Pharmaceutical companies can no longer take strong growth for granted, and CEOs and shareholders are lowering their expectations about future performance. The industry’s global sales growth likely will be limited to 1.3% until 2015, according to Joe Dixon, a spokesperson for Datamonitor. Compare this anemic figure to the 7.1% growth rate that manufacturers enjoyed from 2003 to 2009, and you’ll see little reason for joy in drugville.
The problem of slowing growth has been compounded by the difficulty in developing new branded products, according to a Datamonitor analyst. As more drugs lose patent protection, companies’ profits are eaten away by competing generic medicines, and meager pipelines have not been able to compensate for the loss in revenue so far.
In apparent despair of finding worthwhile candidates, several companies have reduced spending on research and development. Other companies have laid off research scientists. The Wall Street Journal reports that Elan cut roughly 65 research jobs at its San Francisco site. The fact that research has borne so little fruit likely is contributing to drugmakers’ decisions to cut staff and spending, although I’m not sure that the approach is a good one.
Enter the US government, a bugbear that industry often decries for imposing burdensome regulations and impeding innovation. To help find promising drug candidates and to demonstrate their potential to the industry, the National Institutes of Health (NIH) plans to found a National Center for Advancing Translational Sciences (NCATS). This new center will gather research from various institutes under one roof, use robotic screeners to identify promising chemicals, and conduct animal and human testing to confirm that the drugs are safe and efficacious.
“I am a little frustrated to see how many of the discoveries that do look as though they have therapeutic implications are waiting for the pharmaceutical industry to follow through with them,” Francis S. Collins, director of NIH, told The New York Times. NCATS will not compete with the private sector, but rather do some of its legwork for it.
I am glad that NIH is putting time, effort, and money into helping discover and develop the new drugs that patients need. Now that the low-hanging fruit has been picked, every extra effort could help bring essential therapies to the market. Pharmaceutical companies should be grateful for the assistance that NIH is trying to provide. It bears mentioning that this is not the first government effort to aid pharmaceutical research, and that companies routinely get other help, such as tax breaks, from the government. A combination of public and private efforts could well help keep the industry strong, and keep patients healthy.