[Ip-health] Drugs industry economics 'not sustainable' - report

[Tahir Amin]

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[ Picked text/plain from multipart/alternative ]
A copy of the report is attached. The suggestion of reducing patent life fo=
r
me-too's/new formulations (pg 8) is noteworthy. However, that is clouded by
the idea of increasing patent terms to 25 years (or even 50 years for
groundbreaking vaccines provided they are sold at universally affordable
prices) to incentivise more innovation for creating novel (which is not
defined) products to serve unmet medical needs.

Tahir

Initiative for Medicines, Access & Knowledge (I-MAK)


Drugs industry economics 'not sustainable' - report

 *Marianne Barriaux
Wednesday June 13, 2007
The Guardian <http://www.guardian.co.uk/>*

 The pharmaceutical industry business model is "economically unsustainable"=
,
according to a report by accountants PricewaterhouseCoopers. The study
suggested drug companies' reliance on heavy marketing of a few drugs in the
hope of huge sales meant they were "operationally incapable" of acting
quickly enough to produce innovative treatments demanded by global markets.

According to Steve Arlington, the main author, drug companies spend twice a=
s
much on research and development than 10 years ago, yet produce half as man=
y
drugs: 40 to 45% of medicines in phase 3 clinical trials, the last stage,
now failed.

Shares in pharmaceutical companies have not performed well, sales and
marketing costs have increased, as have legal and regulatory constraints an=
d
the reputation of the industry has been tarnished by high-profile cases suc=
h
as Vioxx, Merck's painkiller that has provoked thousands of lawsuits.

Healthcare providers and payers are keen to reduce the amount they pay for
treatment. People are living longer but not necessarily healthier lives,
leading to predictions of a global pharmaceuticals market that will more
than double in value to =A3660bn by 2020.

Dr Arlington said the pharmaceutical industry would have to change to
capitalise on these opportunities, partly by shifting its investment focus
towards research and less on sales and marketing. "It must focus mainly on
the development of medicines that prevent or cure. But in all cases, the
drugs will have to demonstrate tangible benefits and tackle unmet medical
needs."

The pharmaceutical industry needed to come together with other relevant
players - governments, patients and investors - to discuss the best way
forward.

One of his suggestions was that patent protection for drugs, set at about 2=
0
years, could be extended to a much longer period to incentivise the
companies to produce more innovative drugs and sell them at a lower cost.

The report suggested expanding the pool in which companies fish for basic
research - to Asia, for example, where research is less expensive - or
increasing cooperation with academia. It also mentioned the need to
transform the way companies performed R&D, by focusing on building a much
better understanding of the disease itself to accelerate research.

There is some evidence that pharmaceutical companies are starting to change
their research models. GlaxoSmithKline, for example, today opens a =A350m
clinical imaging centre at Hammersmith Hospital in conjunction with Imperia=
l
College and the Medical Research Council. GSK said the facility would allow
it to partner academia to use the latest advancements in imaging to better
understand diseases and how to treat them, speeding up the development of
new drugs.

The report concluded the industry would have to move fast to make these
changes, or face another round of mergers and acquisitions with leading
companies falling into private equity hands.

*Patent medicines*

The top pharmaceutical companies are expected to lose 14%-41% of their
existing revenues by 2012 as *patents* expire. *Pfizer* will suffer the
expiry of patents for *Viagra *and *Lipitor*, the world's best-selling
medicine, leading to the loss of about 41% of its revenues. *AstraZeneca* i=
s
expected to shed about 38% of its sales and *GSK* sees the patents of its
two best-selling drugs - *Advair *and *Avandia *- expire by 2012, with a
predicted loss of 23% of revenues.
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[ PWC Pharma Vision 2020 Which path will you take.pdf of type application/p=
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