Pharma Shuffles the Deck and Plays Consolidation Hand
Over
in pharma land, jobs have been evaporating for a few years, most
notably in the marketing area. In 2007 there were about 102,000 sales
reps, says Reid Paul, editor of Pharmaceutical Representative magazine.
Although "it's difficult to know the exact number," he believes that
since then "a good 25 percent" have been laid off, and the sales rep
work force could be as low as 70,000.
Regarding trends, layoffs will
continue. Contributing factors vary - from the unpredictable recession
and healthcare reforms, to the new mega-merger trend embraced by
companies seeking to survive, even thrive, in this shifting-sand
environment. Firms of all sizes are rocked by escalating drug
developments costs, their patented drugs going generic, stingy credit
markets, and/or government mandates seen as too intrusive.
Consider
this year's merger trifecta: In January, industry king Pfizer said it
would pay $68 billion to buy Wyeth, marketer of two of blockbuster
drugs: Enbrel (treats arthritis) and Prevnar (a vaccine). The move
gives Pfizer a large stake in vaccine and biologics technologies and
allows it to maintain its top spot. In early March, Merck announced it
would purchase Schering-Plough for $41.1 billion; their combined sales
last year totaled $46.9 billion. Then on March 26, Swiss-based Roche
completed its $46.8 billion acquisition of San Franciso's biotech
giant, Genentech. The deal provides Roche with formidable cancer drugs
Herceptin and Avastin, among other exciting drugs, and world-renowned
research scientists.
Paul says the consolidations will create
fewer and bigger companies that will "increasingly focus on more
targeted drugs that are less `blockbuster,' and instead focus on very
narrow subsets of people." The trend of buying up smaller biotechs with
innovative research to revitalize their drug pipelines should also
continue.
In the past few years, pharma got slapped by overly
worried legislators in about a dozen states (more states are
considering the same). They imposed rules on how companies report
and/or conduct their marketing activities in an attempt to lower
healthcare costs and/or curb perceived influence peddling by sales
reps. Such bans or laws will make it much harder for companies to get
in front of physicians and educate them about important drug
information they need to know to help them provide the best possible
patient care. Nevertheless, in response, the industry voluntarily
curtailed some of its sales activity to mitigate further regulatory
activity.
U.S. Medical Device Forecast
An
insightful market trend article - "A Look Into the Future of the U.S.
Medical Device Market" - provides a comprehensive overview at an
industry estimated to be worth more than $100 billion. Published
January 2009 by Medical Device & Diagnostic Industry magazine, the
article reveals the industry has consistently grown "at mid-to-high
single-digit rates" for companies selling equipment (55 percent) and
supplies.
The report also analyzes "forces currently at play
that will continue in the same direction through 2015," and gives
several scenarios on how they may affect cardiovascular, orthopedics,
and neurological device segments, in particular. One conclusion, say
the authors: "Cardiovascular and orthopedics are likely to continue to
be the largest, most vibrant segments of this market, although both
confront immediate challenges."
Promising Bioscience Areas to Watch
There
are a multitude of exciting (and a few contentious) biosciences trends
and activities under way destined to impact society in the
not-too-distant future.
First, the push is on to intensify
efforts to replace fossil fuels with combustible advanced biofuels made
of renewable plant biomass or municipal wastes. A February 2009 study
released by Bio Economic Research Associates states that a solid
increase in biofuels production could create thousands of new jobs,
stimulate the American economy, improve energy security, and create new
investment opportunities. U.S. Economic Impact of Advanced Biofuels
Production: Perspectives to 2030 states this green industry can create
190,000 direct jobs and 807,000 jobs overall (considering a multiplier
effect) by 2022 and contribute $148.7 billion all told to American
economic growth.
Additionally, according to BIO, over 30 existing and planned cellulosic biorefineries (see http://biofuelsandclimate.wordpress.com/about)
are ready to start advanced biofuels production within the next few
years. However, biofuels are raising many legitimate
social/environmental questions. Concerns abound about the impact of
using land to grow "fuel," not food crops; the quantity (and type) of
land cleared for cultivation; increased fertilizer usage (increases
nitrous oxide, a heat-trapping gas); and water scarcity issues. The
ideal is to find responsible methods of creating fossil fuel
alternatives that yield significant amounts of increased energy, i.e.,
more than the energy used to produce them.
Then, on March 9,
2009, thunderbolts zapped on both sides of the "lightning rod" stem
cell research issue. That's when President Obama signed an order that
allows federal funding of embryonic stem cell research. (Under former
President Bush, government funds could only be spent on researching 36
existing embryonic stem cells lines. The private sector continues to
remain free to do embryonic research with its own monies.) Obama said
this order rejects the "false choice" between science and morality. Two
days later, however, he signed the Omnibus Bill, which includes the
Dickey-Wicker amendment. It forbids the federal government from funding
this research.
Although adult stem cell research already has
already treated scores of medical conditions and diseases - e.g.,
spinal cord injury, heart tissue regeneration, corneal reconstruction,
autoimmune disorders, Parkinson's disease, and some cancers - millions
of Americans believe it's reprehensible to ask taxpayers to destroy
human life, no matter how small or young (days old), to acquire the
cells needed for futher research. This controversy will continue to
play out.
Thus, despite the fact that some doom-and-gloom news
for biosciences and related industries is a bit frightening - and more
surprises could be in store - there are strong signs of hope, health,
and vitality for this sector. Big plans, significant research, and
major investments by governments/private funders are still going on and
will continue to improve our quality of life.
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