I concluded my last blog piece on this downbeat note:
So, where are the new meds going to come from? Don't bank on Pharma. They got out of drug development - assuming they were ever in it - at least a decade ago. Hopefully, new players looking to make profits based on innovation will fill the vacuum.
In the meantime, it's as if Pharma doesn't exist. Those meds you are taking right now? Probably generic from generic suppliers. Get used to them - these will be your only choices for quite some time.
An article by NY Times business journalist Lawrence Fisher appearing in the quarterly publication, The Milken Institute Review, provides the lowdown:
In theory, "biotech" is where the innovation is supposed to be coming from. As opposed to Pharma, which is rooted in ancient chemistry, biotech is all about sexy proteins and genes and stuff. These are your go-go companies founded by brainy people using smart-money venture capital. Think Genentech, Amgen, Gilead.
One catch: Take these three companies out of the mix "and the cumulative return on investment over the life of the sector was negative even before the financial markets' collapse."
In hindsight, it's easy to see why. It takes ten years to bring a new drug to market, but the way the game is set up investors need to see returns in five years. We're talking on average a billion-dollar stake in a high-risk crap shoot where nine out of ten compounds in development fail.
Not surprisingly, innovation-rich and cash-strapped biotech turned to innovation-poor and cash-rich Pharma. Unfortunately, the marriage didn't quite work out as planned. As Lawrence Fisher explains:
"Pharma ideally seeks companies with products on the market close to receiving approval. But most biotechs are risk years away from that goal, and those that are closest often come with substantial infrastructure and big employee bases that the majors neither need nor want."
Then, there's the matter of niche vs one-size-fits-all drugs. It's a question I have been asking virtually the entire ten years I have been writing on mental health, and I have yet to receive a satisfactory answer.
We know, for instance, that antidepressants work really well for about one-third of those who take them. But what about the other two-thirds? We need more flavors aimed at different palates. But Pharma is not set up for that. Plain vanilla spells blockbuster, their license to print money.
Biotech is all about the sophisticated niche meds we badly need. But who wants to roll the dice on a high-risk, low return product? Thus, when biotech meets Pharma worlds collide.
The two somehow need to figure out how to work together, most likely with government partnership. Foundation money and NIH grants are keeping the biotechs on a Ramen noodle diet for the time being, but this isn't going to last forever. Meanwhile, Pharma has run out of products, together with its license to print money.
And here we are, stuck with meds based on technologies that were considered new when Eisenhower was President.
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