Even the largest pharmaceutical companies will soon need to step outside their sector and collaborate with other organisations, according to new research by Price Waterhouse Coopers (PwC). Recently announced activity such as GSK and Pfizer’s new HIV-focused venture confirms that pharmaceutical companies are exploring new ways to collaborate.

At the same time, a flurry of merger and acquisition deals have been triggered, including Roche and Genentech, Pfizer and Wyeth, GSK and Stiefel and Merck and Schering Plough. While such arrangements will continue to be made there are alternatives, such as collaboration, that PwC believes will actually be more flexible and value-enhancing in the long term.

According to the report, PwC believes that the financial crisis may force many more companies into collaboration. In fact the government’s response to the economic climate has allowed collaboration outside the pharma sector that would have been unthinkable before, such as waiving competition issues for mergers. “Collaboration could address the current funding crisis for biotech firms but this requires an immediate response,” explained a spokesperson from the think tank. “In fact the pressure to change to new business models could come from outside the pharmaceutical sector, perhaps triggered by regulators, investors, and healthcare payers.”

There is certainly no shortage of evidence to suggest that there are significant benefits from a collaborative approach with longer term aims. A study by the RAND Corporation estimated the financial savings from having 100 per cent participation in disease management programmes for four diseases (asthma, chronic obstructive pulmonary disease, diabetes and congestive heart failure) in the US. They estimate the net savings to the health system to be $28bn (around 2 per cent of total US health expenditure), with additional benefits to the economy in terms of working days saved.

Furthermore, time waits for no pharma firm so sharp action is paramount, since several non-pharmaceutical companies have already entered the arena. Vodafone has, for example, joined forces with Spanish telemedicine provider Medicronic Salud and device manufacturer Aerotel Medical Systems to offer a wireless home monitoring service. Similarly, Prudential is collaborating with Virgin Active Health Club to offer a critical illness policy that provides subsidised gym membership and rewards people who exercise regularly by reducing their premiums.

Simon Friend, global pharmaceutical and life sciences leader at PwCs, summarised the findings. “Most large pharmaceutical companies use external contractors to supplement their in-house resources, but very few firms have taken the next step,” he said. “Yet there is no reason why many companies could not outsource R&D, manufacturing and promotional activities. This would allow them to focus on their main value-adding functions – project management, business development, regulatory affairs, intellectual property management, pharmacoeconomic analysis and the formation of good relationships with key opinion leaders and healthcare payers. The world is changing fast and those who are flexible and can adapt will reap the benefits.”

The changing face of the wider healthcare model globally, the demands from different stakeholder communities, including the patient, will demand that pharmaceutical companies provide holistic solutions not narrow treatments. In tomorrow’s world this means that pharmaceutical companies must work more with other parties. To do so they will have to ‘profit together’, by joining forces with a wide range of organisations, from academic institutions, hospitals and technology providers to companies offering compliance programmes, nutritional advice, stress management, physiotherapy, exercise facilities and health screening.

A new model to the pharmaceutical industry is the federated model, whereby a company creates a network of separate entities with a common supporting infrastructure. These might include universities, hospitals, clinics, technology suppliers, data analysis firms and lifestyle service providers based in numerous countries.