Generic medicine prices are eroding as European governments introduce short-term cost-saving strategies, such as tendering, and as the economic downturn drives customers to be more frugal and selective over suppliers. At the same time, the costs of developing products are increasing while regulatory burdens mount.

Meanwhile, the market is rapidly consolidating. Five of the top 12 players have merged, and consolidation will continue, albeit at a slower pace, said Mr Sigurdur Oli Olafsson, CEO of Actavis. Generic medicines manufacturers will also have to deal with the reality hitting originators – shrinking R&D pipelines.

The future could therefore look bleak for smaller firms. Large companies apparently have an advantage because they will have more capital to invest in broader portfolios and in the main growth opportunities, including technologies that are difficult to develop. They will also have more to invest in innovation, helping companies differentiate their products and make their value more apparent.

Targeting particular areas and investing in new technology, such as delivery systems, to accompany the product is one way of differentiating, said Mr Nick Haggar, Head of Commercial Operations at Sandoz, Western Europe. Although easier for larger firms, there is ample opportunity for small firms to keep innovation as part of their strategy, as long as they focus. “Focus is the name of the game,” said Mr Didier Barret, President of Mylan France. Another growth opportunity is expanding into under-developed markets such as Belgium, France, Italy and Spain within Europe, and this too looks easier for global players.

Achieving a presence in multiple markets is challenging because each one has its own culture and set of regulations, and each therefore needs a unique approach. “We will have to adapt to a multi-local approach,” said Mr Barret. This is particularly true of the emerging markets, where even regional approaches are inadequate. Not only is Brazil very different from other Latin American markets, such as Argentina, but it is also extremely diverse internally.

Added to this the portfolios of many larger firms, developed for western needs, may be unsuitable for these regions. Local acquisitions provide one possible solution, although again this is easier for larger firms.

Nevertheless, the bigger firms of the future could be the ones that are “currently off the radar,” said Dr Gerard Van Odijk, CEO of Teva Pharmaceuticals Europe. “Who heard of Amgen or Gilead 10 years ago? Today they are big players,” he added.