Tuesday, February 19, 2008

Healthcare: Query from a Reader from India

This week, one of our readers, Kumar Shankar Roy of Chennai, India, replied to my blog about winners and losers in Big Pharma asking if Big Pharma’s difficulties would be an opportunity for generics. He also wanted to know if Clinton or Obama would do anything about extending help in innovation given the bad shape of the drug pipelines.

Larry and I talked about this and here’s what we think. First, let’s talk about the generics. Short term, Big Pharma’s problems will help the generics. Longer term, we’re not so sure. If Big Pharma’s pipeline really slows down there’s going to be nothing to copy, right? Larry’s view is that there will likely be an equilibrium point whereby R&D would likely be focused on fewer higher payout/profit drugs with less likelihood for as many "me too" products. There are still many diseases with large populations that can benefit from focused research:
· elder related illnesses,
· cancer in its many forms,
· mental illness and
· numerous life style issues.
Patients will benefit and the companies that successfully address them will do very well. So, the Big Pharma companies with the R&D capabilities to address these areas stand the best chance of surviving. Larry also believes that there are some other forces at play that will impact demand:
· Will payers prevail and only look at costs (as opposed to pharmaco-economics)?
· Can "we" afford medicines at current price points?
· Will regulatory issues gum up the whole thing, etc.?
· What about biogenerics?
Going back to Kumar’s first question, we see temporary advantage to the generics. Big Pharma if it avoids the pitfalls outlined above and can focus on the new opportunities would survive but be a very different industry.
Kumar’s second question about whether or not Clinton and Obama would do anything about extending help in innovation given the bad shape of the drug pipelines is in a different vein. I haven’t seen much, if anything, from either candidate indicating an interest in helping Big Pharma especially when it comes to helping protect their patents. Their strident advocacy of generics won’t be encouraging drug companies to make big bets on future drugs. I don’t expect Big Pharma to get any relief from Clinton or Obama. (Or, even McCain for that matter. Please see my earlier blog for more on that.)

Larry and I would like to thank Kumar for writing to us, telling us his thoughts on the blog, and asking questions. We hope that he finds our replies helpful and look forward to corresponding with him again in the future.
Please contact us at
larryrothmansblog@gmail.com. We look forward to hearing from you.

Contributed by Guy de Lastin

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