How Change Plays Out

Published on: 
BioPharm International, BioPharm International-02-01-2009, Volume 22, Issue 2
Pages: 40–45

How change plays out will depend not only on the new Whitehouse, but on pharma leaders' ability to adapt to changing times.

America's new president has promised change on many fronts, including healthcare. Some of his planned measures will benefit the pharmaceutical industry. Others, however, will present challenges.

Laura Bush

One refreshing change is that we will once again have a Whitehouse that values science. For pharma, the most immediate benefit of this change will be lifting the restrictions on embryonic stem cell research. The new administration also believes in funding scientific research, though in today's recession, it is hard to imagine where new research funds will come from.


Expanding healthcare coverage is also a priority for the new administration. As an advocate for universal healthcare (see my editorial from October) I welcome the new president's desire to reform the system, though I believe his plans are not comprehensive enough. Only by requiring that everyone be insured—particularly the young and healthy—will the system work. We also need coverage that is not linked to employment. In the current recession, many Americans will lose their jobs and their healthcare coverage at the same time. That is unconscionable.

How expanded coverage will affect drug sales is difficult to predict, but Obama does have plans to reduce drug costs, through increased use of generics, allowing drug reimportation, and eliminating restrictions that prevent Medicare from negotiating drug prices. All of these measures pose threats to pharma profits. These threats are far from new, however.

Faced with major losses from drug safety problems, looming patent expirations, and generics competition, traditional pharma has increasingly turned to higher-margin biopharmaceuticals. But biologics are not a panacea for pharma's ailments. Safety concerns, for example, can affect any treatment; just think of the label changes to erythropoietin last year. And even though biologics are a growing segment of the overall market, there were still only 13 new biologics approved in the US last year, 10 of which were vaccines (including six flu vaccines), compared to 21 small-molecule NMEs. And the biggest threat to biotech profits, of course, is follow-ons. Europe has demonstrated that it is possible to have a robust system for approving biosimilars, and follow-on biologics legislation in the US is going to come sooner rather than later. Wise companies are preparing for that day. Merck's recent announcement of the formation of a biosimilars division is a sign of this change, although their choice was likely precipitated by a need to recoup their investment in GlycoFi.

Meanwhile, the current lack of venture capital threatens the survival of small biotechs, which have become the lifeblood of Big Pharma discovery. Surely, some of these companies, and the drugs they are developing, will be saved from doom by being acquired at bargain-basement prices. But in today's tight credit market, even Big Pharma's access to credit is not a given.

Ultimately, the success of the industry will depend on its ability to devise new strategies for a new world. This will require thoughtful long-term plans and perhaps some bold moves. As we went to press, one big move was heating up: a Pfizer takeover of Wyeth. Such a megameger doesn't strike me as bold, however; it sounds like more of the same. And given the mixed results of past megamergers, it is far from a guarantee of future profits.

This industry is full of smart, innovative people, so I am optimistic that it will survive. In what form, however, remains to be seen. Ultimately, how change plays out will depend not only on the moves of a new Whitehouse, but on pharma leaders' ability to adapt to changing times.

Laura Bush is the editor in chief of BioPharm International,