Pharma News Analysis

Tainted Drugs, How Generic Drugs Depress Big Pharma, Unethical Sales Treatment and More...

On the last day of January 2008, there is so much to talk about and discuss. Remember, this is only the beginning of the year...

From today's New York Times:

"Tainted Drugs Tied to Maker of Abortion Pill... BEIJING — A huge state-owned Chinese pharmaceutical company that exports to dozens of countries, including the United States, is at the center of a nationwide drug scandal after nearly 200 Chinese cancer patients were paralyzed or otherwise harmed last summer by contaminated leukemia drugs..."

Eli Lilly & Co. may end up shelling out more than a billion dollars over its sales strategies for Zyprexa. Read AP's note on it here.

Here is how Generic Drugs Depress Big Pharma Executives... Here is a brief report from Reuters.

"LONDON (Reuters) - The U.S. launch of two generic forms of Wyeth's ulcer drug Protonix will inevitably impact volume demand and increase pressure on prices for rival branded medicines, including Nexium, AstraZeneca Plc said on Thursday. Chief Executive David Brennan declined to quantify the impact in a conference call with reporters. "

Lessons learned/Things to ponder Upon:

- Whether it is China, India or anyone else, Supply Chain Excellence / quality and Good Manuafacturing Practices will become even more critical and in more focus than ever before

- I surely believed that Pharma companies did not engage in "off-the-label" sales strategies too much. A check (fine) of more than a billion dollars proves otherwise. Hopefully, my pharma colleagues will take a look at this and stay away from all their sales practices

- Leading generic companies such as Teva, Barr, Sun Pharma and others will only depress the share prices (and the moods of CEOs) of big pharmas.

Top 10 Trends for Pharmaceutical Industry in 2008

With 27 days left in 2007, it is time to look forward to 2008. Based on my recent conversations with pharma executives, VCs and suppliers, the top ten issues or trends in 2008 will be:

1. Outsourcing & Off-shoring to Continue: While outsourcing and off-shoring seem to have taken off in 2007, it will be accelerated even more in 2008. Pharma companies are getting more and more comfortable, experienced and used-to with doing business globally, especially in India and China. Outsourcing companies in both the countries have scaled up significantly and companies like GVK Bio, SAI, Advinus, WuXi, Hikal and others have received significant private equity money as well. Look out for even more outsourcing and off-shoring deals in these two countries across the value chain, including but not limited to: drug discovery, clinical trials, data management, manufacturing of APIs and formulations (late stage). I.e.: Sanofi-Aventis opens R&D centre in Goa, India. “Sanofi-Aventis has opened its largest Asian and first Indian pharmaceutical development centre in Goa, with an investment of Rs. 100 crore (almost $25 million)...This is the group’s single largest investment in India, as part of its strategy to expand its presence and accelerate growth both in India and Asia, a note from the company said. The centre is operational with around 50 employees, a company official told Business Line, indicating that the number could increase. The centre will be an Asian hub for analytical and pharmaceutical formulation development, with the capacity to develop 12 pharmaceutical compounds per year. No further details were given.”
2. Global Licensing: Licensing is not a new phenomenon in our industry, however, licensing from companies in India and other emerging countries is relatively a new business practice. Look for more deals where pharma and biotech companies will partner with companies like Glenmark, Nicholas Piramal and others.
3. Layoffs and Lean Operations: Pfizer, J&J, BMS, Wyeth and many others have been announcing their plans for layoffs and lean operations. This trend will definitely continue will global pharma companies. However, Chinese and Indian pharma and contract research and manufacturing services companies will continue to ramp up and hire additional people. 
4. Growing importance and dominance of generic companies: Watch for Barr, Ranbaxy, Mylan, Teva, Actavis, Dr. Reddy’s Labs to become even more prominent, important and dominant as they keep launching more and more generics and also keep moving up the value chain by focusing on their NCEs.
5. Challenging times for Wholesalers: Wholesalers and distributors will face more hurdles in 2008 as they face more problems with their business models. More and more retailers, hospitals and PBMs (customers) and manufacturers (suppliers) are trying to figure out the true role (and value) of wholesalers and how to compensate them. Wall Street Analysts have not been kind to this sector and it is not likely to change anytime soon.
6. M&A / Consolidation: It is likely that 2008 will see even more M&A and consolidation. However, the major twist will be that a great deal of buyers will come from outside the US.
7. Eliminating Hospital Infections: Companies like Cardinal Health are already putting a lot of energy, resources and focus on the prevention and treatment of hospital infections. In 2008, in addition to treatment, pharma industry will work more and more towards preventing infections and creating solutions that treat infections in an expedited manner. This is a huge shift when the onus was solely on hospital staff.
8. Prevention of Medical errors: In previous posts, I have talked about the recent problems related to medical errors. Medical errors are almost as big, if not bigger, than hospital infections. Pharma companies are already working on informatics and other IT tools to prevent medical errors in partnerships with healthcare institutions.
9. Emergence of new global players: Pay attention to companies like Actavis, Ranbaxy, Nicholas Piramal, Dr. Reddy’s, Zydus, Wuxi Pharmatech to take lead in a wide range of M&A activities. More and more of these companies have the dreams to become leading pharma companies not just in their own countries or regions but also globally.
10. Additional pressure, limelight and scrutiny of US Pharma industry due to elections: Whether it is Hillary Clinton, Obama, Rudy or Mitt Romney….look for more rhetoric, more pressure and more limelight on the US pharma industry’s practices. Thanks to the upcoming elections, pharma industry will be sure to become a punching bag for many politicians and Presidential candidates.