Summit Notebook

Drug industry: Crown jewel or national treasure?

    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.

Pharma mega mergers? Just a sugar rush

Big pharma mega mergers are no way to escape looming loss of exclusivity on key drugs and pressure on prices. In fact, they’re the last refuge of CEOs running out of ideas, reckons Bayer HealthCare’s chief Arthur Higgins.   “I think the tendency is, when you’re short of ideas, to go for a quick fix. It’s a little like myself and a sugar rush. I feel good for about 10 minutes, then I wish I’d never taken the sugar,” Higgins told the Reuters Health Summit. “I can’t see any logic in combining two poorly performing businesses when at the heart what keeps it sustainable is innovation. And there’s no relationship between scale and innovation.“   What’s more, the financial crisis threatens a long-held adage about the drug industry — its defensive status in a downturn — and while prices for acquisition targets may be plummeting, that does not necessarily mean the deal adds up to value.   “Traditionally healthcare has been somewhat cushioned in these economic times, but nobody knows the future any more. We all listen to the television, we all meet with experts, but this is completely outside people’s experience,” Higgins said. “I don’t think any company at the moment is looking at major acquisitions. I think we’re all going to take a pause and step back and look at the economic outlook in 2009.”