[Note from Hedley: Please watch the short video to get the full picture]
AN ARTICLE FROM 2017
I published DISRUPTING PHARMA—ONLY POLITICIANS CAN DO IT, HERE’S WHY AND HOW August 15 2017.
It begins:
“Politicians have been bearing down hard on Pharma pricing for some years now. Sadly however, skyrocketing drug prices are just the tip of a massive iceberg. We see $bns spent pushing brands on health-care professionals, the many clinical trial failures, $bn litigation over damaging side-effects, me-too drugs, shortages, counterfeiting, price gouging—a seemingly endless list of debilitating issues”
It then goes on to describe how the blockbuster era was ‘created.’
Return to the battle of the anti-ulcer drugs
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.
The beginning of a lucrative strategy for the industry was cast.
Glaxo’s formula gets the thumbs up
Large, profitable pharmaceutical companies (Big Pharma) and their Investors were mightily impressed by what Glaxo had achieved. Even the CEO of SK&F congratulated them on their win.
Armed with this apparently powerful strategic model, Big Pharma resolved to beef up sales & marketing, awaiting molecules (also known as compounds) coming down the pipe.
Discovery research grew like topsy, as great libraries of patented molecules were required to feed the hungry marketing machine. Expert statisticians and medics were hired to help the marketers frame the messages to doctors. Regulatory affairs departments were expanded to be sure of keeping on the right side of the regulators, just.
So the scene was set. Sales & marketing, with their supporting cast, were poised ready for the next blockbuster molecule to come down the pipe. Discovery research was out there, plotting theories on why a molecule would work, modelling and patenting them in great quantities and stuffing prime suspects into the upstream end of the pipe.
In the investor community, however, there was emerging realisation that not much was actually making its way out of the pipe. The prospect of being lumbered with huge fixed costs if a drug failed was a serious concern.
Coincidentally, during the ‘80s, other sectors were outsourcing ‘non-core activities’, claiming significant benefits in risk reduction, plus lower costs to boot. That seemed like the perfect solution. Discovery research and marketing were considered core activities. Running clinical trials, manufacturing and testing materials, movement and storage, making active ingredients and patient dosages were all classed as non-core…
…and so the cull began.
…Part II coming soon. Paid subscribers can find it in the archives, here:
The main thing to remember is that the Tagamet/Zantac battle is a pivotal event in the history of the pharmaceutical industry.
It turned an industry that Dr Mike Yeadon describes as the ‘glory days’, pre-1980s, into the monster we know only too well today.
Read: DR. MIKE YEADON SAYS "WHAT HAPPENED TO THE GLORY DAYS IN PHARMA?" for more on that.
So, stay with it, it’ll be worth it! :O)
(PS Please do share below if you like or can).
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