit will make this more difficult for companies operating out of or distributing drugs in the UK.

6) Patent Cliffs

A patent cliff refers to the expiration of drug patents and the sudden drop-off of sales of products that previously constituted a large percentage of the market. Essentially, patent cliffs put these dollars up for grabs for competitors to produce and patent a comparable brand name drug

In 2022, the industry is expected to have almost $50 billion in prescription drug sales worldwide at risk due to patent expiration, according to market research firm Statista. &

Katie Dwyer is a freelance editor and writer based out of Philadelphia. She can be reached at [email protected].

The Qualities to Look for when Selecting a Financial Lines Carrier

Operating a business comes with its share of challenges, but having an insurance partner that strives to understand and align with your operations can make all the difference.

By: MSIG USA | October 31, 2024

Running a commercial business is no small feat. Leaders are often tasked with making difficult decisions — sometimes with limited data — and communicating these decisions with confidence while acknowledging their inherent uncertainty.

“Expectations are incredibly high in today’s current climate,” said David Guild, head of financial lines, MSIG USA. “Companies and their leaders must be thoughtful and controlled in their communications, conveying both competence and a clear vision on an ever-evolving world stage.

Nevertheless good leaders (whether they are in the C-suite or on the board of directors) consistently persevere and face the challenges of our evolving world, equipping themselves with the necessary tools and techniques to keep operations running.

For financial companies and commercial businesses looking to keep pace with today’s risks and better understand their own exposures, finding the right insurer need not feel like an added weight.

Below are several qualities to look for in a partner that has the experience and insights to help mitigate and navigate their insureds’ unique exposures, giving leaders the space to focus on their core operations.

Sustainability in All Markets

David Guild, Head of Financial Lines, MSIG USA

When looking for a financial lines insurance partner, sustainability should be top of mind. Knowing that an insurer can provide solutions in a hard market alongside the soft will not only provide peace of mind but also help build resilience.

“Leaders should have the room to concentrate on their vision for the company and what it can achieve — not be burdened by potential risks that keep them awake at night. “Your insurance partners should be able to understand the trials and tribulations of running a business, to respect that there is no single right answer to most challenges, and be prepared to assist wherever, whenever issues may arise,” Guild said.

Sustainability is proven in an insurer’s ability to come through on the promises it makes. For example, MSIG USA’s approach has earned it an A+ rating, proof that its team can back the promises it makes and see them through to completion. “We are confident in our ability to serve your insurance needs, on a global scale,” Guild added.

“Everything we speak of revolves around the credibility of our platform, which is reflected in our A+ rating, a 350-year legacy within our family of companies, and our experienced team here in the U.S.”

An Emphasis on Company and Culture

Successful partnerships are built on a solid relationship between insurer and client.

At MSIG USA, “we aim to be a stable and sustainable presence for our clients,” Guild said. “The value of long-term relationships is at the core of what MSIG USA is all about. Our underwriters deeply appreciate the importance of these connections.

“We believe that building and maintaining strong, long-lasting relationships with our customers is essential to navigating the inevitable fluctuations of the insurance market. We are confident in our abilities, and in yours.” he added.

Company culture, as Guild mentioned, is more than an internal commitment; it’s something that can also drive business relationships.

For insurance partners, analyzing and aligning with their clients’ culture helps to solidify partnerships, as well as open the lines of communication and understanding.

“Variables will change, oftentimes rapidly. From our view, what matters is the culture of that company when responding to change. It’s about trusting their character rather than just the policies and procedures in place,” Guild said.

A Source of Truth and Clear Communication

Effective communication goes a long way in clearly understanding an insured’s business and future potential. This allows for sustainable partners to develop coverage that fits and to work closely with their Claims team to understand the partnership in context.

With the amount of data available today, and the number of ways information can quickly be disseminated through different medium, a good insurance partner knows that companies must be the single source of truth for their stakeholders.

“Quarterly and annual earnings calls provide a platform to discuss financial results and respond to investor questions. Investor presentations offer a more comprehensive overview of the company’s strategy, performance and outlook,” Guild explained.

We will look at what analysts and other third parties think about the information provided to try to glean what the investor base will think and how they will act. But ultimately, it is what the company says, and the way they say it, that we will assist in defending, if need be, and so we make sure to listen and learn from the company leadership.

Bringing These Qualities Under One Roof

Leaders want to know that, at the end of the day, their business is a priority for their partners.

Clear communication, a strong relationship and emphasis on sustainability are just the start. Their insurance partners should strive to understand their business, identify areas of concern and craft coverage customized to meet their needs.

With an impressive 350-year legacy, MSIG USA is doing just that for its clients, utilizing its global presence to further its clients’ goals.

“The key elements of our approach are an intellectual pursuit of information, a well-honed practice of underwriting that identifies material aspects for risk assessment, and clear communication of our insights to our clients: brokers and buyers alike. We aim to provide a transparent and informed perspective on the risks we underwrite,” Guild said.

“We bring sustainable, predictable insurance capital and what we believe is best in class service philosophy, honed by working with some of the most sophisticated brokers and buyers of insurance in the world.”

To learn more, visit: https://www.msigusa.com/financial-lines/.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with MSIG USA. The editorial staff of Risk & Insurance had no role in its preparation.

MSIG North America is a member of MS&AD Insurance Group Holdings, Inc. which is the 8th largest non-life insurance group in the world by revenue. Based in Tokyo, Japan, we operate in 48 countries/regions and generated $46B in 2021 with approximately 40,000 employees globally. MSIG North America is the marketing name used to refer to MSIG Holdings (U.S.A.), Inc. (“MSIGH”), and its subsidiary companies.

Pharmceutical Industry

6 Critical Risks Facing the Pharmaceutical Industry