004: Necessary Insertion

Last time I finished up saying: "Next time: Eminentia and Trade, else WTO and rules.."

Truth is, however, that to do so immediately would put me ahead of myself and clear exposition in relation to that topic.

I have Perjjo to thank for this realisation. For during the week he called to "wonder" whether my last blog (003) had reached into the souls of US pharmaceutical industry and/or marketing to an extent of 'eminence lacking!'. Today.

To explain this he had been reading an article which revealed Pfizer buying into Boston academia's "eminence". That is to say buying basic research collaborations. To my mind and knowing pharma's potential for such matters it had hitherto been not so much pharma executive requirement as investors' ace-holding directive. On consideration - checking dates and a few other relevant things - I decided no, any soul change was down to others. Still, within a week of that particular publication kind of says I was both close to the mindset and in need of this insertion.

So.. further to 003.. was a genuine lack of pharma R&D evident? If so, where lay a sustainable future for its players.?

If the first then surely Ledford@Nature would have an indicative answer.

If the second then credence is given another finding to hand. In the matter of innovation which framed my question on the topic, the Federal Drug Administration(FDA) approvals of Big Pharma drugs between 1997 and 2008. Importantly, two thirds [ 2/3 ] of those were classified as "follow-ons". Quite possibly approval-seeking to shelve patent or patent-ready stock for sustaining future marketshares. Cashflows. A case of old wine, new bottles...

At best then, only one third [1/3] truly new chemicals or molecules or like processes. To perhaps truly earn eminence by innovation. Likewise per its long tradition that innovation justifies this industry's patented price premia.

So what gives now—if a net third innovative then a larger market leverage shall be applied.? for whom? How? Waitta minute..!

Costs..?

Why yes, we cannot overlook this since the Financial Times in London has made pretty clear recently all the M&A has really been about cost cutting. Rationalizations..chopping jobs and old manufacturing plant including labs(Sandwich, Kent, anyone! NY out, Groton in!) Yet even FT say term's up for cost cutting. Show us the growth!

Enter Heidi Ledford(above) who opens — "The agreement is the latest sign of a growing trend in the pharmaceutical industry, which is trying to cut costs and improve efficiency by outsourcing the earliest phases of drug discovery."

Which in its way says it all. For her cited parties.

And Perjjo tells me how the later phases will run cheap (and mebbe nasty) among multitudes in third world clinics. Where ethics are somewhat slacker. BAU. Besides, some will always rely on homo sapiens being all-for-one, with one for all ;-)

The leverage.. see?

Yet I now wonder about this. From here I'd say there was a firm investors' sense of which costs Big Pharma must keep. And despite Merck's(qv) talk of its own previous collaborations.

For investors the innovation tag is pretty vital. Corporates legitimizing premia prices. With overall profitability tumbling even lowered pricing would give them no show against lower-priced and already major long-term generics competition.

But of course with but one third [1/3] of FDA approval drugs novel what ratio of these are In-house? Or owned? Could it be that already the external and/or independent twosomes and threesomes in molecular and nano science and biopharmaceuticals, along with novel agents in such processes have tipped the balance away from Big Pharma control over patent holders' monopoly pricing.?

Example for the small independents lies well in IT app-builder business opportunities. A several year software development and web/net beta testing can see very significant buyouts by deeper pockets dependent on 'viral' growth and product streams. Goose, gander stuff, I mean to say.

Then not beyond the bounds of reason are that these deals or research buyouts amount to pharma-wrap of such knowledge and future-makers in secrecy. Serving only insiders. Hey there's a lot at stake.!

Bottom line: Contention has a mind of its own. And its very own people. Conditioning chronic convergence. Hence the need of vigilance and watching this space..