Lately, I’ve been blogging about the general malaise that life sciences, and in particular, Big Pharma, are finding themselves in. Last week, I even compared poor Mike Huckman to a canary in a mine. (Apologies there, it seemed like a good idea at the time.)
The recent full court press by the Federal government against Goldman Sachs, first a civil suit, then a criminal investigation, got me wondering what the Beltway Gang was up to with their another one of their favorite bête noirs, Big Pharma. Seems that the Federal Drug Administration (FDA) has decided to breathe new life into its Office of Criminal Investigations. A recent article by Alicia Mundy in the Wall Street Journal (http://online.wsj.com/article/SB10001424052748703862704575099942109582112.html ) outlines the FDA’s plans to re-energize itself and the focus of its prosecutions.
Are we seeing yet more evidence of an industry under siege? There’s definitely a more activist administration in Washington, D.C. these days. And Big Pharma has all the characteristics of a great target. Unpopular with the public, aging business model in need of an overhaul, and recipients of large amounts of public largess (i.e., Medicare). Makes me think of the financial services industry. I wonder if we’re going to see Big Pharma’s chairpersons appearing before Congress en masse anytime soon?
But, maybe we won’t see everyone trooping down to the Capitol anytime soon. Here’s why. First, Congress is enjoying themselves too much with the financial services industry. (Big Pharma should consider themselves fortunate in not having a poster child for egregious behavior like Bernie Madoff.) Next, Big Pharma hasn’t provided a lightning rod for public outrage yet. Sure, they’ve had the occasional Vioxx but they haven’t tried to melt down the economy or anything comparable yet.
In ancient China, there was a form of execution cum torture known as the death by a thousand cuts. I won’t go into the details (there are other blogs for that) but you get the idea. This is what Big Pharma is experiencing now. Every day seems to bring another cut/issue. Nothing big by itself but cumulatively they have an effect. Resources are drawn away from things like research and development. Innovation is throttled because of a risk adverse culture developing. Management attention is distracted from running the day to day business let alone forward looking strategic planning.
Once upon a time, Big Pharma was one of the glamour industries. Overtime, they became one of the last men standing. Now, Big Pharma is on the cusp of being another also ran. Globalization and commoditization are bringing down another industry.
I’ll continue to pursue this line for awhile. Unfortunately, I don’t see any significant changes anytime soon.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
Showing posts with label Congress. Show all posts
Showing posts with label Congress. Show all posts
Saturday, May 8, 2010
Sunday, March 21, 2010
Healthcare Reform: Endgame?
Finally. We seem to moving to closure on the seemingly unending national debate over healthcare in the U.S.. Tomorrow, Sunday, March 21, 2010, in an unusual Sunday session, the U.S. Congress will put healthcare reform to the vote. I predict that the Democrats will get the necessary votes and the legislation will pass. Then it’s over and we can all go home, right?
We may all go home but this is far from over. Let’s not forget that august body, the U.S. Senate which would still need to put its imprimatur on the proposed legislation. The Republicans are preparing a desperate, last ditch defense there that would make John Wayne’s Alamo look like a tea party (and I don't mean the one in Boston Harbor nor the current anti-Republican/Democrat Party) If the Senate can’t pass the legislation before the spring recess we could be in this state of affairs for a while longer. (Am I the only one who’s reminded of Waiting for Godot?) Various governors and state legislatures are promising to challenge the constitutionality of government mandated healthcare reform. Their positions are based on the old states’ rights arguments. (Somebody should tell those guys that those arguments didn’t work very well for the Confederacy.)
CNBC’s Patti Domm wrote a piece (http://www.cnbc.com/id/35956840 ) yesterday about the potential short term negative impact of healthcare reform on stack prices. I’m still convinced that most people still unsure about what healthcare reform means for business, especially in the life sciences sector. I’m excluding the Republicans and Tea Party members from this because they’re just opposed in general to the whole idea.
Tomorrow, we may have the unusual situation of most of the country sitting around their televisions, computers, PDA’s, whatever to follow the final debates in the Congress. I can’t wait to see the audience ratings. (Another prediction, they may rival the recent Olympics.)
After all that has gone on before now, the present moment seems somewhat anticlimactic. If the past is any guide even if the legislation passes not much may change immediately. But, changes will be put into play that combined with the law of unintended consequences will change many things. (Nobody ever thought that when Congress put through a minor piece of legislation for something called a 401k plan would become the primary financial tool for retirement planning and practically shut down employer funded pensions as generations knew them.) What will we wake up to on Monday morning if healthcare reform passes?
No one knows what the future holds for healthcare reform. I can predict passage but that’s just one person’s opinion. But, passage is just one point in time. It’s binary – yes or no. What happens after that is much more complicated and the stakes are very high. Let’s see what happens.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
We may all go home but this is far from over. Let’s not forget that august body, the U.S. Senate which would still need to put its imprimatur on the proposed legislation. The Republicans are preparing a desperate, last ditch defense there that would make John Wayne’s Alamo look like a tea party (and I don't mean the one in Boston Harbor nor the current anti-Republican/Democrat Party) If the Senate can’t pass the legislation before the spring recess we could be in this state of affairs for a while longer. (Am I the only one who’s reminded of Waiting for Godot?) Various governors and state legislatures are promising to challenge the constitutionality of government mandated healthcare reform. Their positions are based on the old states’ rights arguments. (Somebody should tell those guys that those arguments didn’t work very well for the Confederacy.)
CNBC’s Patti Domm wrote a piece (http://www.cnbc.com/id/35956840 ) yesterday about the potential short term negative impact of healthcare reform on stack prices. I’m still convinced that most people still unsure about what healthcare reform means for business, especially in the life sciences sector. I’m excluding the Republicans and Tea Party members from this because they’re just opposed in general to the whole idea.
Tomorrow, we may have the unusual situation of most of the country sitting around their televisions, computers, PDA’s, whatever to follow the final debates in the Congress. I can’t wait to see the audience ratings. (Another prediction, they may rival the recent Olympics.)
After all that has gone on before now, the present moment seems somewhat anticlimactic. If the past is any guide even if the legislation passes not much may change immediately. But, changes will be put into play that combined with the law of unintended consequences will change many things. (Nobody ever thought that when Congress put through a minor piece of legislation for something called a 401k plan would become the primary financial tool for retirement planning and practically shut down employer funded pensions as generations knew them.) What will we wake up to on Monday morning if healthcare reform passes?
No one knows what the future holds for healthcare reform. I can predict passage but that’s just one person’s opinion. But, passage is just one point in time. It’s binary – yes or no. What happens after that is much more complicated and the stakes are very high. Let’s see what happens.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
Tuesday, March 16, 2010
Healthcare Reform: Watching Paint Dry
I’m fascinated by the healthcare reform debate that’s currently underway in the U.S. both inside the Houses of Congress and without. Last week, everyone in the country became experts in the arcana of the Senate’s reconciliation rules. This week, we’re all becoming familiar with President Obama’s travel schedule. Oh, and, let’s not forget the furies that have been unleashed at the health insurance providers. (I loved that move on the part of the President. A friend of mine who is a rabid opponent of healthcare reform rallied to that one. As he said, “Who doesn’t hate the health insurance companies?”)
The absence of Big Pharma from this debate is obvious. As I blogged last week, they appear to be in the President’s camp but their silence is deafening. Given all that’s at stake here I find that response, or, more accurately, lack of one, puzzling.
Maybe, just maybe, healthcare reform is not all that it’s knocked up to be for Big Pharma. The argument advanced by some (see Janet Adamy’s and Greg Hitt’s article in the Wall Street Journal, http://online.wsj.com/article/SB125590875879693189.html?mod=rss_whats_news_us ) that the drug companies will profit from all the sales to customers who couldn’t afford their wares reg Hitt, previously. That assumes Big Pharma has something to sell. This blog has noted previously the struggling new product pipelines at many drug companies. Now, the generic manufacturers may have something to crow about but I doubt their more upscale brethren will.
OK, you don’t buy the drying up pipeline argument. You say that new product development is not a straight line always headed up. You believe that research and development is a fitful, creative process with long dry spells frequently the result. I buy that. There is historical precedent. Now, let’s stop and think who’s going to be footing the bill for all this. The Federal government and the insurance companies. Am I the only one who thinks that these august institutions won’t figure out a way to squeeze volume purchase discounts from the drug companies? The drug companies are doing it to their own suppliers and even their own employees. Or, the Federal government could fall back on their old standard – price controls.
Here’s where I’m going with this. I don’t believe that healthcare reform will be beneficial to Big Pharma and other life sciences companies. Yes, more products may be sold to more people but at lower prices. Doctors will probably be second guessed over treatments. Stories have been around for years of nurses paid by health insurers second guessing physicians over treatments and medications. These practices will only continue and grow in all likelihood.
I’ve stuck my neck out now and given my position. There may be a vote on healthcare reform in the next week. If it passes, and the jury’s still out on this one, then I think we’ll see an interesting time for Big Pharma in the next several months.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
The absence of Big Pharma from this debate is obvious. As I blogged last week, they appear to be in the President’s camp but their silence is deafening. Given all that’s at stake here I find that response, or, more accurately, lack of one, puzzling.
Maybe, just maybe, healthcare reform is not all that it’s knocked up to be for Big Pharma. The argument advanced by some (see Janet Adamy’s and Greg Hitt’s article in the Wall Street Journal, http://online.wsj.com/article/SB125590875879693189.html?mod=rss_whats_news_us ) that the drug companies will profit from all the sales to customers who couldn’t afford their wares reg Hitt, previously. That assumes Big Pharma has something to sell. This blog has noted previously the struggling new product pipelines at many drug companies. Now, the generic manufacturers may have something to crow about but I doubt their more upscale brethren will.
OK, you don’t buy the drying up pipeline argument. You say that new product development is not a straight line always headed up. You believe that research and development is a fitful, creative process with long dry spells frequently the result. I buy that. There is historical precedent. Now, let’s stop and think who’s going to be footing the bill for all this. The Federal government and the insurance companies. Am I the only one who thinks that these august institutions won’t figure out a way to squeeze volume purchase discounts from the drug companies? The drug companies are doing it to their own suppliers and even their own employees. Or, the Federal government could fall back on their old standard – price controls.
Here’s where I’m going with this. I don’t believe that healthcare reform will be beneficial to Big Pharma and other life sciences companies. Yes, more products may be sold to more people but at lower prices. Doctors will probably be second guessed over treatments. Stories have been around for years of nurses paid by health insurers second guessing physicians over treatments and medications. These practices will only continue and grow in all likelihood.
I’ve stuck my neck out now and given my position. There may be a vote on healthcare reform in the next week. If it passes, and the jury’s still out on this one, then I think we’ll see an interesting time for Big Pharma in the next several months.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
Monday, February 15, 2010
Healthcare Reform: Where’d It Go?
I’ve been a little distracted lately (busy Holidays, snowstorms, colds) but I stopped the other day and U.S. healthcare reform was gone. Poof! Not there anymore. Now, Larry always kids me (you are kidding Larry, aren’t you?) that when distracted I can miss a lot. But, I must’ve had one heck of a lot better New Year’s Eve than I’d realized.
I went to my usual haunts to see if anyone had any perspective on this. Mike Huckman at CNBC (http://www.cnbc.com/id/15837675 ) and Pharmalot (http://www.pharmalot.com/ ) didn’t mention it. (My apologies if they did and I missed it.)
OK, don’t worry, I’m not going to drag this out. I had heard about Scott Brown’s (http://www.brownforussenate.com/ ) election in Massachusetts. (Ted Kennedy’s old seat no less.) The irony of that victory has not been lost on me. I wasn’t as much surprised by Brown’s victory as how the national discussion on healthcare reform has practically shut down. Despite some noises from Nancy Pelosi and other supporters, there’s virtually nothing compared to prior to Congress’s late Christmas Eve recess.
What’s going on here? Further, what does it mean for Big Pharma? I’m going to go out on a limb here with my views.
First, the Democrats obviously couldn’t arrive at a consensus within their own party about what healthcare reform was all about. (I’m not going to go into the political missteps that cost them Ted Kennedy’s seat.) There were no killer ideas. What began as a high minded crusade to overhaul healthcare in America became a mad, undignified dash for the finish line replete with all sorts of cloakroom deals to make it all happen. No one had any reason to cross the aisle or to worry about why they hadn’t. I suspect that President Obama is probably relieved that he no longer has the Supermajority for this one. We just don’t have any good ideas to implement major healthcare reform. Consensus on smaller issues like tort reform or health insurance regulation may be possible but that’s going to be it for now. We may see this happen as the November midterm elections draw near.
Next, what about Big Pharma? I don’t think that the current status quo concerning healthcare reform is good for them. The topic isn’t going away. Both sides are going back into their corners to get ready for the next round. Uncertainty prevails. The Tea Party movement will play the role of spoiler this year possibly foretelling what will happen in the 2012 Presidential election. Decisions on future drug development not to mention how capital markets will value these companies are only several of the possible issues here.
I’ll be blogging on this theme for a while. With the Congressional elections coming and the White House trying to find common ground with the Republicans, there will be plenty of good material here.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
I went to my usual haunts to see if anyone had any perspective on this. Mike Huckman at CNBC (http://www.cnbc.com/id/15837675 ) and Pharmalot (http://www.pharmalot.com/ ) didn’t mention it. (My apologies if they did and I missed it.)
OK, don’t worry, I’m not going to drag this out. I had heard about Scott Brown’s (http://www.brownforussenate.com/ ) election in Massachusetts. (Ted Kennedy’s old seat no less.) The irony of that victory has not been lost on me. I wasn’t as much surprised by Brown’s victory as how the national discussion on healthcare reform has practically shut down. Despite some noises from Nancy Pelosi and other supporters, there’s virtually nothing compared to prior to Congress’s late Christmas Eve recess.
What’s going on here? Further, what does it mean for Big Pharma? I’m going to go out on a limb here with my views.
First, the Democrats obviously couldn’t arrive at a consensus within their own party about what healthcare reform was all about. (I’m not going to go into the political missteps that cost them Ted Kennedy’s seat.) There were no killer ideas. What began as a high minded crusade to overhaul healthcare in America became a mad, undignified dash for the finish line replete with all sorts of cloakroom deals to make it all happen. No one had any reason to cross the aisle or to worry about why they hadn’t. I suspect that President Obama is probably relieved that he no longer has the Supermajority for this one. We just don’t have any good ideas to implement major healthcare reform. Consensus on smaller issues like tort reform or health insurance regulation may be possible but that’s going to be it for now. We may see this happen as the November midterm elections draw near.
Next, what about Big Pharma? I don’t think that the current status quo concerning healthcare reform is good for them. The topic isn’t going away. Both sides are going back into their corners to get ready for the next round. Uncertainty prevails. The Tea Party movement will play the role of spoiler this year possibly foretelling what will happen in the 2012 Presidential election. Decisions on future drug development not to mention how capital markets will value these companies are only several of the possible issues here.
I’ll be blogging on this theme for a while. With the Congressional elections coming and the White House trying to find common ground with the Republicans, there will be plenty of good material here.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
Wednesday, February 11, 2009
Healthcare Reform – Will Big Pharma Get a Reprieve?
Has Big Pharma gotten a temporary reprieve from threatened reforms from President Obama? Last week’s withdrawal by Tom Daschle from consideration as the Secretary of Health, Education, and Welfare and his office’s admission that there was no immediate replacement doesn’t bode well for quick reform.
Also, given the problems President Obama is having gaining bipartisan support for a stimulus package that everyone agrees is needed, think what will happen when he tries to push healthcare reform through the Houses of Congress.
A cynic might say that Treasury Secretary Timothy Geithner was approved despite his tax problems because everyone felt that he was the man and this was his moment. The same cynic might also say that Tom Daschle knew that Congress wasn’t ready for him and this was certainly not his moment.
What does this mean for Big Pharma? One pending issue that some of us have been writing about is what happens when President Obama gives the go ahead to Medicare to negotiate volume purchase discounts for prescription drugs with the pharmaceutical companies. Revenues will certainly contract. I don’t think volume increases will offset the price decreases unless there is a new, national commitment to really overmedicating the country.
Now, if the Obama Administration is too distracted to go after healthcare reform then Big Pharma may get a temporary reprieve this year. This will be a good thing for Big Pharma. Many drug companies have major patents expiring this year and their replacements are not exactly setting the world on fire. Getting pounded on their remaining products would not have been a good thing.
I’m going to stick my neck out and say that this year’s, 2009’s, revenues will probably be safe from Federal tinkering. Going a little further out, 2010 and beyond, I think the risks increase significantly. Here’s why. First, the economy is not going to improve any time soon. The Republicans are on the defensive and when their constituents start screaming about government assistance because they’ve lost their jobs, homes, savings, etc. then we will really start to see bipartisan support. Especially, as we start to draw closer to the midterm elections in 2010. Next, once the Federal government really lets loose and starts to spend, someone’s going to realize that we’re spending too much. That means other someone’s are going to start finding places to save money. Medicare spending for prescription drugs is a great place to start. Even John McCain hates Big Pharma. I recently saw an article which indicated that the Obama Administration is reviewing the U.S. nuclear arsenal. They’re getting serious. The sacred cows are going to be gored.
Big Pharma’s going to have a tough year in 2009. President Obama’s current troubles may buy them a little time but it will come back with a vengeance next year.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
Also, given the problems President Obama is having gaining bipartisan support for a stimulus package that everyone agrees is needed, think what will happen when he tries to push healthcare reform through the Houses of Congress.
A cynic might say that Treasury Secretary Timothy Geithner was approved despite his tax problems because everyone felt that he was the man and this was his moment. The same cynic might also say that Tom Daschle knew that Congress wasn’t ready for him and this was certainly not his moment.
What does this mean for Big Pharma? One pending issue that some of us have been writing about is what happens when President Obama gives the go ahead to Medicare to negotiate volume purchase discounts for prescription drugs with the pharmaceutical companies. Revenues will certainly contract. I don’t think volume increases will offset the price decreases unless there is a new, national commitment to really overmedicating the country.
Now, if the Obama Administration is too distracted to go after healthcare reform then Big Pharma may get a temporary reprieve this year. This will be a good thing for Big Pharma. Many drug companies have major patents expiring this year and their replacements are not exactly setting the world on fire. Getting pounded on their remaining products would not have been a good thing.
I’m going to stick my neck out and say that this year’s, 2009’s, revenues will probably be safe from Federal tinkering. Going a little further out, 2010 and beyond, I think the risks increase significantly. Here’s why. First, the economy is not going to improve any time soon. The Republicans are on the defensive and when their constituents start screaming about government assistance because they’ve lost their jobs, homes, savings, etc. then we will really start to see bipartisan support. Especially, as we start to draw closer to the midterm elections in 2010. Next, once the Federal government really lets loose and starts to spend, someone’s going to realize that we’re spending too much. That means other someone’s are going to start finding places to save money. Medicare spending for prescription drugs is a great place to start. Even John McCain hates Big Pharma. I recently saw an article which indicated that the Obama Administration is reviewing the U.S. nuclear arsenal. They’re getting serious. The sacred cows are going to be gored.
Big Pharma’s going to have a tough year in 2009. President Obama’s current troubles may buy them a little time but it will come back with a vengeance next year.
As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.
Contributed by Guy de Lastin
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