This is the new business model for pharma?

Oct/02/2008 09:22

I have to say that I am astounded at what appears to be the new business model for drug companies. The new business model seems to be to lay off R&D people, lay off the people who work on brands that are coming off patent, and purchase other companies so you can get your hands on their pipeline. I can understand Pfizer's decision not to pursue any other CV drugs once Lipitor comes off patent as it is going to be hard to get payers to add a new CV drug that is better than generic Lipitor. However, laying off R&D people like GSK, Pfizer and others are planning to do is an acknowledgement that the organization doesn't have the financial resources to develop new products and that it would be bette to just "buy" companies that develop new compounds.

Today Roche indicated that they have not yet given up the potential 100% takeover of Genentech. With the economy in trouble and the dollar at all time low this makes perfect sense. Cash starved companies are going to look for ways to raise capital to both launch new drugs and continue research on potential new drugs but is this consolidation better for shareholders or patients?

Big Pharma has become synonymous with big business which is not exactly in the best spotlight right now. Smaller biotech companies can develop and market new drugs with a minimum of bureaucratic big pharma processes that slow drug development and marketing to a crawl. Big pharma also has a major addiction to the sales force at a time when salespeople are getting less and less face time with customers. Over the past few years I have heard from many people who have left big pharma to go work in smaller biotech companies and now love what they do. But then comes big pharma knocking at the door and the venture capitalists see a chance to cash in early on products that are in early stage development. Most times when big pharma takes over another company most people find themselves out of work and staring over again.

What really surprises me is that big pharma is its own worst enemy. They are stuck in marketing practices of the past and don't know how to market in an environment of patient empowerment and payers who want clinical proof that branded products are better than generics. Rather than try and streamline the company to better compete in this era they give money to lobbyists and donate to presidential campaigns. Rather than engage people on the Web they spend endless dollars in market research to tell them what they already should know or to validate current DTC initiatives to get more money. No wonder the best and brightest marketing people are leaving the industry.

Imagine working on a brand like Lipitor, making the worlds top selling drug and then hear that you have to look for a job within the company because Lipitor is coming off patent ? You see at most pharma companies very few people are "promoted". They maybe given a new title but then they are told that they have to "find a job" within the organization. So you want to work on a brand, do all you can to make it number one within its category and then find out that you have to find another job? Yeah makes sense to me !

R&D and marketing people? We don't need no R&D and marketing people !!!

Big pharma is its own worst enemy and it seems that most CEO's are only looking to keep the boat afloat rather than acknowledge that the river is too narrow to turn the boat around quickly.