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Profit Over Patients

Saviours or sharks?


The twentieth century witnessed some of the greatest advances made by science to better the quality and longevity of human life. Think penicillin, think insulin: we'd still be dying by the millions if not for these and several other wonder drugs - medical miracles that sprung from this century and have inspired further breakthroughs and modern endeavours. One of the enablers of this revolution was the pharmaceutical industry, which ensured that the drugs could be mass-produced and distributed. It was rightly hailed as a saviour. But as scandal after scandal - illegal marketing, selling spurious drugs, over-pricing, unethical clinical trials - hits major pharma companies, the sector is coming under intense scrutiny. Is the most profitable industry globally indulging in ruthless profiteering? In a free market, it is the job of companies to make profits. But can an industry that is in the business of healing and saving lives be measured on the same scale as car manufacturers or oil diggers, given the repercussions on human lives? TOI-Crest puts big pharma - which can deal either life or death - under the microscope

Our mission - improved outcomes for individual patients

We apply science and our global resources to improve health and well-being

To improve the quality of human life by enabling people to do more, feel better, and live longer

These are laudatory mission and vision statements on the websites of some of the world's largest pharma companies. So, is the pharmaceutical industry a messiah, saving millions using its enormous resources and formidable knowledge? Or, is pharma a merciless profiteer leveraging these advantages to exploit the diseased and the weak? It is an undisputed fact that advances in medicine in the 20th century had a dramatic impact on humanity, as a plethora of drugs cured dreaded diseases, eased suffering, and extended human life like never before. Yet, even in the new millennium, 10. 6 million children die of treatable diseases like malaria, diarrhoea, pneumonia or sepsis, about three million people die from TB every year, and a million die every year from malaria alone - largely because they cannot afford medication. This reality raises the question whether an industry in the business of producing life-saving medicines should be subject to more stringent regulation and greater accountability?

The pharma sector has, no doubt, pioneered products that have made a vital difference to humankind's quality of life. After all, penicillin, the wonder drug, could never have saved lives if the difficulty of mass producing it could not be overcome. Pharmaceutical companies like Pfizer, Squibb, and Merck invested in mass production of penicillin and churned out million of doses, which helped prevent a large number of deaths and amputations during World War II, even among the general public. Mass production also brought down the price of penicillin from $20 to just $1 per dose. Similarly, insulin, discovered by scientists in the University of Toronto, had to be mass produced and marketed, which Eli Lilly did in 1923 after negotiations with the university. It came as manna from heaven to thousands of diabetics who, till then, were condemned to a slow and certain death. Just as penicillin and insulin were not discovered by pharma companies, and were only commercialised by them, even today it is publicfunded institutions that are behind a majority of drug discoveries, which are then developed by pharma companies. Indeed, it is not just philanthrophy that drives pharma companies.
Seeing the enormous demand for life-saving drugs, pharma companies invested in research for new drug therapies, discovered several new top-selling drugs, and became global giants. But even as humanity benefitted, the cost of advancement, from a patient's position, was steep. By 1985, R&D investment had touched $4 billion and it yielded several new therapies such as drugs for hypertension, cholesterol treatment, and for dissolving blood clots, which generated huge sales. Single drugs that could rake in sales of over a billion dollars annually, called blockbuster drugs, became the industry's trophy products. A blockbuster drug could account for as much as a quarter of a company's annual revenue. For instance, Lipitor, a drug to treat cholesterol and one of the best selling drugs in the world, brings in 23 per cent of Pfizer's revenues while Nexium, a drug for heartburn, accounts for over 24 per cent of AstraZeneca's annual revenues.


The dream run of the 1990s, when blockbuster drugs ruled the roost, definitely seems to be over. The industry has few major new drugs in its research pipelines, and the patents of most blockbusters are set to expire in the next few years. For the first time, the spending on R&D, instead of climbing, dipped by 26 per cent in 2009, according to the accounting firm Ernst and Young - an indication of the crisis in drug development.

The industry is looking for new and efficient ways of research and several models are being tried out. Among them are acquisition of biotech companies, as biopharmaceuticals is the new buzz in therapies, and increased collaboration with academic institutions. Merck says it also focuses on finding better ways of targeting therapies by employing genomics and other tools to identify biomarkers and incorporate them in the drug development process. There is also a move to create patent pools like the one created by Glaxo-SmithKline. Through this, some of its patented drugs and manufacturing processes are freely available in a 'patent pool', from which they can be licensed at no cost to help research into neglected diseases.

Critics apportion a good part of the blame for the present crisis to obsessive patenting by the pharma industry. Companies hoard a large number of compounds - which could be vital building blocks for new drugs - as precious intellectual property, even if they are not using them. Plus, companies tend to take out a slew of patents around specific drugs to ensure no one else gets to research on it, adversely affecting the drug discovery process.


Despite these woes, the pharmaceutical industry continues to be one of the most profitable industries globally. It recorded massive profits even during the recent recession, posting among the highest profit margins by any industry - approximately 20 per cent per annum. Digest this: the pharma industry rakes in more profits than other money spinners - the defence and oil sectors. And it is estimated to grow from over $800 billion this year to touch $1. 1 trillion in 2014. According to IMS Health, while the US will continue to be the single largest market topping $390 billion by 2014, China will become the world's third largest drug market behind the US and Japan.

Growth in markets like the US, Japan and Europe will slow down to 4-6 per cent per annum as insurers and government health programmes tighten spending on drugs. Sales growth is predicted to shift to emerging markets - Brazil, India, Turkey, Mexico, Russia, South Korea, and China - which are expected to grow between 13 per cent and 16 per cent annually over the next five years, thanks to their expanding patient population with unmet medical needs, and growing healthcare investment. These emerging markets are expected to contribute around 70 per cent of the pharma sector's growth in the next five years. Branded generics, that is drugs without patents marketed by companies under a brand name, will represent about 50 per cent by value in these markets.


The importance of such off-patent generic drugs in emerging markets, coupled with the harsh reality of drugs worth about $142 billion in current sales losing patent protection over the next five years, has made the biggest companies shift focus to the generics market. According to Standard & Poor's research, branded drug sales are set to decline for the first time, partly due to the economy and also due to increasing competition from generics. The global market for generic drugs, worth over $84 billion in 2009, is expected to reach $129 billion in 2014. In a bid to stem the revenue loss due to the expiry of patents, big pharma firms are increasingly getting involved in generic production, or are scrambling to acquire established generic manufacturers, or enter into tie-ups with them. For example, Novartis, a French firm, purchased the German branded generics manufacturer Hexal, making it the second largest generics manufacturer after Teva of Israel. The UK- based GSK bought a stake in a South African generics manufacturer, Aspen, and entered into an agreement with Dr Reddy's in India to sell generics in Asia and other emerging markets.


Faced with the prospect of sliding revenue from blockbusters and stiff competition in the generics market, companies are resorting to a whole host of desperate measures to shore up their revenues. These include extending the life of patents, litigation, and pushing new drugs in the hope of creating more blockbusters that can rake in the moolah.

In an industry locked into the old blockbuster model, the battle to keep milking a super-hit drug can get pretty unsavoury - like hiding the side-effects of a drug so that it does not get taken off the market. Over the past decade, more than 26 major drugs have been recalled as they caused side-effects. The most recent to be recalled was Avandia, GSK's diabetes drug, which was found to cause heart attacks and stroke (global sales of $3 billion in 2006, which fell to $1. 2 billion last year). Other major recalls include celebrated drugs like Pfizer's pain-killer, Bextra, in 2005, Merck's pain-killer, Vioxx, in 2004, and Bayer's heart drug, Baycol.

Companies side-step the legal stipulation that post-marketing studies be carried out to track the safety and performance of new drugs. Thus, while new drugs get fast track approval, studies on their long-term side effects are routinely avoided. This leads to dangerous drugs getting into the market and continuing to up profits for several years before being pulled out.

Another way to make drugs look good is cherry-picking studies, where only the successful studies are reported or cited while those with bad outcomes are ignored. Most pharma companies deny that this happens. According to a Merck spokesperson, the company "is committed to the timely registration of clinical trials in patients and disclosure of those clinical trial results regardless of their outcome. " Pfizer too insists that it places "the utmost importance on the integrity of scientific research and authorship of medical literature. "

However, an article published in the Journal of the American Medical Association (JAMA) on clinical studies on drugs showed that the key claims of nearly one-third (14 out of 49) of the original research studies examined were either false or exaggerated. A 2006 analysis published in the American Journal of Psychiatry found that 90 per cent of manufacturer-sponsored studies of antipsychotic drugs led to claims that the drug was as good as, or superior to, every other drug in its class. The evidence has been overwhelming that industry sponsorship is likely to yield pro-industry results.

Experts blame this on the increasing nexus between academic medicine - medical schools, teaching hospitals, and their faculty - and the pharmaceutical industry. The solution, they suggest, is more public-funded R&D and clinical trials. But, is anybody listening?

Reader's opinion (12)

Nitin BordiaNov 19th, 2010 at 22:35 PM

In recent time there have been many acquisition of indian pharma companies by foreign is smthng to be looked upon and required government intervention.

Raman PatelNov 19th, 2010 at 02:00 AM

Not only MEDICINES,but also EVERYTHINGS WE-HUMANS DID;unless it was DONE with MOTIVE of SELFLESS-HELP like WE did to OURSELF and or OUR NEAR and DEAR and not with MOTIVE of GETTING-SOMETHING-BACK-IN-RETURN from OTHER/S,which WE always DID;therefore I BELIEVE that IT would be ABSOLUTELY-USELESS..!!

Aditya KartikNov 18th, 2010 at 22:31 PM

Here, science is commerce!

Nupur JainNov 16th, 2010 at 01:13 AM


nice article gave an insight about the pharma industry.But was more focussed on MNC's not to the Indian cos

Nupur JainNov 16th, 2010 at 01:13 AM


nice article gave an insight about the pharma industry.But was more focussed on MNC's not to the Indian cos

Shaik Naveed BashaNov 14th, 2010 at 22:22 PM

I strongly belive in Natural, external, Oral and so on in order. I tried almost 90% we get sick can be cured by Natural methods.In Allopathy there is hardly any medicine which is free from side effects, some are so severe we need medicine to couter. Allopathy at high end OK but for common its a TRAP

Parimal VyasNov 14th, 2010 at 17:41 PM

excellent and well timed cover story. Some of the hopitals and doctors never miss single opportunity in taking undue advantage of patitents' unawareness of credence quality of healthcare services. tiomes can do a cover story on 'patients' satisfaction measurement in near future.

Raman PatelNov 19th, 2010 at 02:52 AM



Think about that for a moment..!!

Vinay ShivhareNov 13th, 2010 at 20:57 PM

Not only pharma co. but doctors also are totally corrupt and very much greedy without any human concern or professional dignity for the well being of their patients or about his finances. They just are there to earn money nothing much. Doctor need money but the greed to be big by days is hurting us.

Raman PatelNov 19th, 2010 at 02:23 AM



Jignashu ShahNov 13th, 2010 at 13:19 PM

There are no free lunches in this world, every company should have a vision, should have have their goodwill, at the same time also their share of profit.
It should be governmental organisations that should make medicines at affordable cost, give subsidies, inturn should help the companies.

Raman PatelNov 19th, 2010 at 02:10 AM

PROFIT must be made to SUSTAIN-BUSINESS,but there must be FREE-LUNCHES not only for US-HUMANS,but also for ALL-BEINGS and ALL-THINGS in the WORLD;because this WORLD or UNIVERSE was not MINE or YOURS..!!


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