The world’s top 10 pharmaceutical companies spend around $50bn a year on research & development…but have very little to show for it.
The cost of bringing a new drug from the laboratory to market has risen to around $1bn and, in an influential study released last year, McKinsey estimated that the industry’s return on R&D over the past decade has averaged just 7 per cent, below its cost of capital. It is startling that companies boasting operating margins of 30 per cent or more are actually destroying value in their core activity. No wonder the sector has been de-rated so substantially over the past 10 years.
I was naively puzzled for a long time about how people got addicted to painkillers – what was so enjoyable about having pain numbed? – until I tried Vicodin.
It was prescribed after a minor operation last year and I suddenly discovered the alluring qualities of pills such as Vicodin and Percocet that combine opiates with paracetamol. After a day or two of pleasurable wooziness, I thought it would be wise to stop.
My column in the FT this week is on drugs and the developing world:
There is a fascinating interview in the FT today with Sir James Black, the scientist who helped to discover beta blockers and cimetidine, a stomach ulcer treatment. The thing I took from it was his extreme scepticism about drug company mergers, which seem to be revving up again.
Sir James view of mergers such as last week’s $68bn takeover by Pfizer of Wyeth is:
Lawrence Lessig, the Stanford law professor who has become a leading expert on copyright and other matters affecting Silicon Valley companies (including, see below, net neutrality) is moving back to Harvard.
I like the sound of his new job, as director of the Edmond J. Safra Foundation Centre for Ethics: