A bitter pill

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Wyeths drugs including the anti-acid Protonix are facing renewed competition from generic products.

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Wyeth is facing legal claims in the US that its Prempro drug caused breast cancer among its users.

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Wyeth has an appeal pending at the US Supreme Court concerning a patient who suffered complications after taking the antinauseant Phenergan.

Mahady is pleased with the speed the region has embraced Wyeth's drugs but says he is constantly looking for better growth.

"Sometimes the first dollars are the easiest ones. You get excited, you have a national immunisation programme and you go into new territory. But in the second, third and fourth years the [territories] are much more challenging to deal with, either from an economic effort or they have become more demanding in terms of what they expect from the pharmaceutical companies."

While Wyeth may be scaling back its staffing needs, it still plans robust investment into research and development. It is realigning its research projects to concentrate on six therapeutic areas and 27 diseases in a bid to increase the likelihood of finding another blockbuster drug.

Oncology will be one of the focus areas, in line with predictions from IMS and other data agencies marking cancer as one of healthcare's fastest growing sectors. IMS is predicting a 16 percent increase in cancer spend in 2009. Globally, the market is currently worth around $52bn.

Obesity is another key area. Last month saw Wyeth purchase the tiny biotechnology firm Thiakis for $30m. The British firm has focused its research efforts on obesity therapies, and will prove a valuable addition to Wyeth's drugs pipeline if its therapies prove effective.

The New Jersey-based drugmaker is set to face a number of significant hurdles in 2008, partly driven by America's upcoming change in administration. Mahady is under no illusion that an Obama government will pose a tougher test for big pharmaceutical firms in terms of regulation from the Food and Drug Administration (FDA). But he believes a more challenging process will eventually benefit the industry.

"I think we genuinely believe [it will be a] tougher environment but I am not as concerned as maybe people might think I would be," he explains. "I think one of the big things we need in the US for drug approval is a strong leadership at the FDA level.

"I believe the approval process requires courage from the FDA and I think they only have that courage when they have a strong leader. We have done better as an industry with FDA commissionaires that were tough on us."

A harder line from the FDA, however, will make Wyeth's patent losses harder to bear. With few new drugs on the market, all pharmaceutical firms are bracing against competition from generic products and a likely loss in market share.

Last year saw Wyeth lose the patent lock for the antidepressant Effexor, a drug that has netted $3.79bn in annual sales, and it faces unanticipated generic competition for its anti-acid Protonix. Mahady concedes generic drugs are likely to be one of the biggest challenges next year, but says the rivalry does have its advantages.

"There was a point in time when you would fret that the generic was coming. While we don't like it when it happens to our brand name product, generic drug availability has been a way of taking the pressure out of the system," he says. "When drugs go generic the cost picture changes and to some extent we hope it creates a supply of revenue to be supplied to new drugs."

But time in the laboratory is fast being rivalled by the time Wyeth spends in court. The pharmaceutical industry suffered a barrage of lawsuits in 2008, and the trend looks set to intensify. According to newswire Bloomberg, as of October 29, Wyeth faced around 8700 legal claims from women in the US who contend Prempro, its hormone replacement therapy, caused breast cancer.

The drugmaker is also the subject of a Senate investigation, amid accusations it hired ghostwriters to pen favourable articles about its drugs for medical journals and then signed academic scientists as authors. Bringing up the rear is a pending appeal at the US Supreme Court, concerning a $7m payout to a patient who suffered complications after taking the antinauseant Phenergan.

"It's unfortunate [and] it's an incredibly significant consumption of management time to deal not only with the act of lawsuits, litigation and government threats, but the time spent trying to avoid those issues," Mahady admits.

It was reported that the firm set aside more than $21bn to resolve lawsuits over its fen-phen (anti-obesity) diet combination but, unlike its research budget, Mahady denies that Wyeth sets aside a specific budget for future lawsuits.

"Do we budget a fair amount of money for defending these cases? Obviously the answer is yes," he acknowledges. "Our legal bills go up every year."

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