Adam Smith

Science and communications officer, ANH-Intl

A well-respected industry report written by an experienced team of business insiders confirms that the pharmaceutical industry has basically run out of ideas. So for Big PharmaTech, it’s bye-bye innovation and hello mergers, investment in emerging markets, buy-outs of companies making generic drugs and renewed focus on the ‘over-the-counter’ market – including dietary supplements and herbal medicines.

Big PharmaTech: falling off a ‘patent cliff'

The report, written by mergers and acquisitions specialists IMAP, Inc., identifies three main problem areas affecting Big PharmaTech from 2011 onward:

 

 

  • The ‘patent cliff’, whereby the patent protection of highly lucrative drugs runs out and competition is opened to companies producing much cheaper, unbranded generic drugs. One of these is the world’s biggest-selling drug, Pfizer’s statin Lipitor, which went off-patent in November 2011

 

 

  • Research and development (R&D) pipelines that have nearly run dry: “The long-term average is merely one new remedy drug a year per company”, says the IMAP report

 

 

  • An ongoing worldwide recession/depression that is forcing governments to rein in their healthcare spending, particularly on pharmaceuticals

 

 

Pharma’s pharmerging strategy

Of course, Big PharmaTech isn’t going to take these massive losses of revenue lying down. Both pharma and biotech companies have been frantically buying out and merging with other companies, with activity peaking in 2009 in a year that saw $161.2 billion USD of deals, compared with $51.6 USD in 2010. The IMAP report confirms in black and white our recent story that Big Pharma is concentrating on increasing its presence in emerging markets, particularly the so-called BRICS countries. Three of the top five countries for mergers and acquisitions activity were the BRICS countries India (48 transactions), Brazil (13 transactions) and China (105 transactions).

To put this in perspective, the IMAP report predicted that global pharmaceutical sales would grow by 5–7% in 2011, despite the problems listed above, up from 4–5% in 2010. However, in the 17 ‘pharmerging’ markets, sales growth was forecast at 15–17% in 2011. 

Addressing unproductive R&D pipelines appears to be more of a challenge. Apparently, “Pharma companies will need a higher degree of medical differentiation to successfully introduce new products into the market”. This sounds suspiciously like ‘inventing new medical conditions that we can medicate’ to us. 

Biosimilars and muscling in on natural healthcare

Big PharmaTech is also looking to new areas in order to protect its income streams. One of these is biosimilars, which, like generics, are products that have come off-patent. However, generics are small molecules whereas biosimilars are, “Complex high-molecular-weight three-dimensional structures”, such as insulin and human growth hormone.

Of more interest to us, and an area about which the IMAP report is oddly coy, is what it terms, “Diversification into new areas such as consumer health” – in other words, the vitamin and mineral supplements and herbal medicines so beloved of natural health advocates. We have seen moves in this direction before, where increasingly tough regulatory environments for vitamins and minerals combine with negative media portrayals to put the public off buying high-street products – while Big PharmaTech is developing its own, prescription-only, highly expensive versions!

In a highly revealing phrase, the IMAP report alludes to this process: “The greater cooperation between the regulators in different markets will ultimately be advantageous for the pharma industry as a whole...”. So in the European Union (EU), we see herbal medicines threatened by the Traditional Herbal Medicinal Products Directive, therapeutic dietary supplements facing extinction thanks to the Food Supplements Directive and natural medicine practitioners being squeezed by a combination of these, EU medicinal law and the Nutrition and Health Claims Regulation – with the USA following suit.

All an enormous gift to Big PharmaTech, of course. 

Call to action

 

 

  • Read the IMAP report and understand why Big PharmaTech is in trouble, so you can be informed of its future strategies

 

 

  • Get involved with our campaigns (links at the foot of the page) to protect natural healthcare and prevent the pharma companies from taking over the sector

 

 

  • Spread the word about natural healthcare: it works, it’s cheap, it doesn’t come with pharmaceutical side effects and it’s in tune with your body, your genes and the environment! 

 

 

 

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