book review

Pharmaceutical industry books

The Future of Pharma:
Evolutionary Threats and Opportunities
Brian D. Smith, Gower, 2011. 194 pages
Reviewed By

Score+2

D oes the pharmaceutical industry have a future? Ten years ago, that question would have seemed silly. But with the government whacking Pfizer and GSK with multi-billion-dollar fines for relatively minor offenses, lawyers circling corporate HQs looking for any smell of adverse outcomes, and boondoggles like Obamacare threatening a de facto nationalization of the entire healthcare industry, that question is no longer hypothetical. The industry is under a savage attack by the government, landsharks, and special interest groups. If they can't adapt, ten years from now, giants like Pfizer, GlaxoSmithKline and J&J may be striding alongside colossal corporate failures like PanAm, American Motors, Eastman Kodak, and Firestone.

Smith, an industry consultant, says the main problem is that pharma's fitness landscape has changed. Customers, which are increasingly HMOs, insurance companies, and government, now value "health benefits per unit cost" instead of "clinical efficacy." As a result, generics and research-based pharma are increasingly diverging in terms of cost and availability, and patients are finding their treatment options increasingly restricted. Smith says the industry will fragment into a three-tiered system, with routine services being sold over the counter, a nationalized, price-controlled generic system for the middle class, and medical tourism for the rich.

This has dire implications for patients hoping for cures for cancer and the diseases of aging. Smith makes a good case that hard times are ahead for traditional pharma, based on extensive interviews with industry executives, who are almost universally pessimistic.

Smith uses 3D graphs to outline his predictions about how the business landscape will evolve. But the graphs are just conceptual. They aren't based on any numerical data, and in this section he seems unable to decide whether he wants to give strategic advice or describe companies' strategy in sociological terms. More emphasis on social psychology, like the idea (p.161) that groups should never be bigger than 150 people, would have made a stronger case. As it is, the seven business models he proposes (Monster Imitator, Genii, Trust Manager, Disease Manager, Lifestyle Manager, Value Picker, and Health Concierge), while interesting, seem insufficiently grounded in either theory or real-world experience.

jul 07, 2012

Essential CNS Drug Development
Kalali, Preskorn, Kwentus, Stahl, eds. Cambridge, 2012. 207 pages
Reviewed By

Score+2

Q uick review of the process of developing a drug in industry, from the lab through IND, clinical testing, FDA, and marketing. Discusses the criteria for designing good clinical trials, and the hurdles imposed by the government, which are daunting: the average NDA (New Drug Application) is 100 000 pages long. If printed out, this would be a stack of paper 33 feet high. Although useful as an overview of how people in the industry make decisions, this book also has many mistakes: Axelrod's first name was Julius, not "Jules"; a patent is good for 20 years, not 17; and many more. Background in pharmacology recommended.

aug 10, 2012



See also Clinical trials books

Leading Pharmaceutical Innovation:
Trends and Drivers for Growth in the Pharmaceutical Industry, 2nd ed
Gassmann, Reepmeyer, and von Zedtwitz, Springer, 2008. 184 pages
Reviewed By

Score+5

D espite the industry having spent US$43 billion on R&D in 2006, only 29 new molecular entities were approved by the FDA that year, barely half the number of a decade earlier. That works out to US$1,482,700,000 per drug.

That cost is a bitter pill for the drug industry as well as the consumer. Since then, the trend has accelerated. What has gone wrong? It is inconceivable that the "low-hanging fruit" could have been picked so fast. Yet industry's response has been to cut back on research. When profits plummet, the paradoxical response of corporations is to stop innovating, and to spend all their efforts trying to outsource their expertise—not just sales and clinical testing, but R&D and manufacturing as well. The pharmaceutical industry is moving to China, leaving America and Europe to bleed slowly to death.

To me, the reason seems obvious: the economic climate in the West, with ever-increasing taxation, regulation, and vicious anti-business sentiment, is no longer favorable for corporate survival. The cost of developing a new drug in a Western country is now more than the cost of buying the Empire State Building. Most of this is a direct or indirect result of government regulation. Only one out of 10,000 substances investigated becomes a marketable product, and only three out of ten drugs pay back their R&D costs. Although biotech might have turned things around, biotech just means antibodies in the USA, and strict regulation has hampered biotech R&D in Europe.

This short book focuses on Swiss companies as a microcosm of the industry. The three authors, all academics, excel at teaching the basics of how the pharma industry operates. Short case-histories are scattered throughout the book. One example, Pfizer's marketing of Lipitor, a me-too drug that became the biggest selling drug of all time, challenges the argument that copycat drugs harm the industry. The authors say that outsourcing, in- and out-licensing, co-development, internationalization, and fragmentation (or what might be called hollowing-out) of the industry will increasingly become the norm as the pharmaceutical value chain continues to disintegrate.

Successful corporations like Roche, say the authors, are intensely research-driven. Because of competition, time-to-market is a critical factor. Chapter 6 compares how research is managed at six different companies. The authors studiously avoid giving advice and making normative judgments. This book is an excellent, well-written source of factual information about the state of the industry as of 2006.

jul 08, 2012

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