Drug Firms Face Patent Woes
At November-end, Pfizer will lose its patent on Lipitor, a cholesterol drug, which currently fetches the company $10 billion annually. Pfizer is not alone. On the whole, this year alone, drug companies stand to lose patents over more than 10 medications, which together fetch them annual sales of about $50 billion.
This development is a great setback for the drug industry, which was a most profitable sector not long ago. Now, drug firms have to shed their dependence on a few blockbuster drugs and discover new ones through research. Not surprisingly, Morgan Stanley has downgraded its ratings for a slew of pharma companies.
In the U.S., drug firms laid off 53,000 employees in 2010 and 61,000 in 2009. These sad figures are much higher than other sectors. Experts say the drug industry is facing a panic time. The efforts of Eli Lilly and Pfizer to develop new blockbuster drugs have not proved successful. The drug industry spends about $45 billion each year in research and development. But, the FDA is approving fewer drugs.
Pfizer says drug companies need to reinvent themselves. Pfizer has begun focusing on branded generics, neuroscience, inflammation and cancer. It will also cut its research and development expenses by about 30%. The public may gain in the short term as generic medicines cost less than expensive blockbuster drugs. But, in the long run, they will suffer if new drugs are not discovered due to cuts in research funds.