Taming the BIG PHARMA MONSTER by Speaking Truth to Power

Published May, 2019.....just in time for COVID

Taming the BIG PHARMA MONSTER by Speaking Truth to Power

I thought to treat subscribers to an extract from my book published in 2019. It explained exactly why COVID was going to happen—Big Pharma companies had cast out there ability to develop new drugs. This is how it goes:

THE CRUCIAL SEDUCTION UNEARTHED

In November 1976, Smith Kline & French (SK&F) launched ‘Tagamet’, a drug to combat stomach ulcers. It quickly took off and was dubbed the world’s first ‘blockbuster’ drug (≥ $1 bn annual sales). Glaxo launched a competitor product, ‘Zantac’, in 1981 and immediately targeted reportedly minor side-effects of Tagamet to pitch their case to doctors. By 1987, Zantac had become the world’s biggest-selling prescription drug, outselling Tagamet 3:1 at one point.

This was the first example of clever targeting capturing competitor markets, and it stimulated phenomenal growth in the therapeutic area; the profits were immense for both companies, on sales of tens of billions of dollars. It was the beginning of a lucrative strategy for the industry.

Seduction turned to full-blown love following Glaxo’s courtship display; the age of the blockbuster was upon us.

OUTSOURCING BEGINS IN EARNEST

The exact sequence of events isn’t easy to pin down, but the results were unmistakable — masses of workers were shown the door and thousands of facilities went up for sale.

Ousted senior execs looking for pastures new put the dumped assets to good use. They set up small companies, dubbed ‘biotech’ at the time, (we will call them small drug developers or SDDs) developing drugs to either sell to Big Pharma or try to get to market themselves. The CEOs in SDDs were making a persuasive case to be the engine house of drug discovery, citing less bureaucracy and shorter chains of command. Investors liked the sound of it and started pumping money in.

Meanwhile, other exiting senior execs joined together and bought up the facilities, funded by a different cadre of investors (private equity). These companies provided SDDs with services in exchange for a fee, under contract. These became known as contract development and manufacturing organisations (CDMOs) and contract research organisations (CROs).

Many of the rest of the redundant staff became consultants. Not the McKinsey kind – more former employees selling their skills back into the industry under contracts of varying length. I became one of them.

Also on the agenda was the tricky business of supplying hospitals and pharmacies. Handling customer complaints and dealing with ever more frequent deliveries were not deemed core and Big Pharma handed over all of its warehousing and distribution assets to gratefully receiving wholesalers.

Similarly, specialist third party logistics providers (3PLs) grew their businesses helping with the burgeoning volumes of materials and products that needed to be stored and transported around the globe.

The final arm of the strategy was ‘out-throwing’; the practice of dropping existing products once the patent expired because they wouldn’t meet the sumptuous ROI targets the branded versions had enjoyed.

Up sprung companies with more modest profit aspirations working to much tighter margins, copying the originals. This gave rise to the generics industry, where, at last, competition was going to save the day, or was it?

HOW DID THE DYNAMIC PAN OUT?

The number of SDDs began to accelerate as the potential rewards in doing a licensing deal with Big Pharma were immense. These new boys on the block were developing drugs themselves, hoping to eventually hand the baton on to Big Pharma.

There was similar growth in numbers for the CDMO/CROs because business was brisk as both the SDDs and Big Pharma increasingly needed their services.

The Drug Price Competition and Patent Term Restoration Act of 1984 (‘The Hatch-Waxman Act’) gave a welcome boost to the use of generics, and this, in turn, was more business for the CDMO/CROs.

With the growth of biologics, more companies entered the fray. Biosimilars, the generic equivalent in biologics, were attempting to capture innovator markets as patent expiry loomed. Biobetters were aiming to improve on what had gone before. Again, they needed the services of CDMO/CROs.

The ever-increasing availability of services to cover almost every aspect of drug development encouraged universities to spin out their research ideas into SDDs on the trail of Big Pharma attention and licensing deals. Government grants and funded bodies were set-up to support progress.

All this time, the contractors had begun consolidating, egged on by private equity regarding service providers as high potential, less risky investments; and all was not rosy in the PC garden.

WHERE ARE THINGS TODAY?

PCs are dried up prunes compared to the fulsome plums they used to be. They have retrenched into opposite ends of the prescription medicines lifecycle, leaving most of the work of testing, developing, making, storing, moving and distributing medicines to third parties.

On the other side of the fence, the fledgling service providers flew the nest years ago and grew into fully formed adults. Many have been soaring like eagles.

CROs have been and still are consolidating, becoming big, powerful providers of clinical and non-clinical services. Massive consolidation has also taken place in the CDMO world, and media evidence suggests they are moving into additional areas of the value chain.

The specialist 3PLs have also been part of the consolidation as the two main players have been acquired by giant corporations, one from inside pharma and one from outside.

The finished-product distributors of pharma products are now mega corporations, on the back of – yes, you guessed it – consolidation. Just three share nearly 90% of the market on each side of the pond. There has been forward integration (pharmacies) and reverse integration (logistics specialists) going on for some time, and also moves into broader service offerings to the industry.

The generics industry has grown enormously on the back of payer demands for cheaper drugs. Up to 90% of drugs now sold in the US and UK are generic. Ironically, in later times, the intense competition for out-of-patent drugs has subsided, which has led to spiraling rises in generic drug prices. This again has been attributed to M&A activity leading to far fewer, bigger players on the field being able to pick and choose what they supply, with the ever-present shortages adding to the hikes.

This is a very different industry compared to the days prior to the Tagamet/Zantac affair. The diagram below shows how it was in those halcyon days pre-blockbusters:

DYSFUNCTIONAL MARRIAGE LEAVES ITS MARK

In 2006 the US Government Accountability Office penned a damning report on productivity levels, attrition rates and other issues in the industry. The diagram below was included in the report, having been originally created by the US industry trade association PhRMA:

SUMMING IT UP

In a nutshell, the findings were this:

• 10,000 (patented) molecules screened

• 250 undergo preclinical development and testing

• 5 enter clinical development

• 1 gains approval

• 249 development candidates fail to make it

• 4 out of 5 clinical trials fail

• It takes 10-12 years to gain approval of a development candidate

Staggering 90%+ waste, $$$BNs in the bin ($2billion for every new drug developed)

Do you still think it’s mainly about depopulation?

Subscribers may remember this post:

Why are you suspicious there is a more sinister purposeful depopulation agenda?

One of the comments, from Glenn Doherty, caught my attention:

“I always thought that the ultimate goal was to depopulate (billions) the globe, now I'm not 100% certain. Depopulation would reduce profits for the globalists. Wouldn't it be better if they just made us sick and then offered the cure (just like the last 60 years!)

I'm leaning towards power and control, both of which, result in massive profits for the likes of Blackrock, Vanguard, State Street and the Bill Gates of this world. If there were no consumers, the aforementioned would not be around!

All empires die in the end, and this empire of fear and terror, will also die too. But what will succeed it? A one world government, run possibly by the United Nations?”

This is the kicker from Glenn:

I'm leaning towards power and control, both of which, result in massive profits for the likes of Blackrock, Vanguard, State Street and the Bill Gates of this world. If there were no consumers, the aforementioned would not be around!

Indeed, if the predicted 500,000 left on the planet comes to pass, who will be paying medical bills?

The thing is, a depopulation agenda leaves us all helpless to do anything about this evil crime. If it’s faceless billionaires pulling the strings up in the stratosphere, then we are never going to pin them down.

If it’s ordinary humans being that have been working in the pharmaceutical industry for years, then that’s a different story.

I’ve been exposing these people for the last three years. I used to work alongside them. They know me, I know them.

Most of them have been bought by Bill Gates, Anthony Fauci and Jeremy Farrar.

So, do you still think this is all about depopulation? It’s really OK if you do, ‘cos I’m going to go on trying to convince as many as I can that these guys are standing in full sight - we just need to shine a spotlight on them.

Go on, ask me in the comments who they are, and I’ll tell you.