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Kellogg on Biotech

The Future of the Biomedical industry in an era of Globalization

Alicia Loffler and Scott Stern, Kellogg School of Management, Northwestern University

The biomedical industry -- composed of pharmaceutical, biotech, medical device and diagnostics segments -- is shaped by a variety of distinctive forces. Among these are the need for specialized human capital, a formidable regulatory approval process, high sunk costs, a complex financing structure, science risks, and a range of ethical and political issues. The outlook for the industry in the next 10 years is very positive. It will experience explosive growth in markets for the treatment of both chronic and acute illnesses. These markets will be driven by a confluence of political and demographic trends -- most notably globalization and population growth and aging -- as well as by new products resulting from the genomic discoveries of the late 1990s and early 2000s and a generally favorable policy environment.

This report makes the case for fundamental changes in the biomedical industry in the coming years. It anticipates the ascendance of personalized medicine and suggests ways in which industry players will have to adapt to profound demographic, political and technological shifts in order to compete successfully in a world transformed by forces of globalization.

©2007 Kellogg School of Management, Northwestern University