The latest from DTC Perspectives

Experts Blast Marketing

I was reading an interesting article quoting Wharton and other U of Penn professors (knowledge@wharton 10/14) on the future of the drug industry. As usual the critics think drug companies are too focused on marketing rather than on innovative drug research. One professor, Dr. Brian Strom, feels the drug model of marketing slightly tweaked products is a problem. He claims consumer distrust of pharmaceutical companies is a result of marketing. “They should be focused on innovation,” he says.

I agree that the drug industry needs more innovation. I also am sure they are trying their best to develop innovative products that are clearly well-differentiated. After all, drug companies know sales will be huge for a breakthrough drug. Many of the critics of the drug industry assume that drug CEO’s are taking the easy route by making slight improvements on existing classes of drugs and then marketing them heavily. The reality is that breakthrough products are rare and all drug companies need meat and potatoes drugs to stay in business. Like for any business, a truly differentiated product is the Holy Grail and highly sought after. It is not for lack of trying that drug companies are facing a lull in great new products.

Most large drug companies are partnering with or acquiring nimble small R&D companies to find new compounds and biologics. Does any critic think Pfizer is not desperately trying to find a breakthrough replacement to replace Lipitor? The issue is always going to be that curing disease is hard and takes enormous investment. The odds are incredibly small that any drug company will find a cure for cancer or end obesity. The likely path will be incremental. If we want a lot of drug companies working on breakthroughs we need to also allow them the opportunity to sell some sure things, albeit parity or minor improvement drugs.

The H1N1 virus, and other future bacterial and viral mutations are the reasons we want a large, diversified, financially strong drug industry. Critics are getting their flu shots from profit making companies, not a laboratory at the CDC. These “greedy” drug companies need to thrive if we are to stay alive. Saying we need innovation is easy, making it happen is of course much more difficult. Many politicians have never run a business or had to make a profit. It is easy for them to criticize, but Henry Waxman is not going to cure you next time a pandemic hits. He may hold a hearing which he does very well. I ask the drug critics to think about who they want in the disease battle foxhole next to them, Pfizer or Franken.

Ask any investor in drug company stocks if they have made money lately. Pfizer was $50 a share when I left in 2000, now it is $17. Lilly was over $100 now $34, Merck $75 now $33. The idea that drug companies are making a financial killing is ridiculous. Look at all the layoffs just this month. Maybe some CEO’s or top executives made big money but not the owners of the stock. The critics are probably right that we have had too many me-toos recently, but that is not the intent of drug companies, merely recognition of the hard realities of drug discovery.