Exclusive outtakes from industry leaders
The drug industry’s business model is unraveling after years of bankable growth. Some of the healthcare industry's most prominent executives and officials will discuss their strategies for change at the 2011 Reuters Health Summit, from May 9-12 in New York.
Growth in U.S. healthcare spending per person -- the highest in the world -- slowed in 2009 to its smallest increase in five decades as high unemployment led Americans to tighten their budgets . Spending on hospital services, doctor visits, medicines and other health needs rose 4 percent to $2.5 trillion in 2009 compared with 4.7 percent in 2008 (Health Affairs, January 2011). The healthcare industry expects that rate to pick up again as families find they can no longer postpone a trip to the doctor or elective medical procedure.
As one of the world’s top suppliers of both vaccines and antiviral medicine, CEO Andrew Witty resents the implication that billions of dollars of business simply fell into his company’s lap when the World Health Organisation declared H1N1 a pandemic in June.
“If you are talking healthcare reform, it’s our daily life in Europe,” Novo Nordisk CEO Lars Sorensen told the Reuters Health Summit in New York.
Makers of medical tests, implants and other devices face anywhere from $2 billion-a-year in industry-wide taxes in the House of Representatives’ health reform bill passed on Saturday to $4 billion-a-year under a Senate version.
The Senate measure’s tax is not deductible and would be applied much like the tobacco settlement from cigarette makers years ago, said Beckman Coulter CEO Scott Garrett.
A dozen Reuters reporters are covering the annual Reuters Health Summit in New York, featuring speakers from the world’s leading healthcare companies, including Pfizer, GlaxoSmithKline, Merck, Novartis, AstraZeneca, Novo Nordisk and Eli Lilly, plus top insurers and the commissioner of the Food and Drug Administration. Follow the action as it happens:
Pharmaceutical companies are striking mega deals, diversifying and cutting costs to gird for the storm of patent expirations. There are signs that the industry is becoming more productive in its research labs after an extended dry patch. But investors are not convinced they are on the path to sustained profits: pharmaceutical stocks overall have underperformed the broader market in 2009, and trade in general at low premiums.
Indeed, Wall Street skepticism persists in many corners of healthcare. The uncertainty over the outcome of U.S. health reform efforts has brought a cloud over the sector, none more so than for health insurers, which are at rock-bottom valuations. The weak economy weighs on medical technology companies, as hospital keep tight reins on budgets and people avoid elective procedures.
Some of the world’s most prominent CEOs and top executives from leading health care companies and organizations will discuss these and related issues at the Reuters Health Summit, which will generate exclusive interviews and key insights from our team of reporters as well as online video and blog postings, which will be immediately available only to Thomson Reuters clients during the Summit.
With U.S. automakers close to collapse and financial services companies in turmoil, drug makers are positioning themselves as a premier American industry that deserves support from policymakers.
“The pharmaceutical industry is a national treasure,” Joe Pieroni, head of U.S. commercial operations for Japanese drugmaker Daiichi Sankyo, said at the Reuters Health Summit in New York.
“We are probably at the forefront of technology in terms of numbers of jobs, numbers of innovations, numbers of patents,” he added.
Drug makers are touting their contribution to the health and economy of the nation as traditionally critical Democrats prepare a major effort to overhaul health care. The companies are expected to face pressure to lower prices often attacked as too high. Manufacturers say that could hurt their ability to invest in research for new medicines.
Pharmaceutical companies are working “to convince people in Congress that, instead of bashing the industry, try to work with the industry in establishing the U.S. as truly a foundation for this high technology workforce,” Pieroni said.
Other executives who spoke to the Reuters summit also waved the flag.
“Here is a chance for the U.S. to keep doing what it is very good at, which is to innovate,” Schering-Plough Corp Chief Executive Fred Hassan said.
With the auto and computer industries, Hassan said “unfortunately a lot of that went over to Asia a long time ago. But we are the preeminent industry around the world … and this is a crown jewel of the U.S.,” Hassan said.
The health-care sector is “a very important source of jobs and innovation and economic growth,” Pfizer Chief Executive Jeff Kindler said.
Aetna CEO Ron Williams is one of the highest profile African American executives in the United States. On Wednesday he reflected on the election of Barack Obama, who is about to become the nation’s first black president.
“I thought it was terrific that the country was able to judge him on the basis of what they felt he could do for the country. I felt proud of the country. I thought it was an important milestone in the evolution of the country, and having done that, like the seat I sit in, now our shareholders want to know, ‘what are you going to do for us?’
“I think he is off to a good start working on critical issues,” said Williams.
Many risk factors for developing heart disease are well known, such as smoking, obesity, high cholesterol and high blood pressure. Last week, a study suggested that elevated C-reactive protein (CRP) levels in the blood may indicate higher risk of heart disease.
AstraZeneca Chief Executive David Brennan has identified a few more risk factors and may be ready to start taking his own cholesterol medicine.
“I don’t know about you guys but I’m having my CRP tested. Why not know? I’m 55 years old, Type A personality, an executive, that’s a risk factor right there. Working in the pharmaceutical industry is a risk factor,” Brennan said, only half joking.