A matter of perspective

May 1, 2008
Bibiana Campos-Seijo
Pharmaceutical Technology Europe

Volume 20, Issue 5

One of the headlines before going to print was 'Pfizer earnings suffer as patent expiries cause damage'. This US pharma giant has reported a net income decline of 18% for the first quarter, despite the positive impact of the favourable currency rates.

One of the headlines before going to print was 'Pfizer earnings suffer as patent expiries cause damage'. This US pharma giant has reported a net income decline of 18% for the first quarter, despite the positive impact of the favourable currency rates.

Bibiana Campos-Seijo

Although some of its products continue to generate handsome profits, Pfizer is planning to do what one would expect it to: cut costs. As patents continue to expire for other big companies, this is a scenario we can expect to encounter again in the coming months.

It's bad news for some workers of the sector, as the company's immediate plans involve the sale or closure of 13 manufacturing plants and the decommissioning of four R&D facilities. Jobs will be lost. How could this possibly be a positive outcome? Well, I guess it is all a matter of perspective...

It is certainly a positive outcome for a number of CROs and CMOs as the scaling down of big pharma's manufacturing and research capacity is likely to boost their growth. In fact, the big companies are able to 'take the hit' as the opportunity to - outsource, and thus reduce production costs and improve margins, exists. Additionally, the sale of facilities directly benefits other pharmaceutical companies wishing to expand and grow, which, in turn, means more jobs.

And from the perspective of consumers on a global scale? Another positive outcome: prices of medicines are likely to fall, with patients favouring the less expensive generics. Interestingly, it has been reported that, for the first time in 5 years, insured US consumers have paid less on average for their prescription drugs. In summary, as consumers, we benefit from lower prices, greater availability and, in the long term, better treatment.

So let's be positive: while patent expiries mean pharma will cut costs (and jobs!), consumers are likely to benefit from better, cheaper treatments. And for us? Well, jobs will come and go as the pharmaceutical companies change, develop and adapt, but the industry is healthy and we are confident that the balance will be restored.

Dr Bibiana Campos-Seijo

bcampos.seijo@advanstar.com