I wrote in the December 2005 issue of Streetalk that no matter who won the election between George Bush and John Kerry, the
result would have been good news to the biopharm industry - if for different reasons. I said that with President Bush back
in office for a second term, industry red tape would be diminished and the life sciences sector would shift into higher gear.
But that was before the Vioxx scare. Now you can be sure Uncle Sam will be scrutinizing drug companies very closely after
widespread media coverage — much of it negative — rattled the biopharm industry. That's what happens when a big pharma company
like Merck takes a $28-billion market capitalization hit from the Vioxx fiasco, and when the Bloomberg US Pharmaceutical Index,
which includes Merck and 13 other giant pharma companies, is down nine percent in January 2005 over a one-year period. More
importantly, it's what happens when American consumers are anxious over the government's ability to protect them from potentially
damaging pharmaceutical products. They want Bush to act quickly and protect them.
Year-End Review: Burrill Life Sciences Indices (All Burrill Indices):
That's bad news for Merck, in particular, and the pharma industry, in general. Why? Because with Merck inundated with Vioxx-related
lawsuits, and Pfizer on deck due to problems with its marquee Cox-2 inhibitors, the glare from the unblinking media spotlight
will take its toll on the industry, even with a friendly face in the White House. George Bush is a canny politician — nowhere
near as politically tone deaf as his father — and will no doubt order the US Food & Drug Administration to get tough with
Reforms will surely follow, with some decidedly uncozy ramifications for biopharm companies. How would the industry react
to an independent public agency springing up to review and regulate approved drugs? Not very well, I'd say. Drug companies
might want to appease the Bush administration by rolling out their own watchdog commissions comprised of industry heavyweights
to conduct their own due diligence. Traditionally, this route has worked wonders for other industries like Wall Street and
the high technology sector, with its alphabet soup of standards and practices bodies.
GAUGING THE BUSH FACTOR - PART II
What else does a Bush second term mean for the bioscience industry? Is there better news? Let's take a look.
Financially, the Bush re-election was good news, short term, for the biopharm industry. According to the Burrill Biotech Select
Index, biotech stocks increased by five percent in November, surpassing the Dow Jones Industrial Average, which rose four
percent during the same time period. The life sciences industry's market capitalization also spiked upward by the same amount
— five percent — from $356 billion at the end of October 2004 to $373 billion by the end of November.
G. Steven Burrill, CEO of the San Francisco-based Burrill & Company, says the Bush election was a shot in the arm for companies
and investors: "The biotech market took a turn for the better in November with the re-election of George W. Bush, the passage
of California's Stem Cell Research Initiative, and a general market upswing. Once the uncertainty surrounding the election
passed, the market jumped back up with many investors believing that four more years of the Bush administration will prove
advantageous to the markets and to biotech."