Hindustantimes.com February 20, 2002
Pharma giants likely to face big challenges in years ahead AFP London , 18-02-2002 These are unsettling times for big pharma: the sector which congratulates itself on being "the most profitable industry over the past 25 years" may not be so for much longer. Expiring patents, generic copies of their drugs, biotech challengers and the smouldering debate about providing affordable medicine to impoverished countries -- global pharmaceuticals giants have much soul-searching to do as they rethink the formula for the decade ahead. At first glance, the good times appear to keep on rolling for the manufacturers and distributors of those blockbuster drugs that not only prolong life but improve quality of life. Recent results showed that at the bottom line at least big pharma continues to thrive. The world's largest group by sales, GlaxoSmithKline, reported a 16 per cent jump in profits last week and predicted more of the same for the next two years. But that masks a deeper concern within the industry, which was laid bare at a forum organised by Economist Conferences last week. The cornerstone of the sector rest on the patents for massive selling drugs like Prozac and Viagra that rake in billions of dollars each year. Yet in the 2000-05 period, patents on drugs worth $40 billion in annual revenue to big pharma will have expired. And patent expiry paves the way for generic copies that naturally eat away at a blockbuster drug's profitability. "Within three months of Prozac going off-patent, it lost 90 per cent of sales," noted SmithKline Beecham former chief executive Jan Leschly at the conference. He said for big pharma to retain its levels of profitability, "they will have to have launches of two to four major new products every year." That is simply not the case at the moment. Leschly noted that the top 15 big pharma companies had only 14 new chemical entities approved by US authorities last year. The signs of urgency are becoming tangible. In the United States, which generates one half of the $350 billion annual pharmaceuticals market, the number of sales representatives selling pharma products into the healthcare system has skyrocketed to almost 80,000. Big pharma meanwhile is studying how it can maintain its profitability. Some executives note the US dominance of the market, which is primarily down to freedom of pricing and call on Europe and Japan to lessen regulation so that drugs companies can charge more for their products. "The European and Japanese authorities must live up to their own responsibility of paying for new improved treatments," British group Shire Pharmaceuticals chief executive Rolf Stahler said. "We need help to remain profitable." Some -- though not all -- executives believe that a recent wave of mergers will continue as companies seek to take out costs. Other executives said that the way that drugs are researched and developed would change fundamentally. They point to breakthroughs in genomics, with the sequencing of the human genome as a key development that big pharma will have to harness. Send your feedback at [EMAIL PROTECTED] ©Hindustan Times Ltd. 1997. Reproduction in any form is prohibited without prior permission.
