Global pharmaceutical industry is heading for a crisis of its very existence in the coming years starting from 2008. International consulting agencies have already warned of such a gloomy prospects for the first time for this sector which had recorded decades of excellent growth in sales and profits in the past. A key reason for this emerging scenario is the substantial number of patent expirations and consequent intense generic competition expected in the next four years. In 2008 alone, global pharma is facing a revenue loss to the tune of 20 billion dollars on account of patent expiries. Top selling brands such as Risperdal (risperidone), Fosamax (alendronate), Topomax (topiramate), Lamictal (lamotrigine) and Depakote (divalproex) are expected to lose their market exclusivity in one or more major markets. And between 2008 and 2012, international pharmaceutical companies are expected to face a revenue loss of 60 billion dollars as several more patents are slated to expire. IMS has already predicted a lower sales growth of 5 to 6 per cent for the global pharmaceutical industry during 2008 with total sales of 735 to 745 billion dollars on account this factor. Pfizer Inc., world's largest pharmaceutical corporation, will take the worst hit during this crisis period ahead when the patent of its 13 billion dollar cholesterol drug, Lipitor, expires in 2010. And there is no blockbuster in the pipeline for Pfizer to make up for such a massive loss in sales. The clinical failure of Torcetrapib, the high profile cholesterol lowering drug, last year has only made matters worse for the company. The launch of Torcetrapib could have enabled Pfizer to make up the revenue losses of Lipitor at least in few years from now. And for the first time, the US, world's largest pharmaceutical market, is expected to record lowest growth of 5 per cent in sales during 2008. Pharmaceutical sales in Japan, the second largest market, is also predicted to grow just one to two per cent this year.

Apart from the patent expiries and tough generic competition, what is affecting the global pharmaceutical industry is a set of new adversities such as a pipeline drought, stricter regulatory environment leading to lesser number of new drug approvals, greater scrutiny of drug safety and patent litigations. Most top pharmaceutical companies do not have any molecule in pipeline which can turn into blockbusters in the near future despite billion of dollars being spent for new drug research. Still worse is the rising failure rate of new drug candidates in clinical development stages. During five years between 2002 and 2006, the global pharma industry brought 43 per cent fewer new drugs into the market than the last five years of 1990s. On the regulatory front, US FDA and patient groups have become extremely vigilant over the safety of drugs even on those which are already in the market. The withdrawal of 3 billion dollar Vioxx of Merck from the market has already provided a clear warning to the industry. Now, the US FDA's decision to set up a Risk Communication Committee to improve risk communication to the public and asking it to make critical assessment of decisions of the agency's post-marketing surveillance approaches during 2008 may make the situation more tough for pharma companies. This uncertainty is further compounded by the increasing intellectual property challenges from generic players and patients organizations. These signals in the international market place are indicative of an onset of a major transition in the years ahead. Global pharmaceutical companies have to reinvent themselves if they have to outlive this unprecedented crisis.