Healthy Skepticism Library item: 12141

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Publication type: news

Mantone J.
Big Pharma’s Bitter Pill
The Wall Street Journal Health Blog 2007 Dec 6
http://blogs.wsj.com/health/2007/12/06/big-pharmas-bitter-pill/?mod=yahoo_hs

Full text:

Shed a tear for the pharmaceutical industry. Its golden age is on the wane.

Many of the top companies are already seeing patents expire on their leading products, and the worst is yet to come. On their way are generics that will eat away at $67 billion in annual U.S. sales of drug makers between 2007 and 2012, says a bracing story on the WSJ’s front page. Pfizer’s Lipitor is the doomed whale, but Merck’s got a bunch of blockbusters, including osteoporosis pill Fosamax, that won’t be big brands much longer. (Click here for a chart of some of the biggies heading for a fall.)

Compounding matters is the fact that the industry’s researchers have been so slow in developing new medicines– 43% fewer new chemical-based drugs were brought to the market from 2002 through 2006 than in the last five years of the 1990s. “I think the industry is doomed if we don’t change,” says Sidney Taurel, chairman of Eli Lilly.

Wall Street has taken notice. Moody’s Investors Service recently lowered its outlook for the U.S. drug industry to negative from stable. On the equity side of the house, for the six years ended Nov. 29, the FTSE Global Pharmaceuticals Index had fallen 19.8% while the Dow Jones World Index rose 75%. One estimate from research and consulting firm Datamonitor has industry revenue in its first outright decline in four decades. The contraction is expected to hit between 2011 and 2012.

But don’t worry yourselves to death pharma fans. The sector, despite its growth problems, remains highly profitable. And the prescription for renewed growth may lie in a shift toward biotech from chemistry-based drug development. “For all our amazing advances in the last 50 years, we are still working with the tools of the first pharmaceutical revolution…using advanced chemistry to treat disease symptoms,” Lilly’s Taurel said in a 2003 speech.

No doubt, Big Pharma’s been trying to make the shift. Old-line companies have spent $76 billion since 2005 snapping up biotech firms. The added incentive for Big Pharma and biotechnology: “No regulatory pathway yet exists in the U.S. for bringing to market generic biotech,” the story says.