Big Pharma Going Bankrupt?

"I think the industry is doomed if we don't change," said Sidney Taurel, the chairman of Eli Lilly & Co.

The reason for this statement is thus - "The expiration of patents on top moneymaking drugs is expected to reduce the top drug companies' profits by a total of $67 billion between 2007 and 2012, or 50 percent of those companies' combined 2007 sales in the United States. This decline in income is expected to be the industry's first in 40 years."

Here's a short list of top-selling drugs that are set to expire:

• Lipitor - a statin, used for lowering cholesterol
• Singulair - asthma medication
• Cozaar - blood-pressure drug
• Fosamax - osteoporosis drug and, of course
• Imitrex - needs no introduction around here

To put it shortly, if a pharmaceutical company cannot make 90% profit on the drugs it makes, it doesn't want any part of it.

That's why "the pharmaceutical industry are hoping to shift their focus to biotechnology, where the laws currently do not allow the development of generic drugs. High-grossing biotech drugs include cancer drug Avastin, which costs $4,400 per month, and Gaucher disease treatment Cerezyme, which costs $200,000 per year."

"Oh nous, who's gonna make my pills?" - you ask.

Well, it might not be quiet as bad as it seems. Did you notice the word "change" in the chairman Taurel's statement? Some companies in pharmaceutical industry have been "changing" for a while.

Take CoLucid Pharmaceuticals for example. They are developing a new migraine abortive, COL-144. Unlike triptans, it does not constrict the coronary artery. It could be a migraine abortive of choice as soon as 2011.

CoLucid is a "virtual" company that has practically no employees. Everything is out-sourced on a project basis and as such involves little overhead costs.

Despite being a very "modern" company, the CoLucid has tight connections with the "traditional" Pharma. Is this an experiment in re-organizing the industry?

Another part of Big Pharma is actually expecting to turn a profit and very soon. Those are the companies that manufacture generic drugs. They operate on volume. Even if the profit from each individual sale is not that much, it accumulates quickly.

Want to know who's going to make your generic Imitrex come this fall? Meet Dr Reddy’s Laboratories. "In the third quarter of 2008-09, the Hyderabad-based company would exclusively distribute Sumatriptan, used for the treatment of acute migraine, in the US."

Note the word "exclusively". We might not actually see as much of a price-drop on GImitrex as we were hoping for.

Fear not, my gentle readers. As long as we need those pills, there always will be someone who'll make them for us. For a price. And if not, there's always magic mushrooms and Special K.

link: Big Pharma "Doomed" if it Doesn't Change, Says Eli Lilly Chairman
link: CoLucid garners $25M in funding
link: ‘Dr Reddy’s will clock 25% growth this year’