I’m on a press trip in Puerto Rico this week, as mentioned earlier, and it’s been sorta tough to get any blogging done. The perfect sunlight tends to, um, make too much glare on the laptop’s screen. Yeah, that’s it.
Anyway, this morning, before heading out to the beach from my most excellent hotel, I trawled through the news and performed my usual morning info-ablutions, courtesy of CaribeNet‘s high-speed network ($14.95/day charged to the room, but it’s a necessary business expense, since the business center downstairs charges $25/HOUR (!) for net access.
During that time, I read Derek Lowe’s recent blog entry (Pfizer’s Shell Game) on the Pfizer/Pharmacia merger. Derek’s blog (In The Pipeline) is a great venue to get an idea of what’s going on in the intersection of drug development, business, and culture. I liked it so much in its previous incarnation (Lagniappe), that I asked Derek to contribute a regular column to my magazine, Contract Pharma. The first time we paid him is when I realized that Derek Lowe is NOT a pseudonym, and that he had no particular interest in the #2 pitcher for the Boston Red Sox.
I appreciated Derek’s entry today, not least because I tried writing a pair of editorials (I’ll post them when I’m back in NJ) in that vein about a year ago, when several major mergers were being floated in Big Pharma. Derek seems to have hit the nail on the head in the fundamental fallacy of Bigger-Pharma-Is-Better-Than-Big-Pharma: throwing more money at R&D doesn’t make your rate of success increase (and it may just slow down drug development).
Every industry goes through phases of major consolidation and, in some respects, Pharma (and Biopharma) has actually gotten to it much more slowly. The FTC and other groups make sure that no company has too large a share of the Pharma industry, forcing companies to sell of drugs in fields where it might otherwise dominate. I don’t have the numbers in front of me to determine the new Pfizer/Pharmacia’s market share (and I’m too lazy to look it up), but I’d bet it’s less than 15%.
What the merger seems to be about, coming so shortly on the heels of Pfizer’s 2000 acquisition of Warner-Lambert, is covering up short-term R&D problems by buying another drug pipeline. In my editorials on the subject, I talked about this concept, and how it just can’t work in the long term. At some point, there’s going to be no-one to acquire with a meaningful pipeline, and the burden of integrating tens of thousands of new employees is going to wreck the organization.
The question I had then, and still have, is this: Does sales-and-marketing mean more to Pfizer than research-and-development? It’s a tricky question, because without new drugs there’d be nothing to sell, but it could easily be argued that Pfizer bought Pharmacia because it was tired of co-marketing Celebrex (and its successors) and wanted to get the total share of the profits (and perhaps maximize them beyond the efforts of the two separate companies).
The fundamental point of Contract Pharma, is this: If you don’t do something very well (that is, as a core competency), pay someone else to do it. Otherwise you’re just wasting resources that can be focused on what you do best. It’s long been stated that what Big Pharma does best is develop drugs, and sell them. I’m just wondering which one’s more important to them.