http://www.guardian.co.uk/business/2008/aug/30/pharmaceuticals.medicalresearch
Drug companies: Big Pharma besieged from all sides
Blockbusters are expiring, pipelines are emptying and watchdogs are growling
Julia Kollewe
The Guardian
EXCERPTS
The pharmaceutical industry is under siege with the looming end of blockbuster drugs, imminent patent expiries on top-selling medicines and government pressure to lower prices amid accusations of profiteering.
GlaxoSmithKline's new boss, Andrew Witty, has likened discovering a blockbuster - with annual revenues of at least $1bn - to finding a needle in a haystack. Many of the big-selling medicines launched in the 1990s are about to come off patent, allowing generic drugmakers to make cheaper versions. Only four of the 10 major companies have enough products in their pipeline to plug the looming revenue shortfall.
"We've seen the end of the very big blockbuster, the likes of Lipitor," said Kate Moss at PricewaterhouseCoopers. "There's not enough time for a product to become a massive blockbuster. There's so much competition in the market."
The world's top-selling drug, Lipitor, will lose its patent in 2011, threatening Pfizer's $12.7bn (£7bn) annual sales from the anti-cholesterol drug.
Professor Sir Michael Rawlins, who chairs health watchdog Nice, infuriated the industry last week when he accused it of overpricing vital new medicines. But drugs companies reject the charge, pointing to initiatives on pricing. The Association of the British Pharmaceutical Industry (ABPI) says UK drug prices have fallen by 21% in real terms over the past decade.
"It takes £550m - and 10-12 years - to bring a new drug to the patient," said a spokeswoman. "It's an investment in public health. It's only natural that the companies need to make a return on this initial investment."
Nice refused to approve expensive new kidney drugs saying they are not cost effective - despite an offer from Pfizer to pay for the first round of treatments.
The chances of discovering a blockbuster have halved from 10-1 to 20-1. due to competition, pricing, safety concerns and fewer unmet clinical needs. In response, companies are targeting niche drugs for cancers and neurological diseases - expensive treatments for relatively small numbers of patients.
"New drugs for niche conditions are likely to be fantastically expensive. In many cases, it will seem like blackmail. Without government assistance or insurance, treatment will simply not be affordable for many."
The outcome of the US election could have a significant impact. Senator Barack Obama wants Medicare to negotiate directly with companies to drive down drug prices that are on average twice as high as those in Britain.
As blockbusters become rarer, drugmakers such as GSK have switched their focus to developing a range of "middle earners" with annual revenues of £200-300m. Witty declared in July: "GSK must change if it is to be successful in the future." There is a new focus on vaccines - which are hard to copy.
Biologics and generics
Companies are also investing heavily in developing biological medicines, which can often be used to treat several conditions and are harder to replicate than conventional chemical drugs. Roche offered more than $40bn to take full control of US biotech partner Genentech in July. AstraZeneca, the UK's second-largest drugmaker, has acquired biotech firms Cambridge Antibody Technology and MedImmune, and aims to derive 25% of its new drugs from biologics by 2010.
Companies are organising R&D into smaller groups of scientists, to operate more like speciality pharmaceuticals.
To boost revenues, Big Pharma is also venturing into the generics market. Global generic medicines are now worth $71.7bn, a tenth of the entire world drug market valued at $712bn.
As companies focus more on producing costly treatments for rare diseases or benefiting certain patient groups,health services will face new spending dilemmas. (Patents typically expire 10-15 years after marketing approval is granted)
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Anwar Fazal
mailto:anwarfazal2004@yahoo.com