Global Pharma Study 2024 – a new age of performance programs

By Matthias Buente, Morris Hosseini, Thilo Kaltenbach, Michael Baur and Marco Bühren

The Roland Berger Global Pharma Study 2024 analyzes the performance of more than 150 of the largest listed pharmaceutical and life-science companies, identifying those whose profitability and sales growth outperform the industry average and deliver superior shareholder returns as a result. Our analysis reveals the four common characteristics of these pharma “winners” – and what their peers can learn from them.

Winners enjoy business leadership in their therapeutic areas because they have developed unique value propositions for their customers. This is the result of their second shared characteristic – strong strategic coherence. It enables winners to maintain a tight focus on the diseases and conditions they cover, realize operational synergies and actively manage their business portfolio. Winners’ greater strategic coherence is also reflected in better ESG scores and higher R&D expenditures – they spent an average 19% of revenues on R&D between 2020 and 2023, six percentage points more than the bottom-quartile “underperformers.”

Thirdly, winning companies demonstrate a consistent ability to execute strategy through efficient resource deployment and progressive capital allocation. Winners have significantly lower SG&A expenses than underperformers – 19% of revenues versus 32% – and lower COGS – 32% of revenues versus 38%. Lastly, the financial size and position of winners is larger than that of underperformers. The average market capitalization of winners is more than five times that of underperformers. Combined with strong profitability and balance sheets, this gives them access to relatively affordable capital from the equity markets .

Winners have significantly higher average EBITDA margins than underperformers – an annual average of 36% of sales versus 23% between 2020 and 2023. This shows that winners have been able to maintain operational efficiency as the basis for continuous profitable growth despite various challenges confronting the pharma industry. One of the most significant ongoing issues, the study shows, is cost and pricing pressures, which have increased over the past year in step with global concerns about rising healthcare spending, geopolitically driven jumps in energy and raw-material prices and inflation-induced wage rises.

The Roland Berger Global Pharma Study 2024 concludes that a growing number of companies are rightly recognizing the need for performance programs to improve operational efficiency, primarily in R&D, production, and sales and marketing. It notes that the emergence of AI offers timely opportunities to improve R&D, manufacturing and interactions with healthcare professionals. The report offers questions to help executives assess what challenges lie ahead and how prepared they are to meet them. With the right answers, they can set their companies on a winning path to delivering superior shareholder returns.

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