Forecast 2007: At Sea - Pharmaceutical Executive


Forecast 2007: At Sea

Pharmaceutical Executive

And however adversarial their current arrangements, health plans, doctors, and companies will increasingly find common cause in developing and testing drugs. The info that plans have about patient genotypes, for instance, can help pharma preselect patients for targeted treatments of the Critical Path type. And speaking of obsolete models, Peter Pitts says that the double-blind, placebo-controlled (and slow, and expensive, and...) clinical trial is on its last legs. "As gene testing becomes routine in the next decade, we will be able to define what is the right drug for the right patient at the right time."


In times of crisis, it's harder than ever to take the long view. The healing arts may be as old as humankind, but the business of pharma is still in its infancy. "The bottom line is, the drug industry hasn't even scratched the surface of what chemicals can do to help people," says Albert Wertheimer. "We still only control infections and take care of symptoms. But over the next generation, we'll see the discovery of more and more small molecules and synthetic chemicals that actually cure diseases." High hopes for the future are in order.

Less certain is whether the great drug firms that tower over the industry today will pave the way to these awesome advances. The failure of character and competence at the top of corporate America in recent years has not been entirely absent from pharma. Merck, BMS, and Pfizer have all been damaged by CEOs who departed under a cloud. Given the immense challenges the industry faces, it would be less than shocking to see more heads roll in 2007.

For years, with Wall Street breathing down their necks, CEOs tended to make decisions based on the next quarter's growth. More than a few mergers and acquisitions were short-term tactical solutions that may have been at odds with a company's long-term goals.

"Pharma was punished—harshly—by Wall Street for all the negative news about safety and pricing," says Peter Young. "But the stock market will be treating the industry better now that the industry is behaving better." That may give CEOs like Pfizer's Jeffrey Kindler the boost he needs to get his R&D house in order.

But there may be a deeper problem. "The real question for pharma is, How are you going to grow? Not, How are you going to make money?" Bill Trombetta says. "As companies are forced to come up with more and more winning drugs with fewer resources and a tougher market, they have to focus on where their true internal growth is."

Focusing on the internal growth of an operating model that is no longer self-sustaining takes more than an annual series of new acquisitions, no matter how smart. "Big companies have to be able to embrace change, and change can be painful," Arjun Bedi says. "It's not a question of which strategies will work—people understand that. It's getting that into the hearts and minds of everyone in the company. And that takes a bold, courageous leader."

Trombetta agrees. "A generation of scientists and MBAs is what got pharma here, so maybe it's time for an outsider," he says. "Someone who is going to stop noodling around with the blockbuster model and start breaking the rules."


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