Saturday, January 19, 2008

Industry: More Trouble for Big Pharma?

When I blog I normally try to vary my topics from week to week. This week, however, I’m going to stay with last week’s topic. I wrote then asking if Big Pharma was in trouble. I blogged that it was and predicted that the next decade was going to be a difficult one for the industry. After reviewing this week’s media, I decided to stay with this topic for my next several entries because I think that something fundamental is happening out there in this sector.
This week, Mike Huckman in his always topical and excellent blog, Pharma’s Market at, wrote about the problems with clinical trials in Big Pharma. He also had a terrific interview about Big Pharma and its troubles that I encourage everyone to view. I don’t normally use visual aids in my blogs but this one is good and Mike’s blog was kind enough to offer the following code to share the interview. Click on this link, , after you’ve finished reading my blog of course, and hear some really insightful discussion.
Mike’s blog questioned the traditional view of drug stocks as a port in a storm because of the Presidential election and the questions arising about the accuracy of clinical trials. Last week, I blogged about the perfect storm of declining FDA new drug approvals, resistance from national healthcare services to increasing drug prices, and ominous noises coming from the Presidential primaries. The long term nature of these deep rooted problems were the basis for the decade long forecast of industry difficulties that I made. The clinical trials disclosures and the risk of political opportunism from the Presidential candidates are doing nothing to make me rethink my original forecast. Can we expect the U.S. Congress to have hearings and call in pharmaceutical executives? (At least not until they get finished with major league baseball.) Can we expect yet more legislation regarding new drug clinical trials? What impact on the sector’s image will all the above mentioned problems have? Will all these problems being to affect Big Pharma’s financial well being? Will we begin to see a shakeout?
Something has got to give with Big Pharma. If we look at other industries in the United States over the last generation (e.g., auto, airlines, mainframe computers) we see periods of growth followed by a slow as conditions change and then realization of problems leading to a shakeout or consolidation of some sort. Sometimes, new competitors or technologies (Japanese auto makers and Microsoft) arise and overthrow the old model entirely. This is what I want to explore in my blogging with the next few entries. As I was recently telling Larry, I think that we’re about to see major changes in Big Pharma unlike anything that the industry has seen before. These are exciting times!
I’ve been doing all the talking here. I’d really like to hear from you. Larry and I would like to receive your comments and contributions too. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

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