December 2008
	Remember When the United States Was Two-Thirds of the World’s Pharmaceutical Market? This month I want to update you on two topics, important to me, that I have touched on in previous articles and presentations. I won’t start from the beginning and proceed through the whole story, but offer up the original premise and cut right to the chase on the update. The first topic is the shifting geography of the pharmaceutical industry. Early in my career, the United States accounted for about 66 percent of the industry’s business. But now, significantly less than half of pharmaceutical sales come from the United States. I have written often about this phenomenon, and how it will undoubtedly shift the face of the pharmaceutical industry even more in years to come. In its September 2008 issue, The Economist charted growth in the pharmaceutical industry by region for the coming year. The message of this chart, shown below, is relatively self-explanatory; it reveals that precious little growth, by individual region or in the aggregate, will come from the former fountains of profitability, including the United States, the G5 countries and Japan. Rather, the pharmaceutical marketplace is turning into a truly global one, with most of the growth in sales coming from the now often discussed “emerging countries” and, making things really complicated, from the “rest of the world.” In response to this chart, I would reiterate that the pharmaceutical industry is doing far too little research and strategizing to plan for such a changing world, and that a major first-mover advantage will accrue to the company that takes this shift most seriously first. Additionally, I would add the grace note that this chart shows percentages of increase in sales, not profits, and the pharmaceutical companies working hardest on planning for growth around the world had best be simultaneously working on divining how to profit from it. The second topic on which I would like to provide an update is the work of Malcolm Gladwell, an author and out-of-the-box thinker for whom I have the highest respect. You may recall my commentary on his previous book, The Tipping Point, in which he writes that truly interesting phenomena in science, business and other fields do not occur continuously in a plodding, evolutionary fashion, but do so only up to a point, the tipping point, where the phenomenon reaches critical mass, things change rapidly and paradigm shifts occur. Those planning strategies for businesses, for example, are exhorted by Gladwell to pay close attention to impending tipping points. His second seminal book, Blink, I have talked about before as making a compelling case for the notion that the intuition of experts can provide better guidance than can vast volumes of data, and that we should pay more attention to our intuitive, and less to our rational side, than has historically been the case. Here, the update is that Gladwell has just published a new book, Outliers: The Story of Success, which chronicles how people who stand out in a positive way achieve such status. Gladwell writes that while we usually attribute such outcomes to intelligence and hard work, other demographic and sociological factors are often held in common by those who achieve greatness. A coincidence? Gladwell strongly suggests not, and goes on to point out the practical application of understanding the commonalities that bind outliers of many types together in subgroups, from those who achieve great success in the practice of law to those pilots most likely to crash an airplane. To expand your consciousness into new ways of thinking, read all three Gladwell books – especially his latest. By doing so, I think you will learn to look at situations in entirely new ways, which in turn will come in handy as the health care marketplace in which we all are players changes radically, and old ways of adapting simply don’t work anymore. Richard B. Vanderveer, Ph.D. Group Chief Executive Officer GfK U.S. Healthcare Companies