Sharing is caring - also in pharma ?
Almost everyone is writing about pharma collaborations with academia and how that will generate openness, speed and lower costs. Just having researchers work together and streamlining NDA's and disclosure policies lowers transaction costs for development. My question is if (when?) some BigPharmas will take it one step further and come togehter and own entire universities, paying for tuition in exhange for all research results.
I'm envisioning special purpose, e.g. gastrointestinal, (PhD) universities. These would paid for entirely by e.g. 4 bigPharma companies and would give scholars a PhD degree and the companies lots of input. My idea is that BigPharmas would focusing on getting more brainpower rather than the a selected few. Also that they would start sharing the most valuable substances that are discovered. Simple maths show that a blockbuster is needed to make up R&D costs of all non-profitable drugs, especially now when "only" the western world is buying drugs.
But what if the hit/miss ratio of drugs get's improved, by sharing knowledge and goals in the universities I envision, maybe sharing expense/income on blockbusters would be enough. And also - costs need to be cut when India and China catch on.
The natural concern for this would be on the competition-law side, as I can envision a good 'ol gentlemans agreement when dividing the markets.
Generica deteriorating Pharma innovation ?
A recent ruling in California (well commented here and here) basically says that Pharma companies are liable for side effects etc. caused by generica using the same substance.
To me the situation becomes quite perverse as generica companies would operate on a totally risk free basis if they would also be excluded from litigation. In relation to Tobias' post even shorter times before generica becomes available could turn into an interesting pricing situation.
Firstly - shorter times mean shorter times for ROI on drugs. As R&D costs likely won't drop substantially, by all laws of finance a price increase is to be expected.
Secondly - if big Pharma are liable for damages caused by the substance as such rather than the drug, this would either result in an increase of litigation costs or large insurance policies (if someone is willing to write one in these days). It would likely impose a cost on BigPharma.
Bottom line - costs go up for patients/consumers. That could create a very interesting marketplace for drugs. The high price means makes it analogous to drilling for oil in remote locations. If the price is high enough it would mean that more players could find the market feasible. I see that this could have any of the following implicatons:
1) A surge in pharma R&D as a blockbuster with the new high price could mean even higher revenues. Perhaps smaller VC-funded labs could be the way to go as splitting that large revenue could be enough to see ear-marked VC funding for drugs.
2) A more dismal scenario would be a standstill in the innovation and patenting pipeline as fewer actors would see the financial benefit.
3) Forum shopping for lower R&D costs, i.e. pharma development follows the path of heavy industry and moves production and research to remote locations.
The big question is really - when will pharma markets as we know them change?