Pharma’s Cutting Edge

Interesting to read of Mr. Taurel’s lament of the tough environment faced by Lilly (and others) for the benefit of its shareholders. I’m not sure I see the value to the company in this type of honesty, but there’s no doubt that Mr. Taurel’s is a relatively loud voice in a chorus of large pharma CEOs singing the same song. But if the chorus is now in the mood to sing sorrowfully to its shareholders, why not lay it all on the line? Things are bad now for innovator drug companies, but they’re no where near as bad as they’re going to be in the not-too-distant future.

Consider just a few of the portents:

• Widespread government-funded drug programs covering large proportions of those who use medicines, each with upwardly mobile costs due to developed-economy expansions in elderly populations and rising costs of drugs that outpace price inflation;
• Governments almost universally under pressure to reign in healthcare spending, because it consumes a large and growing portion of government spending;
• Very large and increasing numbers of people in the U.S., the largest drug purchaser, without any type of health insurance or drug coverage;
• Successful efforts by powerful groups (elderly, third-party payors, healthcare providers, etc) and populist opinion-makers in the developed world to destroy the once-favorable (or at least tolerable) public image of the pharmaceutical industry, hampering the industry’s ability to influence public policy and healthcare practice, to collaborate with non-industry scientists and clinicians and to recruit and retain top talent;
• The rise of a “biogenerics” industry, first in Europe and coming soon to the U.S.

So, things are tough and they’re going to get tougher. Why then do I believe that there are good answers to these problems for the industry as a whole? Why do I believe that the industry’s best days lie in front of it? I believe it because I am convinced that sick people really don’t like being sick, that healthy people want to stay healthy (if it’s not too much trouble), and that it is sound policy for governments to promote health for all their citizens through the appropriate use of medications. A most important premise is that I also believe the pharmaceutical industry to be in the best position to deliver on these fundamental desires. The answers to the industry’s woes, then, are not likely to come from focusing on a bleak future but instead by looking backwards, to the reasons underlying the growth of the industry. Because oftentimes the best path forward first requires a step back and a broad view of the landscape.