Who does pharma serve?

Jul/31/2008 07:18

The disconnect between slow, plodding scientific research and the demands of Wall Street are on stark display in the world of Alzheimer's drug development "Wall Street either overly hypes a new discovery or damns it too soon," complained Rudolph Tanzi, director of the genetics and aging unit at Massachusetts General Hospital in Boston and a leading Alzheimer's researcher.

"This was just the first wave of drugs, and it would be terribly bad for the field and for patients to make quick assumptions. There are many other drugs in the pipeline, some of them a thousand times more potent." In fact, the Alzheimer's Assn. has decided that there are finally enough drug candidates in human trials to start convening ICAD annually, after meeting only once every two years since the conference started in 1988.

So here we go again...on one side you have the Street whose motto, instant gratification takes too long, has led to billions of loses in market caps and on the other side you have pharma drug development which is trying to get drugs to market while navigating the maze of regulatory rules and issues. Stuck in the middle are the millions of patients who are dealing with, or will shortly be dealing with, Alzheimer's. Remember these are the same analysts who led this country down the path to the housing crisis by bundling bad loans to sell and then asking for more. You can’t serve two masters.

I now understand why Sidney Taurel, ex CEO of Lilly, shortly before he left went on a rant in an article in the Wall Street Journal about how Wall Street analysts don’t understand the drug development process. He was spot on ! Thus CEO’s of pharma companies today have to keep analysts at bay while allowing drug development to move forward in a tightly controlled regulatory environment that is changing month to month. If Wall Street had its way it would rush drugs to market regardless of the potential side effects or efficacy profile.

The drug companies are trying to do the right thing here. They know that unless the new drugs show promise in clinical studies that there is a chance that the FDA would require more clinical studies delaying the drug and costing hundreds of millions more in development costs. Drug companies want to market a drug that works and shows substantial improvement over competitors products with as few side effects as possible. In order to do this they need time for clinical studies with a patient population that the FDA finds acceptable. Guess what? This is not an easy thing to do !

CEO’s thus have to absorb the “hits” from the Street and allow their companies to do what they do best...develop new drugs to improve the quality of life. After all it’s why they get the big bucks but more and more part of those big bucks is being spent on Maalox.