The $500 billion drug company dynasty finally appears ready
to fall as the industry struggles to save face among continual
reports of serious problems with well-known drugs. Meanwhile,
drug research and development is on the decline and the industry
is struggling to find new medicines.
Pfizer, AstraZeneca and Eli Lilly,
all major players in the drug company market, each disclosed
major problems with popular medications -- all in the span
of about half a day:
- Pfizer announced an increased risk of heart problems in
people taking the painkiller Celebrex (one of the world's
best-selling medicines).
- AstraZeneca reported that lung cancer drug Iressa, which
was approved in the United States in 2003, did not prolong
lives in a trial.
- Eli Lilly warned that Strattera, an ADHD drug, might cause
severe liver injury.
The news pushed stocks down, causing the market value of
the three companies to decline by more than $30 billion.
But it's not just these three companies that need to worry
-- all major drug companies are at risk of similar declines.
Although spending on drug development has nearly doubled to
about $33 billion, new drugs approved by the Food and Drug
Administration (FDA) have declined significantly from 53 in
1996 to 21 in 2003.
The major threat to companies (aside from growing negative
publicity due to dangerous side effects)? If fewer drugs are
produced, investors will want to cut the companies' research
spending. Meanwhile, governments may force companies to cut
drug prices to support programs like Medicare and Medicaid.
The result? A less profitable industry that produces fewer
new drugs.
The drug companies are not going
out without a fight, however. In an attempt to save their
falling dynasty, drug makers have been:
- Pursuing aggressive ad campaigns to doctors and patients
- Increasing drug prices
- Attempting to extend patents on existing medications
The efforts have been a mixed blessing for the industry.
While they've protected drug company profits in the meantime,
they've also irritated the industry's target market -- both
consumers and governments alike -- and have even caused a
political reaction in the United States and Europe.
SOURCE:
New
York Times
Reference
Source 114
January 10, 2005
