SECTION VIII
Business Aspects
Introduction
Contrary to popular opinion, governments and
health services develop almost no drugs and dis-
cover very few. In the developed world, almost
all of the therapeutic advances of the last half-
century have been the result of the efforts of the
pharmaceutical industry. This is actually also
true in the underdeveloped partsof the world,
although public health measures in those regions
may also have greater scope for improving the
human condition.
So how does the pharmaceutical industry do
it? Compared with, say, the car manufacturing
industry, drugs have long development cycles,
huge development costs, high project failure
rates, intense regulation, high compliance
costs, shortened periods of patent exploitation,
government-enforced price controls, numerous
competitors and great product liability issues
when a product does make it to the marketplace.
This set of conditions is highly unattractive for
an industry that might want to borrow money
and attract investors.
And so, it becomes a fact of life for large phar-
maceutical companies that they must fund their
research and development activities themselves.
Not only that, but one way or another, they must
also fund development candidates that emerge
from small pharmaceutical or biotechnology com-
panies, too. The latter cannot afford phase III stu-
dies, and would find it impossible to recruit a sales
force.
But research and develop we must. If we do not,
then this industry will wither approximately at the
rate of appearance of generic products. Such a
withered industry will bring to an end almost all
progress in medicine.
This section therefore concentrates on the finan-
cial aspects of pharmaceutical medicine. This may
be an unattractive subject to the idealists. But
Churchill once said: ‘Democracy is the worst
form of government, except for all those other
forms that have been tried from time to time’
(House of Commons, 11 November 1947). Perhaps
we should replace the words democracy and
government with the terms private enterprise
and medical progress, respectively.