(NaturalNews) With patents set to expire on major products and no new blockbusters on the horizon, the pharmaceutical industry must adapt or die, the chairman of Eli Lilly & Co. has said.
"I think the industry is doomed if we don't change," said Sidney Taurel.
The expiration of patents on top moneymaking drugs is expected to reduce the top drug companies' profits by a total of $67 billion between 2007 and 2012, or 50 percent of those companies' combined 2007 sales in the United States. This decline in income is expected to be the industry's first in 40 years.
Once a drug's patent expires after 20 years, the market is opened up to generic versions, which are typically sold at a cost close to that of production, in contrast to the 90 or 95 percent profit margins enjoyed by patent-protected drugs. Once the patent expired on Merck's cholesterol drug Zocor, for example, the company's revenues from the drug dropped an estimated 82 percent.
Drugs set to go generic by 2012 include Lipitor, the best-selling drug in history, which grossed Pfizer $13 billion in 2006. Also due to lose their patent protection are asthma medication Singulair, blood-pressure drug Cozaar, and osteoporosis drug Fosamax, which currently bring in 44 percent of Merck's income.
Meanwhile, no new drugs have emerged on the horizon to take the place of these money-makers. Compared with 1995-1999, 43 percent fewer new drugs came to market between 2002 and 2006.
"There haven't been any new therapies that are proven to reduce death and disability for atherosclerosis since the introduction of the statins in the late 1980s," said Richard C. Pasternak, Merck's vice president of Cardiovascular Clinical Research.
As a result, Moody's Investors Service has lowered the pharmaceutical industry's outlook from "stable" to "negative," and investment has dropped drastically.
Many in the pharmaceutical industry are hoping to shift their focus to biotechnology, where the laws currently do not allow the development of generic drugs. High-grossing biotech drugs include cancer drug Avastin, which costs $4,400 per month, and Gaucher disease treatment Cerezyme, which costs $200,000 per year.
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