As everyone in the industry knows, the pharmaceutical business model is far more complicated than most. It is not simply a case of developing a product, making a cost analysis, researching the competition then bringing the product to market. In pharma, the R&D phase can last 10 to 15 years from inception and a drug coming to market does not forecast its exact profit margin or future. Following the R&D phase, pharmaceutical companies focusing on personalized medicine are increasingly pairing with diagnostic companies to improve the companion diagnostic tests that will propel their products into the marketplace.
For financial analysts in this very intense industry, the daily job may be forecasting solid revenue cycle development, but the priority always needs to be innovation. R&D needs to constantly move forward so that new therapies can continue to push the revenue stream and meet patient needs. This is made even more vital given that previous product patents will expire and diminish a company’s yearly income. There’s a lot of information from many different avenues to continually keep track of in terms of biotech and pharmaceutical financial analysis.
Tools to Consider
The pharmaceutical industry offers more challenges for financial analysis than many other businesses because of the difficulties in judging the landscape so far in advance. A continual inspection of current data for internal financial health as well as external changes in the industry, and diseases as they pertain to your own programs, is essential as you update your projections for a more informed investment strategy.