Pharmaceutical companies have steadily increased their investment in research and development, making this industry the most research-intensive in the United States. Pharmaceutical research and development remains a risky business. Industrywide, it takes from 12 to 15 years for a drug to go from discovery to approval, with just one in five compounds that enter human testing ultimately being approved. The cost to develop a drug has risen to about $800 million, according to Tufts Center for the Study of Drug Development (tufts.edu/ med/csdd).
One of the basic threats which every pharmaceutical company including Pfizer has to offset is the threat of generics. At the Doha trade talks (WTO) in November 2001, ministers of the member countries confirmed that patents could be broken in cases of national emergency and that public health crises, such as AIDS or tuberculosis epidemics, counted as just such an emergency. Intellectual property rights, the Doha declaration said, should not stymie efforts to “promote access to medicines for all”.
And on August 30th, the WTO’s 146 member states finally approved a deal on access to cheap drugs struck a few days earlier by America and four much poorer countries (India, Brazil, South Africa and Kenya). The deal attempts to square the aspirations of potential exporters of generics (such as India and Brazil), the needs of importers (many of them in Africa) and the commercial interests of the patent-holders themselves, principally American pharmaceutical companies. The Americans do not want to be accused of blocking poor countries’ access to essential drugs, but they are keen to set limits on which drugs are seen as essential, and which countries can count themselves poor. They walked away from a deal last December arguing that paragraph-six exceptions should apply only to a short list of the most infectious diseases. Saturday's agreement does not do that. But it does list a number of rich countries that will refrain from importing generics and a second list of less-rich countries that will import them only in a national emergency or “circumstances of extreme urgency”. Even if richer countries do not import generics directly, the pharmaceutical industry fears that generic drugs ostensibly exported to poor countries will find their way back into richer markets. To discourage this, the agreement requires that generic drugs be labelled, packaged, shaped or embossed differently from the patented original. The big pharmaceutical companies also worry that patent waivers granted for life-saving drugs, such as efavirenz (an AIDS treatment), will be abused to make lifestyle drugs, such as Viagra (no introduction needed).
The generic threat is not entirely idle. India’s pharmaceutical industry, in particular, is a wonder of the third world, making high-quality, low-cost copies of the latest drug innovations. Thus far, the industry has catered mainly to the domestic market, taking advantage of longstanding holes in India’s patent laws. When those holes are plugged in 2005, Indian companies plan to move aggressively into the American and European markets, selling cheap versions of drugs whose patents have expired and challenging patents that haven’t. This threat may hit Pfizer hard because of threat of a generic for its lipitor (its 20 billion dollar block buster) from Ranbaxy an Indian company.
The strategies that Pfizer can follow to offset these threats are to increase it sales. It can do so by retraining its sales force and It has to reemphasis the importance of forming long lasting relationships with physicians.
As show in the exhibit 1 & 3 the physicians are bombarded with a lot of information and sales rep’s bother them day in and day out. The best way to counter this is to form long lasting relationships with the physicians.
Another strategy which Pfizer can look into is getting into the pet industry medicines whose sales are increasing in geometric progression (2.4 bn right now) and also into the biotech industry where the drug development costs are cheaper and the drugs more radical and effective.
