Drugs will always be profitable as the demand can only increase. If P&G is dropping out of the game it's because they don't think they can make as much as they were before. It just means their business model can't compete with the superior business models of other companies, including the generics manufacturers.

It doesn't mean R&D will disappear.

@Dunecat,

But, in general, the companies that make the generic drugs do not have R&D capabilities. So, losing P&G may mean that drug R&D will decrease.

P&G sold their drugs division--that doesn't mean they shut it all down. Someone else runs it now.

But if they sold it that means they think it's going to decline.

Also if as you said before they "can't compete with the superior business models of other companies, including the generics manufacturers" that would be a serious thing as I said, because the generics manufacturers' business model is to take hugely funded, well researched drugs and sell them cheaply, without researching future drugs.

I wouldn't worry that much about research diminishing: when it won't be profitable for privates the pubic will do it, as always. Or at least that's how it works here.

Drug research is somewhat of a joke. They release new drugs on a schedule like software versions with minor adjustments.

As a worker for the Pharmaceutical Industry I have to comment that ;-)

First: why are generics cheaper then "normal" pharmaceutics?
Because normal pharmaceutics have to pay their own R&D costs and have to counterpay a high risk. Risk of "side-effects", of another firm developing a better pharmaceutic a short time after your own has started (so called "me-too-pharmaceutics") or even the risk of being banned from the market (like Baycol or Vioxx). Or just the people don't liking it due to its taste, color, shape, name... Plus there is little experience in manufactoring at the beginning which has to be optimized on the running process for years and decades. And very often new production plants have to be build in the first place to start the production in high numbers.

With generics you have an already (nearly) optimized process of manufactoring, you know about the risks (and basically have none, otherwise it would be off the market already), and you don't have to pay high R&D costs.

My personal opinion is: Generics lead to an increase in costs for the patient. If there would be less generics on the market more normal pharmaceutics would be sold. This way the benefit of the producer would be higher and he would have the chance to lower the price (of course he wouldn't do it freely but has to be forced by some law!).

And then there is another point that turns generics cheaper: lower quality. That does not mean that those are "bad" pharmaceutics in general. But compare film-coated tablets e.g.: most generics have a thin coating and are quite coarse. Higher quality drugs have a thicker film which makes it easier to swallow and reduces the bad taste of the drug itself.

Another point of quality is the numbre of employees and what they earn. This is lower at generic producing firms. Far lower!

Secondly: is R&D disappaering? Can it be done by the public?
No, it won't desappear completely in my eyes. But it gets harder and turns more expensive every year. The reason for this are increased safety standards and thoughts like "can we really test this on animals? Or on human beings?". I think those things are very important and should not be banned again - so we have to pay the price for it.

No, the public can't run it. The amount of money needed to even run the infrastructure like testing on humans. You have to invest up to billions of dollars to even start one single pharmaceutic, and you never know if you will have any success. The public will never accept it.

Thirdly: to Kestas first reply and the "third world".
The problem of selling pharmaceutics to e.g. Africa is not the price itself. It is: if you ship one ton of pharmaceutics to Africa approx. 200kg will reach some patients in africa, the rest disappears on some regime, is reshiped to America or Europe and sold on the black market there.
And even if you get some pharmaceutics to the place they are needed: is the climat adequate for drug storage? Do the patient know how to take those tablets? When to take them? How often? Before or after taking food? FOOD? With a glass of water? WATER?
And, which is very sarcastic I know, will it chance a thing? OK, with pharmaceutics they would not die of some bacteria or virus infections. Then they would die due to the next war, to low water supply, no food, AIDS and so on. It sounds hard I know but I really think that shipping tons of pharmaceutics to the third world will not chance a thing and is truly a waste of effort and money.

Last: why did P&G sell: because they think the price of their plants will decrease in the future. That might have a lot of reasons, including generics lowering the profit of P&G pharmaceutics. Or maybe the plant is too old. Or maybe, maybe some of their dugs have to be banned from the market soon and they don't want their name on the news.
Or maybe it is just temporary. There is a lot of selling performed on the pharmaceutical marekt. The firm I work for changed its name four times within the last six years because the owner changed. Selling, outsourcing, merging...

Sorry for that long post ;-)
I have to say: all this is my personal point of view. Even most of my workmates might tell you other things or see some points different. Esp. generics are very popular in general and thought wo be the salvation of any problem on the drug market ;-)

@Hibiskiss: If that's the case I wonder why P&G sold.. I think you're being a bit cynical

@Bonotow: Very interesting, great that we always seem to have someone relevant to the discussion here. If you can say; what area of the industry do you work in, for what company, and do you think there's any hope? Could legislation changes help or is the future pretty much set?

@kestasjk: I am cynical, for good reason though.

@Bonotow: Awesome read. What are your thoughts about the Public Library of Science findings that that the money spent on Marketing drugs has skyrocketed beyond the actual costs of Research and Development and grows more and more each day?

How do these facts mesh with the idea that cheaper generics are what is hurting the bottom line of the drug companies? Instead of spending $60,000+ per doctor in the United States trying to peddle their drugs on television and in the doctors office, perhaps they should focus that money more appropriately and the quality of new drugs would sell themselves.

"the total amount of money spent on marketing by pharmaceuticals was U.S. $57.5 billion for 2004. The total spent on domestic industrial pharmaceutical R&D was U.S. $31.5 billion." - http://www.plos.org/

"U.S. pharmaceutical industry spent 24.4% of the sales dollar on promotion, versus 13.4% for research and development, as a percentage of US domestic sales of US$235.4 billion." - http://www.sciencedaily.com/releases/2008/01/080105140107.htm

@Hibikiss: Feel free to discuss those reasons here :-o

Re: marketing
Whatever proportion the big pharmaceutical companies spend on marketing compared to R&D the generic drug manufacturers profit from both, but give nothing back. It seems unfortunate that they have to spend so much on advertising to try and reach a profit during the period which they hold the rights to make the drugs

Actually Hibiskiss, big pharma spends so much on marketing partially because of the cheap generic movements. The idea is when you have a monopoly on the drug during the patent period you market it aggressively to establish a brand name. Viagra is a good example of this. Then when identical generic drugs hit the shelves, the original drug can still sell for higher prices because of brand power and familiarity.

I also want to say that just because P&G is selling the division doesn't mean that they think it is decline. Perhaps the buyer offered a magnificent price? Maybe they needed some cashflow? Maybe they think it will be more efficient to concentrate on certain things and they aren't running the drugs division to its maximum potential. Perhaps they see Drugs R&D as too much of a gamble and they want safer more steady forms of income.

@kestasjk: All branches of P&G has been in decline since the early 90s. Even after restructuring they haven't had positive sales growth all through the past 20 years if I recall. I just see the sale of the Pharma division to Chilcott as the consequences of corporate greed and long-term failures to modernize and streamline the company.

After all, someone bought P&G Pharma because it was profitable. With revenue of $2.3 billion and a net income of $540 million, I have a hard time feeling sorry that generic drug manufacturers are getting the medications out to people who need them instead of making that $540 million larger.

R&D of necessary pharmaceutical products should be carried out by the state for the benefit of the people, not by corporations aiming for profit.

If Bonotow is right about the costs, this would be very difficult in a capitalist system. But since I don't support capitalism, I'll stand by the above viewpoint.

on marketing: Kestas' and Centurian's answer is just what I would tell you as well ;-)
If there was a public forum that could present reliable information about pharmaceutics then those costs of markceting would decline. But most public press you can read on any pharmaceutic is "don't buy it, it makes you sick/will kill you/is not worth the money". As long as the public press on pharmaceutics is such bad marketing will get more and more important.
Without marketing noone would even recognize most of the phamraceutics that are on the market.

In other countries then the US marketing is limited. In Europe e.g. ads for prescription drugs are prohibited. And those make up the big pot ;-)

A lot of markting also is really pure information like "how to use insulin-pens" and "which pharamceutics shouldn't you take when you are pregnant".

A big problem on the health sysstem is not the price of the pharmaceutics but the high abuse that is done. I would say that at least 1/3 of all pharmaceutics sold all over the world have no need to be taken or even make things worth. Just look at the numbre of people taking antidepressives in the US, or children methylphenidate without being ill or without the drug introducing any benefit. And then we could also talk about antibiotics and analgesics.

My mother e.g. had to take Thyroid medication for more then 30 years. Now her old doctor retired and the new one says "Oh my God! Why did you take it? You are not ill, it even does harm to you!". Well, 30 years, 40 dollars a month, and doing harm...

The income of pharmaceutic firms is not that easy to calculate as the Pubic Library tells you it would be. There are dozens of firms that turn insolvent every month because their benefit was not high enough. For all the others the benefit climbs and falls, as pharmaceutics are high risk products.

Plus: look at the crisis we are in right now. Would those firms and banks that are insolvent right now done a better job (meaning: having some money in the pocket) there would be no crisis at all. Pharmaceutic firms need to have billions of dollars to keep their buiseness running. If they stop making profit they will be stucked.
One example: starting the development of a new drug today means that you have to handle some million dollars per year. If you are lucky you get the patent like 10-15 years from now on. Then it will take you some more years to bring it on to the market. Then you have approx. 10 years to sell it before the first (legal!) generics arrive. You first have to invest up to 20 years long before the first cent comes in again. That's why they need this much money and they need to be profitalbe.

P&G has been streamlining and, honestly, their pharm division is small compared to the heavy hitters in the industry. So this is a faint blip on big drug's radar.

I read the title of this and thought P&G was going to start selling marijuana...

@ Bonotow About how many drugs make it to market compared to those that fail trials. I know failure rate is high.

At University we were taught it was less then 10%.
But this depends on what you call a "new drug candidate". Some firms even tell you about something like 1%, some "anti-capitalists" talk about only 20-30%.
And the numbre of drugs that are bad sellers or are replaced by some other drug on the same illnes is hard to tell.
Plus: not all pharmaceutics developed are for "important" deseases. E.g. a drug that helps you when suffering from fetal burns is not sold too often but was as hard to invent as every other drug had been...

Fetal or fatal burns?

If the burns are fatal, then there is no treatment/cure. If there is a treatment/cure, they can't be fatal. Therefore, it must be fetal burns, but WTF are those?

Fatal unless treated by a wonder drug. Also extensive burns take time to kill, by shock, infection, etc.

Then that would be life-threatening or potentially fatal. Without the qualifier, it means the person is dead already. Ask a doctor and they'll tell you the same thing.

I did not mean "to death" by fatal but "very bad", "life-threatening".

A fatal injury does not have to kill right away to be fatal, any more than a fatal illness if you have 100% mortality rate. Example HIV infection is always fatal with current treatments. Your use is a play on words MDs often use to soften the bad news.

Then why does a fatal accident always have a death. And I would argue a fatal injury does kill right away.

I found these definitions which make it clear that to be a fatal injury death MUST occur, so unless the burn medicine just sooths the wound to make the person's passing easier, it can't be a medicine for a fatal burn.

BTS Transportation Expressions

Any injury which results in death within 30 days of the accident. (FHWA5) (NTSB1) (NTSB2)

Any injury which results in death within 7 days of the accident. (FAA2)


Law Encyclopedia: Fatal
Top Home > Library > Law & Legal Issues > Law EncyclopediaThis entry contains information applicable to United States law only.

Deadly or mortal; destructive; devastating.

A fatal error in legal procedure is one that is of such a substantial nature as to harm unjustly the person who complains about it. It is synonymous with reversible error, which, in appellate practice, warrants the reversal of the judgment before the appellate court for review. A fatal error can warrant a new trial.

A fatal injury is one that results in death. It is distinguished from a disability in accident and disability insurance policies, which includes those injuries that prevent the insured from doing his or her regular job but do not result in his or her death.

*right away being within 7 or 30 days - I'll grant that it isn't immdeiate. But the idea of a medicine for a fatal injury, even if it kills 30 days from now is not comparable to a fatal disease which may take years to kill and where the medicine can improve the person's quality of life.