GSK Reducing Drug Prices in Developing Countries

Last Friday, GlaxoSmithKline announced a plan that would reduce the prices of several patented medications in 30 of the world’s lowest-income countries.  According to the Wall Street Journal, GSK also said it would invest 20% of its profits from low-income countries into health clinics and other infrastructure.

More details of the plan reveal that GSK will lower the price of medications to 25% of what it would be in developed countries.  GSK plans to include drugs that will treat asthma, hepatitis B and malaria.  Although some GSK drugs are already sold in developing countries, this new plan will reduce the prices of those drugs if they cost more than the 25% mark.

GSK CEO Andrew Witty also announced his proposal of a voluntary patent pool that would fuel development of new treatments for neglected diseases.  Witty directed his comments towards other pharmaceutical companies who could make patents available to other third-party researchers.  Interesting enough, GSK did not include its HIV/AIDS research in the patent pool.  Witty stated that the patent pool is to focus on diseases that do not have treatments.

Of course, there must be monetary reasons as to why GSK would not place its HIV/AIDS research into the patent pool.  However, it is nice to see GSK taking initiative into solving problems in developing countries.

Pfizer-Wyeth Merger a Preview of Things to Come?

Pfizer’s recent move to buy Wyeth should not have come as any major surprise.  With patents expiring in the near future, and revenue pools drying up, such a move made sense.  But according to Pharmafocus, more pharmaceutical mergers may be on the horizon.

One such company that is speculated to make a move is Merck, which still hasn’t found a product that equals the amount of revenue generated by Vioxx.  In 2004, Vioxx was withdrawn after concerns that the drug increased the risk of heart attacks.  Chief executive Richard Clark recently said, “I don’t think in today’s world any CEO can categorically rule out any type of transaction.”  Some speculate that Merck could potentially merge with Schering-Plough, after the two forged a successful partnership for the marketing of cholesterol drug, Vytorin.

Another potential merger could involve Sanofi and Bristol-Myers Squibb.  The two recently gained legal protection against any further attacks on their co-marketed drug, Plavix.  But with the patent for Plavix expiring in 2011, both will see a huge loss in earnings.

At the same time, GlaxoSmithKline has made it clear that they are not interested in any mega-merger.  Chief executive Andrew Witty recently said he would “not be distracted by large-scale M&A.”  Some believe that the company’s recent moves into emerging markets supports Witty’s statement.

While merging companies may cut costs, it may only buy time.  The real cure for big pharma is to continue innovating and diversifying their research.

‘Patent Cliff’ Approaching For Pharmaceutical Companies

Many drugmakers fear the approaching year of 2011, as billions of dollars will disappear overnight when the patents surrounding big drugs such as Lipitor, are set to expire.  While 2009 isn’t as big of a year as 2011, many companies will see key patents expire, reports PharmaTimes.

Last year, some high-value drugs went off patent, including Merck & Co’s Fosamax, Pfizer’s Camptosar, and Wyeth’s Effexor XR.  But this year, over 100 pharmaceutical are set to expire, including 13 of which are for major products.  The big firms that will most likely be affected are GlaxoSmithKline, Pfizer, Novartis, and Takeda.

However, a recent report from Global Insight suggests that patent protection may not mean as much as it did in the past.  Last year, generic drugmakers began to challenge patents much earlier in the patent lifecycle than in previous years.  Also, there was a much larger willingness from the big pharmaceutical companies to accept settlements with generic drugmakers in the early stages of a patent lawsuit.

The report also states that the global market for generics will reach $75 billion over the next five years, with annual market growth between 14-17%.  While the market for generics increases, however, the report notes that only a few of the products that face patent expiration this year will have enough market potential for generic drugmakers to really pursue them.  But, the report does not tell how it came to that conclusion.