A pharma bailout?

March 1, 2009

Pharmaceutical Representative

Much has been written of late about which industries deserve government help and whether it could stimulate the economy. We've already bailed out banking and auto industries and more are lining up. So, how does pharma stack up?

Much has been written of late about which industries deserve government help and whether it could stimulate the economy. We've already bailed out banking and auto industries and more are lining up. So, how does pharma stack up?

Reid Paul

Pharmaceutical companies certainly can make the argument that they are suffering. I hardly need to point out that for the past few years, pharma companies have been shedding jobs in huge chunks—especially reps. If only in terms of job protectionism, a bailout might make sense, right?

Just one sign of how the landscape has shifted came from the Stockholm Network, a European network of think-tanks known for its free-market views. The report asserts that "a lack of government investment" was hindering pharma in the United Kingdom and urges the government to bring the level of investment "in line with that of other established economies."

And they aren't the only one's calling for government intervention. Representatives of biotech firms visited Congress last December to ask for a temporary tax break, which would allow some companies to get cash from the government. Unprofitable biotechs have been hard hit by frozen credit markets and are concerned that research will starve without a cash infusion.

Most analysts insist that despite the layoffs, the industry's "fundamentals are strong" (heard that one before?). And, while it's hard to be objective when it's your job on the line, the basic equation is not going to change: pharma makes drugs and as long as people get sick they will need pharmaceuticals. Even in a recession that isn't going to change.

Of course, there is one type of bailout we can expect sooner or later. Expanded healthcare coverage could add up to 50 million more patients with drug coverage. Some are already suggesting that healthcare reform could have a stimulative effect. What is less clear is whether it's the type of help pharma wants.

Reid Paul

Editor-in-Chief

rpaul@advanstar.com

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