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The pharmaceutical industry is at a familiar crossroad: The forces that have rocked pharmaceutical companies over the past century are intensifying, and challenges from the new century are emerging at an equally intense pace. Companies are continuing to grapple with shorter periods of drug exclusivity, proliferation of generic competition, uncertain market growth for ethical products, and rising costs for research and development (R&D). At the same time, recent developments- from pharmacogenomics and information technology, to knowledge management and the emergence of a more demanding, empowered consumer-are placing further demands on an already beleaguered industry.

The financial markets, still reeling from the dot.com crash and high profile accounting scandals, are seeking financial stability and are continuing to raise their earnings expectations for the pharmaceutical sector. The expectations are lofty: In the second quarter of 2002, analysts ascribed price-earnings multiples in excess of 20 for the sector and revenue growth rates upwards of 12 percent.

Now, the industry's traditional, yet highly successful, blockbuster model is in doubt. For more than 20 years, the model has delivered more than 10 percent annual revenue growth, and for the past five years it has delivered more than 20 percent in total shareholder returns. Unfortunately, it is a model that may prove unsustainable in the longer term.

At the center of these forces, one fundamental question remains: How can pharmaceutical executives deliver sustainable and enhanced shareholder wealth against these increased market expectations?