Drugs Stink

Bob Roberts reference. Anyone?

Well, fine. Let’s just get straight to the heart of it then, shall we? I’ve talked in the past about the interesting role our region plays (and doesn’t play) in drug development. And I was reminded of that dichotomy when I was reading the great news about Dendreon filling up a bunch of space at the Russell Center. At the end of the article was the line: “Dendreon is sold out on all the Provenge it can currently manufacture, but it’s “on track” to quadruple the capacity of its first plant in New Jersey and complete plants in Atlanta and Los Angeles…”

Boo.

Let’s turn to better news instead. How about something upbeat like “Drug Firms Face Billions in Losses in ’11 as Patents End.”

Hurray?

I say, “Hurray, indeed.” Because this trend is actually going to benefit regions exactly like ours. Those billions of dollars that the NYT references are because of “…a sobering reversal for an industry that just a few years ago was the world’s most profitable business sector but is now under pressure to reinvent itself and shed its dependence on blockbuster drugs.” Or, expanding on that thought:

“I don’t think there’s a company out there that doesn’t realize they don’t have enough products in the pipeline or the portfolio, don’t have enough revenue to sustain their research and development.”…Drug company executives have begun addressing the calls for reinvention. “We have to fix our innovative core,” Pfizer’s new president, Ian C. Read, said in an interview recently. To do that, the company is refocusing on smaller niches in cancer, inflammation, neuroscience and branded generics — and slashing as much as 30 percent of its own research and development spending in the next two years as its scientists work on only the most potentially profitable prospects.

I get two things from this. First, when a company doesn’t have a huge R&D budget, it gets its innovation from acquisitions.* So, to the extent you buy the argument that Big Pharma buying local companies can be a good thing, get ready for more good things.

Second, I think that we’re going to see some increasingly interesting intersections with the global health community. To the extent that our region is leading the way on drugs that have wide appeal but lower profitability, those are opportunities that are going to be increasingly more attractive to Big Pharma. That is, in the old days, unless they were going to make a few billion on it, it was maybe beneath them. Whereas now, maybe a $100 million does the trick.

Let me toss in a third positive spin: how great is it that our very strong – even thriving – biotech community is successful without all those blockbuster drugs? Unlike how we worry about our aerospace industry if Boeing ever got up and left, or even our IT industry if Microsoft relocated, we’ve got a diversified portfolio of small and mid-caps that keep us from huge fluctuations like the devastation predicted in that NYT article. Maybe slow and steady wins the race. Only time will tell…although it looks like that time starts at the end of this year.

*Assuming you believe that drug companies really do need to make huge R&D investments to be successful.

 

UPDATE: Xconomy agrees that the future “major” pharmaceuticals will come from places like Seattle.

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