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Pfizer is one of the largest pharmaceutical firms in the world. They are the makers of popular products such as Viagra, Lipitor, and Celebrex. Lately, shares of many pharmaceutical companies have been performing poorly and the once thriving industry is now in peril as major reformations and cuts are under-way to make these companies more profitable once again. However, drug prices are not any cheaper, and generic drug manufacturers are making bold statements and aggressive practices to ensure that lower price drugs outsell the brand name alternative. At initial glance this may seem to be a great move on behalf of the consumer, but there is a major catch-22 with this approach.

This article over at The Economist talks about how Pfizer, one of the most conservative companies in the pharmaceutical industry is trying to overcome the down times to become a profit leader in a very competitive market. There are three main reasons why Pfizer and other major pharmaceutical companies are struggling:

1. Generics are squeezing the profit margin
2. Harder and costlier to find and develop new treatments
3. Industry is too focused on marketing and selling, taking away vital funds from research and development

The main problem is that most of these companies, Pfizer included, are vertically integrated. That means, in plain words, they do everything themselves.

The risks have been compounded by vertical integration, reckons Roger Longman of Windhover Information, an industry consultancy. Unlike firms in other businesses, Big Pharma still does most things in-house, from research to manufacturing, sales and distribution. Mr Longman insists that big drugs firms must move towards a “disaggregated” model to focus on a few core areas of competence, such as drug discovery, development or marketing. Many activities can be put out to the growing legion of biotechnology start-up firms, contract research organisations, independent drug-development firms and freelance sales organisations.

Some experts agree that these companies need to focus only in certain areas. For example, they should either do strict marketing or selling or focus on developing new products. We are no longer in an era where medicine will be affordable. Companies such as Pfizer will spend upwards of one billion dollars just to introduce a new pill. The biggest disadvantage is, ultimately, to the consumer. With rising prices, the consumer has to pay more money out of his/her own pocket to get the treatment they need to survive. I think the entire health-care industry has been too focused on profit margins and not enough on the actual patient. Insurance companies are simply sophisticated scam artists that look for every possible way to decline their customers. What is the point of insurance if they are going to actively look for ways to decline you? What is the point of new medicine if the vast majority of people cannot afford the treatment? Drugs that can save lives should be readily available to those who can and cannot afford them. Aesthetic drugs, such as Viagra, merit their high prices because sexual dysfunction is, generally, a non-life threatening issue. Maybe someday we’ll see a world where everyone has equal access to treatment that they need to survive.

Source: Billion Dollar Pills
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