Big Pharma faces big problems

“Over the next few years, the pharmaceutical business will hit a wall.” That’s how a major Wall Street Journal article begins (6 December 2007). The wall sits at the year 2012. The industry is “doomed, if we don’t change,” says Eli Lilly & Co. Chairman Sidney Taurel. The problems:

  • Patent protections for the industry’s top-selling drugs will expire, allowing lower-priced generics to rush in. “Generic competition is expected wipe $67 billion from top companies’ annual U.S. sales between 2007 and 2012.”
  • The industry’s science engine has stalled. “The century-old approach of finding chemicals to treat diseases is producing fewer and fewer drugs.” New blockbusters are lacking.

The industry is still profitable and will continue to produce new drugs — but “at too slow a rate to sustain its size and cost structure.”

That explains the recent spate of layoff announcements.

The future is said to be biotechnology (vs. chemicals) to develop drugs to treat diseases, which is why pharmaceutical companies are snapping up biotech companies and/or creating in-house biotech units. (They’re also getting into the generics business.)

By the way, this paradigm shift is bad news for chemists. See: “As Drug Industry Struggles, Chemists Face Layoff Wave,” The Wall Street Journal (11 December 2007).

Update: A new study says there are too many pharmaceutical sales reps taking up physicians’ time.

2 Replies to “Big Pharma faces big problems”

  1. Hello,

    I am new at blogging but a seasoned scientist-entrepreneur in the life science arena, specifically women’s health in general and reproductive management in particular. Looking at what comes under the business tag, I scrolled and scrolled until I came to your blog and enjoyed reading it.

    Many years ago I decided big pharma was not it for me, one reason being the way the industry works and another the products it produces, with their inevitable side effects.

    Diagnostics are essential for medicine anyway, and when we happened to succeed in helping ourselves to overcome the then diagnosed infertility, my entrepreneurial path was embarked upon, in due course.

    Said diagnosis was actually misdiagnosis; we were really in the sub-fertility or reduced-fertility category – as we did produce two children. By overcoming the basic and superficially possibly a straightforward problem of correct timing of the conceptive act (coitus or intercourse). No A.R.T.

    After this intro, I pose a question. With your expertise, would you say that bioZhena Corporation (our company with the relevant expertise*) should be a good target for merger and acquisition by one of the big pharma firms that are facing the problem you describe? Such as, say, Unipath Limited was for Inverness Medical, despite the fact that the FDA did not (because it could not, for fundamental reasons) approve their product for birth control… A $150M M&A, and more recently the Adeza acquisition for $450MM — those transactions are to be emulated!

    I wonder how you might view the project (and your truly’s goal for the exit) from your perspective.

    Best wishes for the Christmas and New Year season,


    *) reproductive management, via in vivo monitoring of folliculogenesis [the biology of menstrual cycling], around which much in women’s life revolves; and since we work via the cervical tissues, screening for cancer is performed in the background, too…

  2. Thanks for reading my blog post. I’m not really an expert in the pharmaceutical business and, as an independent journalist, I couldn’t give you business advice in any case. But I send my best wishes for your success. — Mitch

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