More Roadblocks Ahead For Pharma in 2005?

Published: 11 Feb 2005

By Patrick Rajan, Team Leader, Pharmaceuticals & Biotechology

The pharmaceutical industry was traumatized in 2004 when Merck had to withdraw its $2.5 billion COX-2 inhibitor Vioxx from the market due to potentially lethal side effects.  Pharmaceutical companies are already struggling to deal with increasing generic competition and stringent approval standards in an effective manner.  Will the aftereffects of a disastrous 2004 hamper industry growth in the years to come?

Merck was not the only company to suffer severe public relations damage.  Studies have linked Pfizer's Cox-2 inhibitors (Celebrex and Bextra) to heart problems. Eli Lilly warned of potential liver problems with its ADHD drug Strattera. AstraZeneca disclosed that Iressa, a lung cancer treatment, did not extend patients' lives, and that Crestor, a cholesterol-lowering drug it hopes would seriously challenge Lipitor and become a blockbuster, fell under scrutiny for potential side effects.  Many major companies were jolted by revelations that they had hidden negative clinical trial data from studies examining antidepressant usage in children.  In addition, rising anger over the price of prescription drugs and increasing outcries for legal importation of drugs from Canada looks to further reduce revenue growth.
The major factor that will likely dictate growth for the industry in the years to come is the FDA itself.  As trust between manufacturers and patients becomes more fractured, proof that the standards for drug approvals are going to be heightened came in late October when the FDA said it wouldn't approve Merck’s next-generation COX-2 inhibitor Arcoxia until it received additional safety and efficacy data.  The FDA may legislate drug companies' aggressive direct-to-consumer advertising more strictly. The FDA has already forced Pfizer to place stronger warning labels on several drugs, including Bextra.  More stringent restrictions on the wording of DTC ads and labeling would severely limit the marketing efforts of drug companies.

As generics continue to cut into profits and patents on major drugs continue to expire, innovation holds the key to success.  There are several potential blockbusters expected to be launched at some point during 2005 that could revolutionize the way many disease states are treated and drive revenue growth for the companies behind them.  Acomplia from Sanofi-Aventis is the first in a class of cannabinoid type 1 receptor antagonists that could offer a way for obese patients to lose weight and reduce their risk for developing cardiovascular disease, metabolic syndrome, high cholesterol, and type 2 diabetes.  Sanofi-Aventis believes that Acomplia could not only combat obesity and smoking but also even prevent clogged arteries and heart disease.  Abatacept from Bristol-Myers Squibb is a novel approach to treat rheumatoid arthritis with a mechanism of action that targets the central cause of the inflammation and joint destruction.  Macugen from Pfizer/Eyetech Pharmaceuticals is expected to be the first therapeutic approved for all subtypes of wet age-related macular degeneration.   

Still, all signs point to single-digit growth for the U.S. pharmaceutical industry in 2005, something that hasn’t happened since 1994.  In the long term, as the effects of the Medicare prescription drug benefit on pricing take hold, more blockbusters go off patent and the FDA places more emphasis on safety data, pharmaceutical companies must strive for pipeline excellence to maintain high levels of profitability as they operate in a increasingly treacherous competitive environment.

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