Tuesday, March 8, 2011

Thanks, NYT, for that cheering news on pharma.

You weren't looking to support me, were you?
Photo credit: missginsu.com
On Sunday, the New York Times had a sobering analysis of the problems of the pharmaceutical industry. Some key quotes follow, with my emphasis:
This is a sobering reversal for an industry that just a few years ago was the world’s most profitable business sector but is now under pressure to reinvent itself and shed its dependence on blockbuster drugs. And it casts a spotlight on the problems drug companies now face: a drought of big drug breakthroughs and research discoveries; pressure from insurers and the government to hold down prices; regulatory vigilance and government investigations; and thousands of layoffs in research and development.

[snip] The same concerns apply to drug giants in the United States. They are all struggling with research failures as they scramble to replace their cash cows, like Pfizer’s multimillion-dollar gamble on a replacement for the cholesterol-lowering drug Lipitor, which failed miserably in clinical trials. Drug companies cut 53,000 jobs last year and 61,000 in 2009, far more than most other sectors, according to the outplacement company Challenger, Gray & Christmas.
“This is panic time, this is truly panic time for the industry,” said Kenneth I. Kaitin, director of the Center for the Study of Drug Development at Tufts University in Medford, Mass. “I don’t think there’s a company out there that doesn’t realize they don’t have enough products in the pipeline or the portfolio, don’t have enough revenue to sustain their research and development.”
 
[snip] “We have to fix our innovative core,” Pfizer’s new president, Ian C. Read, said in an interview recently. To do that, the company is refocusing on smaller niches in cancer, inflammation, neuroscience and branded generics — and slashing as much as 30 percent of its own research and development spending in the next two years as its scientists work on only the most potentially profitable prospects.
 
[snip] “You don’t lay off R&D if it’s just a cycle,” says Erik Gordon, a clinical assistant professor at the University of Michigan business school who follows the pharmaceutical industry. “That kills progress.”
 
[snip] At the same time, pharmaceutical companies are being urged by managed care and government health programs to cut prices and improve reimbursement terms for their most profitable pills.That follows similar practices in Europe, where Germany and the Britain, among other countries, are all increasing pressure for lower drug prices.

Europe is an ugly place to do business today and will be in five years’ time,” Christopher A. Viehbacher, chief executive of the French drug giant Sanofi-Aventis, said in an interview. In the United States, Mr. Viehbacher said generic drugs were taking over the primary care market, leaving the best growth potential in specialty markets and in emerging nations like China, Brazil and Indonesia.
Huh. Well, that's not good news.* Materials science, anyone?
 
A bold prediction: rock bottom for pharma will be sometime next year (2Q 2012?). After that, we're going to have a changed industry with pullouts, layoffs and retrenchments between now and then. And then? We'll probably have a little hiring here and there. But between now and then, there will be blood.
 
*For extra awesome, read the comments to the article. Truly a joy.

11 comments:

  1. I have a friend who loved that line (the one on the kid's shirt). I think it was the way Daniel Day Lewis delivered it.

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  2. Unstable IsotopeMarch 8, 2011 at 8:48 AM

    The leaders of pharma state that they don't have enough new drugs in the pipeline...so the answer to this is to fire 30% of R&D? *scratches head*

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  3. Or, of course, I could have just Dow 36,000'd myself. But I doubt it.

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  4. As usual the NYT is about 15 years late in recognizing the obvious. It started with the death of Wellcome and Sterling research sites and continues to this day. The money guys will not support R&D if the consumer will not pay the price. These guys are in it for the money not some do-gooder view of the pharmaceutical business. Hatch-Waxman, the safety at all cost FDA and trial lawyers, and governments who think they can dictate prices no matter what the costs will destroy the R&D component of the drug industry in the EU and US. Cheap R&D labor in growing markets is just a big bonus to the bottom line.

    See you all in the unemployment line then flipping burgers when the unemployment benefits run out. Pharma/biotech R&D is all dying in the US and EU and never coming back. Time for we chemists to plan accordingly.

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  5. Uh, anonymous materials scientist here again.

    I really wish the grass were greener on my side of the fence, but it's not. No one keeps data on the rabble and refugees from the world's physics, chemistry, and engineering departments that call themselves "materials scientists," but from my own personal experience, there are no safe harbors. It all boils down to...

    No manufacturing = no need for materials

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  6. Lalalalalalalalalalala I can't hear you! lalalalalalalala

    (Just kidding. Thanks for commenting. Willing to talk further? E-mail at chemjobber -at- gmaildotcom.)

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  7. Fortunately for big pharma, outsourcing will never go off patent.

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  8. Gimme a sec to reply, I'm removing my shoe-laces.

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  9. Q: how many lifeboats are there on this ship called the US chemical industry?

    A: There are none left!!!! And the ones already in the water are overloaded. Water is starting to pour over the sides.

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  10. Oh man, the NTY comments section is just full of staggering venom, derision and full-on ignorance... good to see the ACS is doing such a swell job of promotion accurate information to the general public.

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  11. “You don’t lay off R&D if it’s just a cycle,” says Erik Gordon, a clinical assistant professor at the University of Michigan business school who follows the pharmaceutical industry. “That kills progress.”

    No shit! Been following Pfizer long?

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looks like Blogger doesn't work with anonymous comments from Chrome browsers at the moment - works in Microsoft Edge, or from Chrome with a Blogger account - sorry! CJ 3/21/20