Saturday, April 18, 2009

HIV deal shows need for new pharmaceutical models

From Reuters:
The pharmaceutical industry is going back to the lab for its business models as it faces historic challenges.

Large drugmakers are experimenting with various collaborations as their major products face revenue declines, research productivity stalls, and governments and health insurers crack down on drug prices and healthcare costs.

The new ventures -- from deals on products to mega mergers -- seek to meet these challenges by cutting costs and mitigating the risks of research into new treatments.

Look no further than Thursday's deal between GlaxoSmithKline Plc and Pfizer Inc. The world's two biggest drug companies announced plans to merge their HIV operations into a new company.

"Pharma is feeling its way," said Erik Gordon, a professor at the Ross School of Business at the University of Michigan. "They know that the present business model isn't going to work in the future ... What they're not sure of is what will work." ...more

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