|You weren't looking to support me, were you?|
Photo credit: missginsu.com
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.”Huh. Well, that's not good news.* Materials science, anyone?
[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.
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.