HOFSTAETTER: There's some truth to that. But if you accept that a biotech company should get $100 million for a product, then we could only put about five drugs into development a year, where we put 15 in now. We couldn't afford $100 million for an idea.

FRANK: Maybe it's better to put five better ones in rather than 10 lousy ones.

BREITSTEIN: Can pharma afford to finance its future innovation?

DE ROSEN: I don't think our challenge is the financing of R&D. There will always be money available to fund that.

HOFSTAETTER: What we forget to mention here is that the profitability of the pharmaceutical industry is still better than many other industries.

FARINO: But the industry is going to remain under great pressure to deliver innovation in a cost-effective way. Unless there is a much stronger focus on prevention and cure rather than palliative treatment, by 2020, the total cost of US healthcare could be $10 trillion. With real information about outcomes and cost effectiveness, I think that the industry can tip the pricing debate.

RYAN: At the end of the day, there is a market—a demand and a return for innovation—that hasn't changed. Companies must innovate and reinvent themselves, because what they sell today will eventually be generic. Pfizer and Merck are both large-cap pharma companies, but today they have very different outlooks.

CLINTON: So what's the way forward?

RYAN: Merck has said, "We took zero risks externally and extraordinary risks internally." But that's all changing. Companies have to become portfolio managers because the best internal opportunity is irrelevant. What matters is that they pursue the best programs in aggregate.

The question seems to be moving away from, can Pfizer spend $1 billion to develop a new drug—because the answer is yes—to should Pfizer spend $1 billion on a new drug? We have been burned with torcetrapib. They now have a factor Xa in development. It is a novel area of science. It seems as if they went out there and said, "We're going to spend this money. Let's find out who has the best program in the area, and where we have the greatest potential for success."

FARINO: It's difficult for any one company to take something into the market by itself. Partnership, in order to drive innovation, is going to become one of the most important factors in the success of any company.