More good news for Biotech in the Health Care Reform Legislation

Most people have been focusing on the 12 year Data Exclusivity afforded by the Health Care Reform Bill. But Forbes magazine has a great article regarding a part of the Health Care Reform bill that is not getting a lot of discussion.
In the article, the authors state:

Buried in the recently passed health reform package is a provision that provides an unusual and tremendous benefit to small and mid-sized (under 250 employees) biotech firms and their investors. This extraordinary gift from Congress (courtesy of a push by Sens. Robert Menendez, D-N.J.; Maria Cantwell, D-Wash.; and John Kerry, D-Mass.) provides a 50% tax credit for qualified biotech investments for tax years 2009 and 2010, or a grant for the same amount tax-free.
Thus a biotech company that has a tax liability can see its tax bill slashed and a business that has no tax liability can receive a nontaxable grant for the same amount. Bottom line: With this new provision a biotech business can look to put big money in its pocket immediately. Your business makes a qualified investment of $1 million and it gets a $500,000 tax credit or a $500,000 check from Uncle Sam. Wow.

This could prove to be a phenomenal boon to the industry.....

More Good News - R&D Investment by U.S. Biopharmaceutical companies is up

Fierce Biotech reports here that:

Despite a fragile economy, America's pharmaceutical research and biotechnology companies invested a record $65.3 billion last year in the research and development of new life-changing medicines and vaccines - an increase of more than $1.5 billion from 2008, according to analyses by the Pharmaceutical Research and Manufacturers of America (PhRMA) and Burrill & Company.

The article goes on to say:

While companies have been forced to make difficult business decisions, research spending as a percentage of sales remained high in 2009. Over the past nine years, America's pharmaceutical research companies have consistently invested around 18 percent of domestic sales on R&D activities.

Again, while the industry is still experiencing dynamic change, at least there are still some positive trends that we anticipate will help to set the stage for future growth within the Pharma industry.

Good News / Bad News for Pharma

Interesting blog post here entitled "Pharma Layoff Stats Show the Glory Days of Drugs Won't Be Coming Back". The post details the number of layoffs the industry has been experiencing.

While the news has been bleak for the industry, the worst may be behind us.

John A. Challenger, CEO of Challenger, Gray & Christmas, a major Outplacement Consulting Firm says:

"… there is an overall sense that we have turned a corner. With downsizing showing dramatic signs of stabilization, chances are good that increased job creation is approaching."

Mr. Challenger is also quoted as saying:

“We are seeing more job cuts related to business strategy, as opposed to cuts stemming from recessionary pressure. In other words, we expect cuts from mergers and acquisitions or from companies shifting focus from one business area to another.”

My opinion is this....the Pharmaceutical industry is in the midst of a significant contraction.
And the future of the industry may appear bleak.
HOWEVER....there is some truth to the saying that it is always darkest before the dawn.
What the industry is experiencing now is a major shift in its business model.
The old "Blockbuster" model under which the major Big Pharma firms achieved their dominance is no longer valid.
So the industry is changing. And change...even if it is for the good...is not always easy.

Bottom line....I tend to be a contrarian. Any time I hear the 'experts' all lining up in agreement with regards to any topic....I believe that in most instances...over time....the exact opposite will occur.
For example...when I became a Recruiter almost 20 years ago....I remember reading articles about how the Pharmaceutical Industry was bullet-proof. There appeared to be no end in sight for the dominant Big Pharma companies. The stock pickers on Wall Street claimed Big Pharma was recession-proof. They claimed the good times would never end for Big Pharma. The joke was as long as there was Disease...Big Pharma companies would always be extremely profitable.
And at that time...it appeared these companies would rule the Pharma landscape forever.

But things change. Industries change. Companies change. The world changes.

Now we hear the Pundits claiming that not only is Big Pharma in trouble...but the entire industry is in jeopardy. These same 'experts' are now touting the demise of the industry.

I could not disagree more.

I never believed the claims that the industry was bullet-proof. And I certainly don't agree with the predictions of the industry's demise. Like most things the truth lies somewhere in the middle. There will continue to be change. There will continue to be some 'pain'. But the industry will re-emerge...looking differently....but still in a position to thrive in the future.
And for people who love Science....love solving challenging problems...and relish the prospect of being in a position to help improve the lives and health of other human beings....the Pharmaceutical industry will still be a wonderful industry to work in.

Former Schering CEO sees more Pharmaceutical consolidation

Fred Hassan sees more consolidation in the Pharma sector.
You can see the interview here.
He claims that further consolidation is imminent because of two major factors:

1] New "Innovation Investments" require larger pools of resources. Hassan feels larger companies are better able to find drugs for complex diseases like Alzheimer's etc.

2] Smaller companies are running into cash-flow problems....and other than being acquired...these smaller companies have limited options with regards to sources of additional capital.

It is a short interview...but Hassan offers an interesting perspective in the clip.

Pfizer to chop billions from R&D

Fiercebiotech reports here that Pfizer is planning to cut R&D spending by $3 Billion by 2012.

I have felt for years that the Big Pharma business model was no longer valid in the current environment. Bigger is no longer better.

What does that mean for an R&D Chemist/Scientist in Pharma?

It means that while no company is 100% guaranteed secure and stable....going forward....you will have more relative security and stability in the smaller and mid-sized Pharma/Biotech firms than you will have in Big Pharma.

Pfizer and Merck signal impeding deep cuts in R&D

Pfizer and Merck are starting to release the numbers for their initial cuts in R&D.
However, this article on FiercePharma states:

"These layoffs are just the beginning, of course. Both pharma companies are planning deep cuts to eradicate any overlaps with the companies that they are swallowing. And in another ominous note for Big Pharma's embattled R&D organizations, Merck CEO Dick Clark (photo) told an audience attending a Goldman Sachs event that the company has to look at "the number of research sites you need" post-merger."

The article goes on to state:

"None of this can come as any kind of a surprise at the companies, which have made it clear that the old days of monolithic R&D groups left in complete charge of new drug development are over. They also have to deliver big cuts to investors hungry to see some real synergies following the M&A splurge. The cuts, though, create new opportunities for biotech companies with bright pipeline prospects."

The question is who will oversee drug development then if not R&D?

Pfizer Continues Push Into Generics

According to an article on FiercePharma, Pfizer has entered into deal with the Indian Generics firm, Strides.

According to the article:

"The drugmaker has agreed to source 40 generic treatments--including a bundle of cancer meds--from the Indian firm Strides Arcolab, for sale in the United States. The drugs will be marketed by Pfizer's relatively new Established Products unit, which sells some 600 off-patent products."

The article also noted that:

"...it's not Pfizer's first generics partnership, nor is it the drugmaker's first venture with an Indian generics maker. Last year negotiated for the rights to more than 30 oral generics made by Aurobindo Pharma, for sale in the U.S. and Europe. The deal also included 12 injectable antibiotics."

Pfizer's Established Products unit has only been around for a short period of time.
According to Pfizer's web site:

"Pfizer's Established Products Business Unit (EPBU) was created in 2008 to provide underserved patients with affordable medicines characterized by Pfizer's reputation for quality, safety, and innovation.

Led by David Simmons, President and General Manager, EPBU is a small, flexible unit that leverages Pfizer's strengths to manage the established product portfolio.

Established products are medicines that have lost patent exclusivity or are close to losing their exclusivity. Pfizer has over 380 established products, including many familiar brands such as Norvasc, Zoloft, and Zithromax.

Pfizer's global sales of established products are more than $10 billion annually."

These are interesting developments for Pfizer as a company....and the Pharma Industry as a whole....

People Make the Difference

I came across a post on Pharma Conduct today that referenced an article that appeared in the Christian Science Monitor entitled: People making a difference: Steve Korman.

The article details how Mr. Korman, the CEO of Korman Commuications, has been appealing to his fellow CEOs to resist mass layoffs. The article goes on to say that:

"Korman recoiled earlier this year when he heard Pfizer Inc. CEO Jeffrey Kindler on CNBC explaining that despite the company's $16 billion profit, it planned to cut 8,000 jobs to boost that profit to $20 billion....It was just so cold," Korman says, though in true Korman form, he adds, "I'm sure [Mr.] Kindler didn't mean it to sound that way." But then he returns to his point: "These are not widgets we're talking about.... These are not jobs. These are people, families.... Where are you going to go to find a job these days?"

So, as a Pfizer shareholder, Korman wrote to Kindler and to the CEOs of other companies in which he held stock. He placed ads in The New York Times and The Philadelphia Inquirer."

What is the message that Korman is sending to these CEOs?:

"Stop the "herd mentality" when it comes to mass layoffs. Forgo some short-term profits and stock value and keep people working....His point was that maybe we don't need to make the last dollar."

Now that is a message that we all should be embracing as we roll into the Holiday Season.

Big Pharma - still hungry for Biotech

Big Pharma's appetite for Biotech deals has apparently not been sated. According to an article on Reuters today.

According to the article:
"Even amid aggressive cost-cutting, many big pharmaceuticals companies continue to seek biotech acquisitions in the hope of finding new drugs to replace those lost to generic competition."

However:
"....they will have to pay more than they did a year ago. The average value of U.S. biotech companies is increasing as funding flows back into the sector after a drought caused by the credit crisis....executives at the Reuters Health Summit said they need to make acquisitions and form partnerships to fill holes in their pipeline of new products, even if the terms are not quite as advantageous as they were a year ago."

Why is Biotech in NYC Floundering?

Interesting article in The Scientist about the problems besetting the Biotech sector in NYC.
While acknowledging the city's "lucrative scientific output", the reality is that investments aren't "...yielding as many start-ups as other regions with comparable scientific investment."

Why is this the case?

The answer according to Jonathan Bowles of the Center for an Urban Future, a New York City think tank, "is that 'for a long time [technology transfer offices] put too much emphasis on the blockbuster deal,' ignoring smaller technologies that could have been developed by start-up companies with the help of venture backing"

I find it interest that people are still 'swinging for the fences' and pursuing blockbusters....that strategy really seems somewhat dated in this environment.....

Pfizer's Silence

Pfizer has been very close-lipped about the subject of lab closings and job cuts. Everyone from the Governor of CT to chemists in the lab are on edge.....

Some Good News - Pharma Growing Faster Than Expected

FiercePharma reports here that:

A boost in American insurance will push worldwide drug sales up by 4 percent to 6 percent in 2010, IMS Health predicts. And global growth will continue at a 4 percent to 7 percent clip every year through 2013. Just six months ago, IMS had predicted that U.S. drug sales would fall by 1 percent to 2 percent this year.

It is nice to get some good news.....

Pfizer/Wyeth Site Closings

Derek Lowe comments here on fellow bloggers Eric Milgram's crowd-sourcing approach to which Pfizer /Wyeth sites will be closed.
Milgram's approach is interesting to say the least......

Pharmaceutical Industry Experts Wrong Again!

Recent articles have chronicled the large number of lay-offs that are being experienced in the Pharmaceutical and Biotech Sectors.
FiercePharma had this to say on their website today.

But that is not the whole story.
While it is true that a number of the big firms are downsizing and that some smaller firms are shutting down....My firm seen a large uptick in hiring. While some firms are definitely trying to cut costs in order to deal with their diminished pipelines, other firms are definitely helping to pick up the slack in hiring.

Bottom line - The whole industry is in flux - we are in the midst of a very dynamic time.
But this is still a phenomenal industry to be in....and there are still tremendous opportunities not only in the area of scientific developments....but there are still exist a tremendous number of opportunities that will enable the individual to advance their career.

Years ago the Pharmaceutical industry was being touted as bullet-proof. Major magazines had cover stories where they espoused the theory that the industry was immune to the business cycle. these so-called experts claimed that the industry would continue to experience unparalleled growth with nary a hiccup.

I thought the experts were wrong then.

Now the 'experts' are burying the Pharma industry....now these same experts that years ago called the industry 'bullet-proof' are now sounding its death knell.

The experts are wrong again.

The truth is that there are still tremendous opportunities career-wise in Pharma....And the industry will....once we admittedly go through some more near term pain...emerge much stronger and even more prosperous.

And this is one prediction that will definitely come true.

Are you Single-Minded? Part 2

Labor Day weekend has got me thinking again about the whole concept of work and what makes a person successful. In my last post, I had discussed the importance of single-mindedness.
After I wrote that post, I remembered an article I had read online years ago, In Defense of Workaholism, that did an even better job of of explaining the concept than I did. In the article, the author writes:

"The truth is this: if you want to succeed..., you have to be at least something of a workaholic. No one admits this, but it's true. You need to work hard to establish yourself, to fortify your reputation, to market your services, and to ensure that your clients are happy. The work never stops -- and because of this, you have to keep in close contact with your inner workaholic....Doesn't matter what your gig is, there's almost always a direct correlation between hard work and success. I'm currently on a tour of Europe with the Orpheus Chamber Orchestra, working on a project that should see the light of day by early next year. Each of the musicians comprising the group is an IP -- juggling their Orpheus gigs with all kinds of other projects. Some play for the New York Philharmonic, the American Ballet Theater, or the New York Opera, some teach at Julliard, others do Broadway shows or commercial work, and most do some combination of these. Each of these people is at the pinnacle of the music profession. And, to a person, they all work their posteriors off. They wouldn't be nearly as successful as they are if they sat around playing pinochle half the day, enjoying some mythical "balanced" work life that we're supposed to all aspire to."


Bottom line - if we want to be successful...we need to focus on that goal.

Don't fall for 'The Balanced Life' myth.

And as the old saying goes - "If you try to chase two rabbits, you end up catching neither."

Are you Single-minded?

While the bulk of my posts have focused on developments in the Pharmaceutical industry, I also like to post occasionally on topics related to Career Development.
And along those lines, there is an interesting post here.

We often hear it touted that we should all strive to be well-rounded....that we should work to improve our weaknesses....that we should strive for a balanced life.

David Rendall does not agree with that philosophy. He writes:

"While you are busy diffusing your time and energy broadly in an effort to improve in a variety of different areas, someone else is obsessively developing their strengths and flaunting their weaknesses. They aren't allowing their weaknesses to distract them from focusing on the areas in which they have the greatest potential.

If you want to win, in your career or your business, you need to be singleminded. Don't let your weaknesses and the goal of being well-rounded keep you from a maniacal focus on improving your strengths."

I think his point is valid....Being successful in any one area requires sacrifice....including possibly giving up the pursuit of success in other endeavors.....

Rise in Hiring Activity

Good news for job seekers in the Pharmaceutical/Biotech sector....
We have seen a significant surge in hiring.
I am not sure if this is just a blip on the radar....or if this development is the start of an upward trend.

Nevertheless - for now - there is a lot of hiring going on....

Bristol’s $2.1 Billion Medarex Deal -Brilliance or Desperation?

The Wall Street Journal's Health Blog briefly discusses this week's acquisition of Medarex by Bristol-Myers Squibb here.

The article describes BMS as "an old-line pharma company sitting on a lot of cash ($8.1 billion as of the end of the second quarter, according to Bristol’s latest earnings report this morning) and facing the generic competition for its blockbuster Plavix in a couple of years." On the other side of the aisle, you have Medarex, which is more of the 'New Kid on the Block...the hot upstart Biotech with promising cancer meds in late stage development and testing.

The reality is this....The potential rewards of this acquisition are promising...but the price of admission is high.
According to the WSJ article..."Bristol is paying a 90% premium to Medarex's Wednesday closing price,..."

And a quick glance at Google Finance shows that Medarex earned $10 Million last quarter...but lost almost $47 Million.

So while the potential is there...the question is...Did BMS pay too much for some potential?
Is this a strategically brilliant move? Or is it one that smacks of desperation?

Celgene's Revlimid shows promise as first-line treatment

Reuters reports that:
"Celgene said its multiple myeloma drug Revlimid significantly improved progression-free survival in patients undergoing initial treatment. The study's findings could boost the chance of expanding Revlimid's use outside the U.S., the company said. The product is approved only for patients who failed to respond to other therapies. "

Very nice development for Celgene......

Pharma Death Spiral

Sally Church has another interesting post on her blog where she asks what Pharma companies are in the proverbial 'Death Spiral'.
There is no doubt about it....the Pharma/Biotech industry is going through a very dynamic time.
The reality however is that while there are a number of Pharma and Biotech companies that are in serious trouble, there are an even greater number of companies that are doing well. These companies are poised to not only survive in this new marketplace, but will actually thrive.

There will be losers in the industry...and change is inevitable. But we can rest assured that the industry will continue to thrive. Unless someone invents a pill that totall eradicates illness in all humans, the Pharma/Biotech industry as a a whole will continue to be successful.