The global pharmaceutical industry is led by giants that have established near-monopolistic control, dictating market trends and influencing drug availability worldwide. This dominance has often stifled innovation and limited competition, creating a challenging environment for new market entrants.

However, emerging pharmaceutical companies are exploring alternative models to drive faster innovation. It signifies a need for new systems that address unmet medical needs and drive competitive advancement in global healthcare.

The Big Pharma monopoly

Globally, the pharmaceutical industry includes the presence of both large corporations, known as ‘Big Pharma,’ and a growing number of smaller companies. However, the larger firms dominate drug development, supply, and pricing, significantly affecting drug accessibility worldwide.

As per Open Markets Institute, three of the major American insulin manufacturers have raised their prices substantially since 2010, with increases ranging from 168 percent to 325 percent.

Adding to this, there are other events as well. As per Labiotech, five pharmaceutical companies, one being the German multinational biopharma Boehringer Ingelheim, have been fined $14.1 million by the European Commission (EC) in a price-fixing conspiracy.

Moreover, these monopolistic practices and regulatory issues not only affect consumers, but also have a significant impact for venture capital. According to Deloitte’s 13th Annual Pharmaceutical Innovation Report, the projected return on investment (ROI) in pharmaceutical R&D for 2022 has dropped to a mere 1.2 percent, marking the lowest ROI observed in the 13 years since the research began.

These kinds of events also manifest in the drug discovery process, characterized by high failure rates and exorbitant research costs. A Harvard University article states that the estimated development cost for a single drug approved by the U.S. Food and Drug Administration (FDA), is around $2.6 billion. This figure reflects the sheer financial burden of the drug development process, where the majority of potential drugs fail to clear clinical trials or validation stages​​.

For instance, in the high-throughput screening (HTS) process, most of the initial ‘hits’ fail to turn into viable drugs, leading to a scenario where only about 1 in 20 drugs make it through clinical trials for FDA approval​​.

Dr. Gennaro D’Urso, the Founder of Pharma Collective and Chairman of Genetic Networks, elaborates, “There are significant limitations in the pharmaceutical industry, particularly in its conventional methods of drug discovery, impeding the efficient development of new treatments.”

Yet, in the shadow of these daunting giants and events, a new era is emerging. The problems now have solutions that deviate from traditional paths.

A community-driven model

Startups and smaller pharmaceutical players are now starting to explore alternative partnership models, like profit-sharing or incentives with specialists rather than ceding commercial rights. And central to this shift is the concept of leveraging collective decision-making and resource pooling.

This approach envisions a model where a global community collaboratively decides on key issues, such as which diseases to target, which medicines to develop, and how to reinvest profits into further research.

“These communities could form partnerships with private firms, gaining a portion of the royalties from successful projects to be reinvested in further community projects. This method offers a stronger alternative to traditional venture capital, giving innovators more autonomy and flexibility,” says Dr. D’Urso.

This shares similar roots to the crowdfunding model which is an effective way to support innovation. Illustrating the success of crowdfunding platforms, ITjuzi for instance has garnered over 1.4 million users, as per FinModelsLab​​.

While traditional crowdfunding mainly involves individuals contributing funds to support projects, this model goes beyond financial contributions. It empowers new pharma entrants to focus on equitable and innovative approaches to drug development, independent of traditional industry structures.

For example, Pharma Collective’s community-powered model embodies this new paradigm. It operates as a collective using Web3 technology, where members worldwide can unite to drive systemic change, supporting visionary projects chosen by the community to treat and cure diseases. The community invests into companies, fostering a self-sustaining solution through royalties from the drugs produced. This includes evaluating and funding proposals for drugs based on community consensus​​.

Aligning collective efforts in pharmaceutical innovation

As the pharmaceutical industry continues to evolve, embracing community-centric approaches could be the key to addressing the pressing challenges of today’s pharmaceutical landscape.

By doing so, the smaller and emerging entrants can not only play a big role in improving public health outcomes, but also rebuild trust. The collective hands of established companies, startups, and communities are willing to challenge the status quo and drive systemic change for a healthier world.

TNGlobal INSIDER publishes contributions relevant to entrepreneurship and innovation. You may submit your own original or published contributions subject to editorial discretion.

Empowering investors: How AI and social investing forge sustainable financial ecosystems