The drug formula that didn’t work

Matthew Lynn says the mega-mergers that reshaped the global pharmaceutical industry over the past decade have delivered little of what they promised

Meanwhile, Sanofi-Aventis hasn’t fared much better. In September it ousted its chief executive Gerard Le Fur, who’d been in the job just 18 months, and replaced him with GSK’s Chris Viehbacher. The reason? Setbacks in bringing vital new drugs to the market. Not much sign of bigger R&D budgets transforming the industry there either.

It wasn’t just R&D, however. ‘We can contact 250,000 physicians in one week,’ said Garnier at a press conference in London, boasting about the 40,000-strong sales force that the combination of Glaxo and SmithKline would have at its disposal. And indeed it could. The trouble is, it’s no good just contacting doctors. You need something to tell them.

True, the massive sales forces at the disposal of the merged conglomerates gave them the ability to push new medicines on to the market far faster than in the past. Possibly, it allowed them a slightly easier passage through the regulatory process as well. If a drug worked, they could tell people about it quickly, and so get more mileage out of a limited patent life.

Yet, once again, the premise was flawed. Doctors are not stupid, and neither are regulators. Whether you have 1 per cent or 10 per cent of the global market doesn’t make much difference: your drug still needs to go though a lot of trials before it will be licensed. Likewise, doctors are always looking around for new treatments. They don’t prescribe drugs because a slick salesman just gave them free pens. Indeed, with the pressure on health budgets around the world, medical professionals look at the claims of drug salesmen more sceptically than ever. The chances of selling a mediocre or irrelevant treatment are lower than they have ever been.