Good medicine leads to profits?
Jan/15/2007 07:39 Filed in: Pharma
Business
George W. Merck said: "We try never to forget that medicine is for the people. Not for the profits. The profits follow, and if we have remembered that, they have never failed to appear"
Is this still true today? The answer to that is more no than yes and that is unfortunate. Because of litigation, lack of leadership at the CEO level and the power of Wall Street the pharma model today has evolved more into a business/proift model than a "medicine is for people" model.
The recent news that Genentech's profits soured 76% in the fourth quarter was hardly enough to impress the "what have you done for me today" crowd on the Street. Their stock did go up but then quickly corrected after analysts projected slow growth ahead. News like this is what CEO's are graded on, not the number of new drugs that can save or enhance patient lives.
Having a best in class drug no longer means success for pharma. Lilly's Zyprexa for example has helped millions of people live better lives but because of the weight gain issue Lilly has to pay out over a billion dollars to settle litigation. That's a billion dollars that will primarily go to lawyers..that's a billion dollars less that can be spent on new breakthrough products. It also means that some drugs in development won't get the funding needed to advance to next stage clinical trials because of cuts in funding.
While some CEO's retire with $83 million pay packages (hello Pfizer!) others come under intense pressure to please the people on Wall Street who grade their performance. Do you think that these people care about patients? They only care about one thing.....profits and long term financial outlook. Why do you think most CEO's have a financial background ?
With the costs of introducing new drugs increasing and pharma spending less time looking at new ways to reach patients and consumers the model is broken. Where have the industry leaders like George Merck gone? Almost overnight they have become accountants and forgot that the real reason we are here is to make a difference in patients lives but it is naive to think that good medicine will lead to profits in today's regulatory and cost environment...that is until someone steps forward and shows the industry how it can be done.
|