This may seem like a strange assertion to some, but consider the facts.  Since the early 1980’s, Big Pharma companies have been busily casting off the people and facilities that were once developing their drugs. The rationale was that they could then focus on their core activities of discovery research and marketing.

The vital flaw in this ill conceived plan was that development of new products has to remain under the control of the companies intending to market the products—otherwise that vital link between end-users of products, and those carrying out the development work, is lost. This is what we now have with Big Pharma, to the point where it now cannot develop new products for itself.

This has resulted in the valley of death which has subsequently become the patent cliff.  To quote from Find It, File It, Flog It, Big Pharma might just as well jump off that cliff now if it intends to continue building businesses with this crippling [disconnected] attitude. All that is left is to continue trying to squeeze more and more out of less and less. Eventually, nothing will be left.

The seeds of ‘nothing left’ are currently being sown with all the mega-merger activity that is now going on to mask the real issues. This will result in more divestment of value creating capability and irreversible decline.

What can Big Pharma do, then, to reverse things? It needs a new model for product development. Learn more about that in a day or two…

My last blog recounted how Big Pharma had jettisoned people and facilities over the years, leaving it now unable to develop properly differentiated drugs. The conclusion was that a new model for product development is required, which will be explored in my next blog coming soon.

In the meantime, let’s turn attention to the products that Big Pharma has also been cutting lose for many years, those out of patent. We turn again to FIND IT, FILE IT, FLOG IT: For Big Pharma and other greedy people, for inspiration. The book has this to say on the topic:

“Products go too 

Along with the people and facility assets, product assets also found their way onto the scrap heap. These were the ones that had outlived their patent lives, the products that earned all the healthy profits in the past. They were considered to be clogging up the sausage machines with products that didn’t make the necessary returns, and so Big Pharma stopped making these products and left it to other companies to copy their products and service their once-loyal customers. 

The copying companies—named generics—started turning Big Pharma leftovers into profitable businesses.”

 It is common knowledge that over eighty percent of prescription drugs sold today are generic, and some pretty big companies have been created on the back it. Why Big Pharma companies would turn up their noses to such business is a mystery to many, including me.

The saddening net result, though, is that they now need to charge eye-watering prices to the ever shrinking patient markets available to them. To defend their position, Big Pharma devotees are developing all manner of pharmacoeconomic cases that prove the cost savings to the healthcare system outweigh the purchase price. None of it appears remotely convincing.

Wouldn’t it have been easier, and more profitable in the long term, to have continued satisfying those once loyal customers with solutions to their healthcare problems?