[Ip-health] Economist on rolling heads in Pharma industry

[Jeff Williams]

Ellen and all,

  I and I am sure many americans as well as peoples whom are
aware are glad to see generic drug manf's. challenge big Pharma
companies as their pricing practices have made many essential
drug out of reach for most middle class families and contributing
significantly to a global health care crisis which will be with us
and future generations for years to come.

Ellen T HOEN wrote:

> PHARMACEUTICAL INDUSTRY
> Sep 14th 2006
>
> Yet another boss of a big drugs company loses his job
>
> NOW is not a good time, it seems, to be running a big pharmaceuticals
> firm. In the past year and a half the bosses of three such giants have
> been fired, two of them in the past two months. The three sackings,
> admittedly, had quite different causes. Merck booted out Raymond
> Gilmartin in May 2005 in the wake of the Vioxx scandal, in which the
> firm had to recall its blockbuster arthritis drug when it was linked to
> an increased risk of heart attack. Henry McKinnell's departure from
> Pfizer this July was the result of his arrogant and aloof response to
> shareholders' concern over the firm's sinking share price. And the
> removal of Peter Dolan from the top job at Bristol-Myers Squibb (BMS)
> this week came as a result of his mishandling of a challenge posed to
> Plavix, the company's lucrative blood-thinning drug, by a generic
> rival. But the three cases are all, in some ways, the result of deeper
> trends.
>
> Viren Mehta, an industry analyst, argues that two recent shifts have
> conspired to put drugs bosses in a difficult position. The first, he
> argues, is that the pharmaceutical industry is "in the midst of a
> journey from 'old science' to 'new science'." The industry's
> traditional model, based chiefly on chemistry and basic biology, is
> giving way to a new approach based on biotechnology, computing,
> advanced chemistry and combinations of the three.
>
> As drugs bosses invest huge sums to help their firms master these new
> skills, however, the second shift makes it harder to do so. They are
> finding that the once-reliable sources of profit from traditional drugs
> are suddenly drying up. An unprecedented number of patents will expire
> this year and next and new drugs have been slow to emerge from research
> pipelines. More troublingly, generics firms are now even challenging
> patents--such as the ones held by BMS for Plavix--that were expected to
> deliver profits for years to come.
>
> The new reality of the pharmaceuticals business, says Mr Mehta, is that
> the market for a blockbuster drug can collapse almost overnight. He is
> not exaggerating: in August BMS lost 75% of the market for Plavix in
> just a couple of weeks to its generic rival. In this difficult
> environment, missteps that might have been tolerated in rosier times
> can put a boss's head on the block.
>
> The much harsher financial outlook for big pharmaceutical firms is the
> link between the three sackings, says Chris Schott of Bank of America,
> an investment bank. Revenue growth of 10-15% may have been possible in
> the past, but today many drugs giants face stagnant growth or worse. As
> the prospects for growth have diminished, so too have drugs companies'
> share prices. But, says Mr Schott, some bosses are still stuck in "an
> aggressive-growth mentality" and make strategic errors as a result.
>
> So can replacing the chief executive really fix what ails these
> companies? It is too early too tell. Richard Clark gets generally good
> marks for steering Merck through the Vioxx affair, but he struck a sour
> note last week with the release of a company-funded "outside"
> investigation into the matter that critics said was a whitewash.
> Jeffrey Kindler, the new boss of Pfizer, has made an impressive start,
> announcing a sweeping revamp and vowing to make his firm "more agile
> and entrepreneurial"--but whether he can really do so remains to be
> seen.
>
> As for BMS, the future remains even more uncertain. Proclaiming that
> someone had to be "held accountable" for the bungling at the top, James
> Robinson, the firm's chairman, chucked out both the chief executive and
> the general counsel this week. The selection of James Cornelius as
> interim chief executive fuelled speculation that the board is ready to
> sell the firm. That is because when he held the same post at Guidant, a
> manufacturer of medical devices, Mr Cornelius lined up the firm's sale
> to Boston Scientific, a rival device-maker. Perhaps the only safe job
> at the top of the pharmaceuticals industry today is that of interim
> chief executive.
>
> See this article with graphics and related items at
> http://www.economist.com/business/displaystory.cfm?story_id=7915375
>
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Regards,
--
Jeffrey A. Williams
Spokesman for INEGroup LLA. - (Over 134k members/stakeholders strong!)
"Obedience of the law is the greatest freedom" -
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