Pharmaceutical (19)

15 Aug 2013

Fortune highlighted Regeneron for its ability to do drug discovery for much less. To quote from their article here are the costs for drug development by some of the Big Pharma:

Merck : $5.5 Billion per drug

Pfizer: $7.8 Billion

Sanofi: $10 Billion

Average for other Pharma: $4.3 Billion

Regeneron: $0.75 Billion

There may be some fudging and accounting dependent upon how each of the companies account for their development costs but they are still very high and would generalize that it is almost impossible for other companies to do drug discovery but the true number may not be so high.

The article does not give any clues on what worked but the interview does point out that their thinking was long term and very different from the other companies who are very dependent on the perception of the stock market.

12 Aug 2013

Drug Discovery is obviously expensive but the scientists that actually make the discoveries, make very little money. Yes, they might get a bonus or two but it is nowhere close to what the Vice President of the President of the division will make, who get a decent compensation package with stock options and other bonuses. GSK plans to change all that by rewarding scientists make big bucks in compensation for their efforts.

However, as the people at Xconomy discuss, there are two sides of any decision…they argue that giving such a large bonuses may change the scientists, making them less cooperative as well as making them more liable to take decision based upon the large motivational check.

Read more at the link below and decide for yourself, whether GSK has made the right decision.

09 Aug 2013



2013-08-09-Drug Discovery crossroadsDrug Discovery is expensive. Even drugs for an important disease like cancer have not been as easy to discover. There are many reasons and that could be a topic for a separate article but an MIT professor, Andrew Lo has proposed a new model.

In the present model, all drug discoveries are funded primarily by private companies but in the new model proposed by Mr. Lo, a superfund needs to be created to fund cancer research and that fund can be funded by the bond market. The thinking is that if you require $30B to create a fund then you need a market that is big – like the trillion dollar bond market. The super fund will get a decent rate of return since a few of the entities will get developed into block buster drugs.

Interesting proposal – may need more clarity but the idea is certainly good and could be a way financial engineering could help with drug discovery in the future. See the link below for the financial times interview and also see this video here to decide whether financial engineering can cure cancer!

30 Jul 2013

Every company needs marketing and sales. Some it may be generated by the discussion by customers themselves but on the other hand, companies spend substantial amount of money for marketing and sales. However, marketing as its practiced is changing – the digital marketing is taking over more of the dollars as compared to the traditional marketing. This has put a lot of stress on marketing supply agencies – leading to a giant merger between French and American big agencies : Publicis and Omnicom.

This has been significant for many but also has implications for the healthcare industry. How things change is to be determined but many pharmaceutical companies currently depend on marketing that inform the customers about the new treatment options available. Similarly, much of the healthcare industry is dependent on imparting information through the marketing channels and that is going to change with this merger.

Read more opinions in the blog below:

12 Jul 2013

The southeast countries and members of South Eastern Nations (ASEAN: Brunei, Burma, Cambodia, Laos, Malaysia, Singapore, Philippines, Vietnam, Indonesia and Thailand) have been working on unifying their health care systems as reported in Pharmaceutical technology in June 2013 with the link to the full article below.


There are several interesting points to note in the ASEAN countries. It is a comparison of two countries with different policies and how that has affected their economy in Pharmaceuticals.


Indonesia is trying to setup of a system of universal health care. This is commendable since many rich and developed nations have struggled with it and not succeeded. It is also amazing how government regulation affects the economy in pharmaceuticals. Indonesia allowed 100% ownership of pharmaceutical companies and the sector grew by twice their GDP!


Contrast that with Philippines - The Government set a maximum drug price. It increased the generic process and decreased freedom to patent new uses for previously existing drugs. This has led to their pharmaceutical economy not growing as fast.


Despite these differences the ASEAN countries are working with each other, such as the mutual recognition of inspections. For pharmaceutical companies, this area will be the one to watch with a population of nearly 600 million and great demand for innovative medicines.

01 Jul 2013

Another look at the financial data of Pharmaceutical companies. Who has the big bucks to spend on research? A picture is worth a thousand words.


30 Jun 2013

This question can be analyzed an-infinitum but the real answer is simple. Each of the Pharma companies here grows by their ability to research new drugs and chemical compounds. The more they spend on research, the better they will perform moving forward. The chart below is a percentage of what these companies spend on R&D as a percentage of Therapeutic sales. The number is variable on different countries, accounting practices but even if you ignore those things, then some companies stand out very clearly.

The big Pharma companies are the middle of the pack or middle-low. They are sitting on a pile of cash and need sure bets to support their big economies rather than go out and discover. They will primarily have a licensing model.

The smaller growing companies are spending more on R&D and will continue to grow. If you want to invest in companies then choose the following 7 companies to invest and watch your stock grow:

  • Biogen Idec
  • Forest Laboratories
  • UCB
  • Shinogi
  • BMS
  • Eli Lilly
  • Celgene

2013-06-30-Percentage spent on research by Pharma

This is not investment advice, and based on one critical factor. Please consult your investment professional before making choices rather than reading this Scientist's blog!

29 Jun 2013

It is surprising how few pharmaceutical companies are left that are big companies with large R&D Budgets, but the top 50 Pharma companies has very few surprises from the usual suspects. Take a look at the chart below that is derived from the Pharma Exec (link below) data.

2013-06-29-Pharma sales by sales

Interesting conclusions can be drawn from the data. Now, look at the data from the country of origin and that tells that the two countries that are the highest for Pharmaceutical sales is USA and Japan.

2013-06-29-Pharma sales by country


20 Jun 2013

There are several things that were considered odd by western medicine but have been proven much later to be useful. Consider these two examples:

  1. Stitches during surgery: In Kenya, Uganda and parts of South Africa, doctors or sham-doctors used ants to treat a wound. This was considered odd by western medicine. However, what is interesting was that they used the ants to treat a wound. African fire ants were held over the wound and allowed to bite into the wound in such a way that it allowed the two flaps of skin that was incised, to be held together. The ants body was then twisted off, leaving the head with the mandibles holding the skin together like a suture performed during surgery.

                The basis of this practice thus enables healing to proceed rapidly and seals the wound and reduces infection. Till the use of suturing was discovered, this was the best way to close a wound.

  1. In the days of ships, eyesight to see things and visualize things from far was considered very important. If you could see the ship of your enemy from quite a distance away then it would enable you to take appropriate steps. With the vision considered so important, the pirates believed that piercing the ears and wearing an earring improved eyesight. This idea was rejected and was not considered relevant. In modern times, acupuncture therapy has shown benefits in cases in which medicine has not been shown to be very useful. Interestingly, the point on the earlobe that is important for eyesight are very close to the point where the ear was punctured for the earring.
10 May 2013

Unlike all other modes of spectroscopy that are used in Pharma companies – for example measurement of protein or DNA the most predominant one is Raman Spectroscopy.

The one technique that has been used predominantly in the Pharmaceutical companies is Raman spectroscopy. This is a relatively simple technique that is used to identify the specific compound since it is very specific for the chemical bond and can quickly identify the compound or API without complicated or expensive testing. Raman spectroscopy is a significant portion of the $30MM spectroscopy market. One interesting feature about Raman is that it is not affected by moisture content unlike infrared spectroscopy and hence makes it the perfect method to assay compounds in tablets as well as verify labeling and diagnose security issues.

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