While drug makers around the world are lamenting the death of their patent rights on many blockbusters, there is a certain tribe smiling about it – the Indian generic tribe by Steven Philip Warner
A year back, when John Lechleiter took charge as the CEO of the $21.8 billion-a-year earning US pharma giant Eli Lilly, he decided to send his top executives a gift. It was a digital clock, which counted backwards, second by second. The clock was programmed to stop ticking precisely 48,384,000 seconds later. The deadline – October 23, 2011, the day when Eli Lilly’s top-selling (which raked-in $4.9 billion in 2009) schizophrenia pill Zyprexa would go off-patent, setting-off the alarm for generic drug companies to work double-time. This is however, not the only heartache in store for Lechleiter. Besides two more blockbusters losing their exclusivity rights by 2016 (its second-best selling Cymbalta expires 2013 and its third-best Alimta in 2016 – two drugs that make for another $4.8 billion-a-year), two of its most promising compounds failed the final clinical trials last year. Result: Lilly’s stock could not withstand the shock that the company had no new compound ready to hit the global market, while standing to lose close to $10 billion (of its $21.8 billion revenues FY2009) by 2016. It became the worst performer amongst the eleven S&P pharma stocks, and fell by 11% in just the year 2009. This is however just the beginning of the landslide for Eli Lilly, and much remains to be seen. As for the clock, it has started ticking backwards, and it’s the generic challengers that are waiting for the time, to make most of the misery of the once-proud patent holders, Lilly being just an instance.
When shareholders don’t like you, they let you go sans remorse. Much as this sounds a “generic” take on shareholder activism, it is true. Jean-Paul Garnier was voted out despite trying hard for seven-and-a-half years to revive the GlaxoSmithKline stock. Busy ensuring delivery of drugs at cost and selling 90% of its vaccines at not-for-profit prices in developing economies, it lost focus on new drug discovery. During his tenure, the GSK stock had fallen by 41%. He got the boot in May 2008. His successor Andrew Witty hasn’t made amends yet. Since February 2009, the company has enforced price cuts on its patented versions, in more than 50 countries, while winning just one patent (on a vaccine for H1N1 influenza). Witty is dreading the day when the second-highest selling drug in history, the $7.8 billion-a-year earning Advair, expires on April 1, 2011. Pfizer, the biggest pharma giant is no exception. CEO Henry McKinnell was booed-out in June 2006, following a stagnant stock price. His successor Jeff Kindler hasn’t been an exception. Under him, Pfizer’s stock has touched the sub-$18 level for the second time in over a decade and its bottomlines for 2009 have shown a drop of 57% as compared to pre-Kindler days. Worse, despite losing patents on 14 big drugs by 2014 (representing 70% of its annual revenue for 2009), its new launches have simply been shadows. Of the biggest setbacks will be the losses of Lipitor’s patent (the largest-selling drug ever) in 2011, and that of Viagra in 2012 and Celebrex in 2013 – add the losses from these two, and you would have Pfizer’s revenues being reduced by an alarming $13.74 billion (as per Evaluate Pharma, loss of revenues, post-patent expiry, is estimated at 85%). “Pfizer has a number of downward revenue revisions. You have to believe board members are scratching their heads,” says David S. Moskowitz, Analyst at Friedman, Billings, Ramsey Group Inc. The company has 148 compounds in the early developmental stages, but hopes of producing another blockbuster drug remains a fantasy.
A year back, when John Lechleiter took charge as the CEO of the $21.8 billion-a-year earning US pharma giant Eli Lilly, he decided to send his top executives a gift. It was a digital clock, which counted backwards, second by second. The clock was programmed to stop ticking precisely 48,384,000 seconds later. The deadline – October 23, 2011, the day when Eli Lilly’s top-selling (which raked-in $4.9 billion in 2009) schizophrenia pill Zyprexa would go off-patent, setting-off the alarm for generic drug companies to work double-time. This is however, not the only heartache in store for Lechleiter. Besides two more blockbusters losing their exclusivity rights by 2016 (its second-best selling Cymbalta expires 2013 and its third-best Alimta in 2016 – two drugs that make for another $4.8 billion-a-year), two of its most promising compounds failed the final clinical trials last year. Result: Lilly’s stock could not withstand the shock that the company had no new compound ready to hit the global market, while standing to lose close to $10 billion (of its $21.8 billion revenues FY2009) by 2016. It became the worst performer amongst the eleven S&P pharma stocks, and fell by 11% in just the year 2009. This is however just the beginning of the landslide for Eli Lilly, and much remains to be seen. As for the clock, it has started ticking backwards, and it’s the generic challengers that are waiting for the time, to make most of the misery of the once-proud patent holders, Lilly being just an instance.
When shareholders don’t like you, they let you go sans remorse. Much as this sounds a “generic” take on shareholder activism, it is true. Jean-Paul Garnier was voted out despite trying hard for seven-and-a-half years to revive the GlaxoSmithKline stock. Busy ensuring delivery of drugs at cost and selling 90% of its vaccines at not-for-profit prices in developing economies, it lost focus on new drug discovery. During his tenure, the GSK stock had fallen by 41%. He got the boot in May 2008. His successor Andrew Witty hasn’t made amends yet. Since February 2009, the company has enforced price cuts on its patented versions, in more than 50 countries, while winning just one patent (on a vaccine for H1N1 influenza). Witty is dreading the day when the second-highest selling drug in history, the $7.8 billion-a-year earning Advair, expires on April 1, 2011. Pfizer, the biggest pharma giant is no exception. CEO Henry McKinnell was booed-out in June 2006, following a stagnant stock price. His successor Jeff Kindler hasn’t been an exception. Under him, Pfizer’s stock has touched the sub-$18 level for the second time in over a decade and its bottomlines for 2009 have shown a drop of 57% as compared to pre-Kindler days. Worse, despite losing patents on 14 big drugs by 2014 (representing 70% of its annual revenue for 2009), its new launches have simply been shadows. Of the biggest setbacks will be the losses of Lipitor’s patent (the largest-selling drug ever) in 2011, and that of Viagra in 2012 and Celebrex in 2013 – add the losses from these two, and you would have Pfizer’s revenues being reduced by an alarming $13.74 billion (as per Evaluate Pharma, loss of revenues, post-patent expiry, is estimated at 85%). “Pfizer has a number of downward revenue revisions. You have to believe board members are scratching their heads,” says David S. Moskowitz, Analyst at Friedman, Billings, Ramsey Group Inc. The company has 148 compounds in the early developmental stages, but hopes of producing another blockbuster drug remains a fantasy.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
“We will change your outlook” - The Sunday Indian on B-SCHOOL RANKING SCAMSTERS EXPOSED! A must read...
The Sunday Indian:-
B-SCHOOL RANKING SCAMSTERS EXPOSED!
For Exclusive Footage by Sunday Indian Click Here
Outlook Magazine's B School Ranking Scam Exposed
Business Standard Exposes the Outlook Magazine Money Editor
Don't trust the Indian Media!
IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN
No comments:
Post a Comment