The Blockbuster Drug-Pharmaceutical Employment Conundrum
Much has been written about the end of the “blockbuster” drug era in the pharmaceutical industry. For those of you who may not know what I am talking about, a blockbuster drug is one that yields a pharmaceutical company over $1.0 billion a year in sales. If you figure that the profit margin on a blockbuster product is typically around 1000 per cent, it is easy to see why pharmaceutical companies have relied on the blockbuster drug business model for the past few decades. Over the past several years, pharmaceutical company executives and Wall Street analysts have declared that the blockbuster drug model era may be drawing to a close. Unfortunately, it was this business model that enabled major pharmaceutical companies to make billions of dollars, grow larger and hire tens of thousands of new employees. Consequently, it should not come as a surprise, that the end of the blockbuster drug era will have a serious negative impact on the size of the global pharmaceutical workforce Bristol Myers Squibb (BMS) is an excellent example of the effects that loss of a blockbuster drug may have on a major pharmaceutical company. Sales of its anticlotting drug Plavix® reached a whopping $3.2 billion in 2005 which accounted for approximately one-third of BMS’ total revenues that year. However, in 2004, the Canadian generics manufacturer Apotex, after developing a generic version of Plavix®, challenged the validity of the Plavix® patent estate (which was thought to run through 2011). In an effort to settle the patent dispute, BMS entered into an agreement with Apotex in 2005 which stipulated that Apotex would delay launch of its generic version of Apotex until 2011 in exchange for cash. Unfortunately, American authorities learned about the agreement and declared it illegal and invalid. Interestingly, according to the terms of the agreement, BMS agreed to not prevent Apotex from selling its generic version of Plavix for 30 days if the agreement was terminated for any reason. Termination of the agreement in late 2006 allowed Apotex to temporarily launch its generic version of Plavix®. Although Apotex’s drug was on the market for only a few weeks (before BMS got an injunction to stop Apotex from selling its product), U.S. sales of Plavix plunged to $2.7 billion in 2006. This represents a $500 million loss in sales as compared with 2005.
BMS officials and many US patent experts believe that the patents protecting the Plavix® franchise through 2011 will be invalidated in federal court. If this proves to be the case, Apotex (and other generic manufacturers) can immediately begin selling generic versions of Plavix® in the US. This will have a devastating effect on BMS’ revenue stream. To make matters worse, BMS will also lose patent protection for its top selling hypertension medication Avapro® in 2011. Perhaps this is why the company is up for sale? Whether the company is sold or not, there will be corporate downsizing and a loss of jobs in NJ and elsewhere.
The death of the blockbuster drug era signals the beginning of the end robust employment opportunities that existed in the pharmaceutical industry for the past 20 years. Those of you who are considering industrial careers ought to take this into account and begin to consider your options!
Until next time…..
Good Luck and Good Job Hunting!!!!!!!!!!!!
