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What does it say about an industry when its leading competitors appear fundamentally at odds about whether they should grow bigger, smaller, more diversified or more focused?
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Why pharma lacks strategic perspective
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An article published last year addressed a factor generally associated with corporate failure and success. Although it mentioned the drug industry only peripherally, it says a great deal about why pharma remains stuck in its current down cycle.
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Pharma at the Rubicon
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One way of viewing the drug industry's current situation involves asking whether pharma possesses the innovative skill to discover and develop new offerings or, alternatively, prop up its legacy business and lose another trillion dollars of capitalization by 2020.
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A big fine and patent breaking highlight pharma's week
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The perfect storm into which pharma has navigated itself means that the most constructive observations ought to point out potentially fruitful, new directions for the industry.
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On AstraZeneca and David Brennan
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Last week AstraZeneca reported a 44 percent drop in its first quarter net profit and 11 percent fall in revenue. Immediately the stock price declined by 6 percent and the company used the opportunity to announce that CEO David Brennan will leave June 1.
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Do pharma boards meet their responsibilities?
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The value of scrutinizing directors and top managers in pharma consists of learning to distinguish good from bad leadership in a research-driven industry that requires 10 years or more to develop its new products. If setting companies on the wrong course can take most of a decade to correct, it makes sense to find the best ways of starting them right and keeping them that way.
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Can Pharma address the emerging needs of Its customers?
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A major satisfaction of writing this blog comes from the occasional comments of some people engaged in actually advancing health care.
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Will Pharma stay in the caboose of proactive health care?
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The current buzzword in health care is "hot spotting." The idea is that if these people receive upfront attention and resources, the long-term health care costs they create for the community, and thereby the total health bill, will decline.
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What pharma needs to evolve
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Stated in the simplest terms, pharma remains in large measure unable to deliver precisely what the world's health care systems need from it — therapies to materially advance the standards of care. At the same time, the public and private systems that pay pharma's bill have grown increasingly unwilling to shell out for the molecular manipulations that have long been an integral part of the drug makers' business model. As a result, pharma barely returns the cost of capital it invests in research and development while the sector as a whole underperforms the S&P 500.
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Sanofi sketches a mid-range strategy for some pharmas
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As biotechs and startups continue to assume a larger share of the responsibility for fulfilling pharma's historic mission of developing better drugs, an obvious question then emerges - what business can pharma pursue?
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The FDA continues to play a vital role
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Today, although the FDA reflects some inefficiency inherent in any large organization, it remains as necessary for a modern pharmaceutical industry as Merck, Pfizer or the most scientifically inventive biotech.
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What business is pharma in?
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Just this week another self-proclaimed savant (see here) declared that pharma's historic mission of developing new drugs to advance curative medicine is dead. In this case the would-be guru runs a tech company with products for enhancing the electronic connectivity of patients and their health care professionals. His previous work involved advising hospitals on information management for a major consultancy and, before that, he spent a dozen years at Microsoft working on health care IT.
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When Big Pharma's good business makes for good citizenship
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It takes a lot to elicit a defense of Big Pharma from these quarters, but a deceptive attack by the radical right has motivated just such an effort.
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Why 'Moneyball' won't work in the pharma field
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Check Up: It appears that some people in pharma are trying to copy what Oakland and other baseball teams did a decade ago. The likely result is that in pharma, not much will change.
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The meaning of hospitals buying cardiology practices
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Cardiologists in large numbers are selling their practices to hospital networks. Here is what that trend means.
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Why Big Pharma Needs to Become Smaller Pharma
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Each year it becomes more likely that the new drugs needed to advance curative medicine will come from small startups and biotechs.
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Why Does Pharma Bury Half of Its Clinical Studies?
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Clinical trials are the last, most expensive part of developing new drugs. More than anything else, one set of facts reveals the current status of drug trials. Earlier this month the British Medical Journal (BMJ) published a study showing that fewer than half the trials funded by the U.S. government's National Institutes of Health were published in a medical journal within 30 months after completion. Even four years after trials are finished, one-third of these publicly funded studies remain unpublished. But at least sixteen prior studies cited by this recent article showed between 25% and 50% of trials funded by pharma remained unpublished for several years after they were completed. In other words, whether funding comes from government or from pharma companies, the results of about half of all clinical trials are buried.
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A Neglected Part Drug Development Gets New Attention
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At Goldman-Sachs' health care conference last week, Merck CEO Ken Frazier said that his company would stock a higher proportion of its late-stage pipeline with in-licensed and purchased compounds. Frazier's comment provide a capsule view of pharma's current condition. More than patent expirations, the drug industry's current down cycle results from its reduced productivity at developing new drugs. Signs are emerging, however, that the industry's leaders are at least starting to pay attention to this shortcoming.
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How Pharma is Subservient to Numbers
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Educators use the term "innumeracy" when they discuss the fact that American schoolchildren achieve lower scores on math exams than their counterparts in Asia. Whether the phenomenon is real or just a catchphrase for some larger social trend, the fact remains that by the time Americans reach adulthood and enter the business world, they are absolutely in thrall to arguments tarted up with quantified data. Terms such as "quantomania" and "numerenvy" might describe the situation. Pharma suffers from it as much as any other manufacturing or service sector.
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Pharma Better Off Ignoring Some Biz-School Gurus
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Pharma might do better by letting the B-school fashion parades just pass by.
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Outsourcing, Partnering Sound Sexy But Won't Cure Pharma
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Partnering and outsourcing R&D offer no easy or pat solution for pharma. The mastodons that ran the Big Pharmas over the past fifteen years produced a score of ill-advised mergers that benefited their own compensation as a result of earnings growth over a few quarters, propelled by layoffs. The longer-term results consisted of several unwieldy companies that stifled research and contained equity bases requiring mega-blockbusters to improve earnings relative to equity.
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Pharma's daily news summary reads like a police blotter
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On the Tuesday before Thanksgiving, the following four headline stories appeared on Pharmalot, the pharmaceutical industry's top independent blog. "Merck Pays $950M Over Vioxx Marketing Probe," "Mylan Is Warned Over Plant In Puerto Rico," "Novartis Execs, Cover-Ups And Jawbone Damage," "Former Synthes Execs Jailed For Fatal Clinical Trial" So as the year-end approaches, pharma's daily business activity turns a diligent news aggregator into a police blotter.
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What Steve Jobs' career says about innovation in Pharma
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Management consultant Steve Denning wondered why some companies slowly wither and die, while others seem able to reinvent themselves and change as circumstances demand. The problem is familiar to anyone who has followed Big Pharma over the past decade.
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What Pharma Can Learn From Penn State
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Over the past week the Penn State scandal has held the top spot among media stories, outranking the Euro Zone's possible collapse, the Republican primary race, the Occupy saga, and nearly everything else. Despite some of its details, the Penn State scandal differs from sensational stories such as crimes and natural disasters because it contains important lessons for people not directly involved. While the story holds social, ethical and, yes, economic significance outside the universities, pharma in particular can learn a lot from it.
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A $3 Billion Fine for GSK Isn't the Whole Story
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Last week GlaxoSmithKline announced it would try to settle a series of federal investigations by paying a $3 billion fine. If the company can resolve the matter with the Justice Department, it will represent the largest single fine ever assessed against a pharmaceutical company, exceeding the $2.3 billion Pfizer paid in 2009. The good news is that the company appears to taking a higher road. The bad news is the scale of the corruption that went on for years.
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Don't Hold Your Breath Waiting for OTC Lipitor
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Pfizer CEO Ian Read surprised investors at his November 1 earnings report when he said the company will eventually sell the world’s best-selling drug, Lipitor, over the counter (OTC) just like aspirin. The comment raised the likelihood that Pfizer would maintain some of its vast Lipitor revenues. But follow-up interviews suggest that it will be much harder to bring Lipitor over the counter than Read let on and will not happen for several years at least.
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Can't Get to PharmaFuture From Here
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Over the past few months several major consultancies have been playing the role of retrospective soothsayers by producing new measures of pharma's assorted difficulties and some ethereal advice on ways of turning around the situation. One such exercise, described by its authors as an effort to develop "Pharma 3.0," actually contains some imaginative ideas, albeit cloaked beneath a lot of hot air and empty blue sky.
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The Week's News Reinforces Some Points
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Several news items from the past week reinforced some critical thinking about pharma and the industry's need to change strategic and tactical modes of its operations.
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Whether Pharma R&D Should Wither
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For most of its history, pharma's core mission has consisted of developing new drugs to advance medical care. But over the past several years, pharma's productivity at this central task has steadily declined. So should pharma slash research, as some suggest?
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Rating Pharma on the Steve Jobs Checklist
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Last week the popular and the business media paid their respects to the passing of Steve Jobs. That is entirely appropriate because Jobs not only created an astonishing business success, but as the comments from individuals around the world attest, his work personally affected the lives of millions. Yet business leaders deserve to be considered great if they can establish principles, patterns or ideas that transcend their individual successes. So when a great one passes from the scene, it makes sense to assess if our own business sector follows his principles and, if not, what circumstances might limit their application. Here are a few of the foundational ideas that business analysts have associated with Steve Jobs, together with a rough-and-ready assessment of whether pharma's business leaders have applied them.
More posts by guest blogger by Daniel Hoffman
Meet our Bloggers
Daniel R. Hoffman
Daniel R. Hoffman is the president of Pharmaceutical Business Research Associates (PBRA) in Glenmoore, Pennsylvania, a healthcare research and consulting company specializing in key account positioning and messaging.
Prior to establishing PBRA, Dr. Hoffman worked for other consultancies and as a marketing research manager at a Delaware Valley pharmaceutical manufacturer. He also worked briefly as a visiting professor of marketing at St. Joseph’s University.
Dr. Hoffman holds a bachelor’s degree from the University of Michigan and M.A. and Ph.D. degrees in political sociology from the University of California.
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