So-- how does PharmExec.com see the world today? One thing I find intriguing is that we pharmascold types think of the drug industry as this huge, powerful juggernaut--as pointed out by Marcia Angell, if we go back to the olden days of 2002, even though major drug firms made up only 2% of the Fortune 500 companies, their total profits were more than half of the total profits of all 500 firms. Yet whenever we get to look through the keyhole at what Pharma execs think is going on, they see themselves as being beleaguered by all sorts of forces out to get them, and the survival of their companies from one year to the next has to be regarded as near-miraculous.
Here's how the post starts: "The consensus is that 2011 will be a bad year for Big Pharma. It must confront a breaking wave of patent expirations, while fiscal retrenchment has created an innovation cycle in reverse as payers find new ways to curb the drugs bill. Risk-averse regulators are transforming old tools like the FDA “complete response letter” into a registration parking lot, with no exit ramp to connect companies to a distracted — and increasingly impatient — community of clinicians and consumers."
Let's make a short list.
- We say: Even in European countries with price controls, that pay only about two-thirds of what the US pays for drugs, companies make plenty of profit to support R&D; and there's no serious drug cost containment on the horizon in the US. They say: Today, no country feels that it ought to have to pay for drug R&D, so the industry will soon find its research funds drying up.
- We say: It's a great step forward when resource-poor countries can negotiate a deal with a multinational drug firm for manufacturing of the drug to occur in a local factory, assuring both a more affordable drug for the local population plus jobs for the local economy. They say: That emerging-nation firm that they've been forced to work with is a potential future competitor, and they've been forced to grant that competitor substantial inside know-how in drug manufacturing--what amounts to the theft of intellectual property.
Yet it would be terribly short-sighted to dismiss this inside view as mere victimhood wailing. Here and there the post gives a little bit of evidence that even the suits now realize that all is not right with how they do business.
- On the incredible amount ($10-14B, depending on who you ask) that Pharma has paid out recently in criminal settlements: "Despite this, pharma has failed to address the problem from an industry-wide reputational, as opposed to a legal, standpoint. ”Tops in Fraud” is a ruinous moniker for a business so dependent on basic issues of trust like integrity, quality and safety – when will the industry, as part of a collective action, replace the gamey politicking with good policing?"
- On the relentless outsourcing of research to cut costs and avoid ethical scrutiny: "The traditional business model of Big Pharma — with its heavy investment in in-house innovation – is being reconsidered through new approaches that emphasize the outsourcing of R&D: from research to “search,” with the latter linked to external licensing and partnering. Taken to its logical extent, the new model could transform companies from innovators to distribution platforms that rely on marketing heft, size and scale to compete rather than science. Coupled with the ruthless drive for efficiencies that have led to large-scale layoffs of once cosseted professional staff, the trend raises an important reputational question: if the industry is no longer viewed as a wellspring of science and innovation, what strategy is in play to respond to a world that perceives industry as the WalMart of pills?"
- On take-no-prisoners marketing battles: "Stiff competition within therapeutic classes has created unheard of rivalries among companies that once were happy to share the same watering hole. Some marketers are investing millions in brand-bashing “anti-launch” strategies to limit the uptake of newer alternative products. The question is whether everyone loses when this logic is applied against the larger patient-first perspective that regulators and the public expect from the industry."