Monday, March 16, 2009

Big Pharma—Too Big To Fail?

Last month it was Pfizer who climbed into bed with Wyeth, and two weeks ago Merck got so cozy with Schering that the two became one— presumably till death do them part. Now it’s Roche who has taken over Genentech, although by all accounts this was more of a rape than a marriage. We’ve seen this scenario before in the financial setting when banking giant, Citigroup, took over Smith Barney back in those days of ancient history when both firms were actually making good money. We’re now told that Citigroup is too big to fail, so it’s natural to wonder if the newly bloated Pharma giants might not be positioning themselves to also be considered, “too big to fail.”

Following each takeover or merger, the well-orchestrated Pharma PR machines went into high gear, spinning out the usual PR-isms about achieving “synergies” and realizing “economies of scale,” but what have been the observable results? The first noticeable change came in doctor’s offices where the number of Pharma salespeople making sales calls fell off dramatically. My own personal physician would sometimes see as many as eight salespeople in a single day (most sales calls were two-minute sample drops). That was a year ago. Recently, the number has fallen off to one or two in an average day, and sometimes none at all. In the 1990s, many young people graduating college looked on Pharma sales as a worthy career aspiration, but today, many of those who realized their dream with a job selling pharmaceuticals have recently learned how fallen leaves probably feel in front of a leaf blower. The industry which once fielded over 100,000 sales people now has about one-third of that number.

None of this is particularly unsettling unless you’re making your living selling drugs. The problem for the greater society is that the research departments in companies like Pfizer are undergoing the same atrophy that’s been seen in the sales divisions. This means that potentially fewer new medications will come into the field of medicine, and even fewer existing drugs will undergo needed improvements. DTC marketing, however, remains robust and will only continue to grow, so look for Pharma advertising on TV to become even more abundant and glitzy as drug firms use this avenue to pump up sales and profits.

No comments: