Wednesday, January 28, 2009

Pfizer-Wyeth merger and medicine innovation

The Pfizer-Wyeth merger, ie, the former bought the latter at $68 billion tag, is seen by some groups as "moving towards oligopoly" of the world pharmaceutical industry. That it's like approaching "Big Oil" or "Big Tobacco".

I think business moves like this merger should be considered as purely micro- and corporate decisions, as such mergers were done voluntarily: one proposed to buy, the other agreed to be bought, at a certain price and other agreements.

As consumers and patients, our main concern is whether medicine innovation and competition among players for innovator medicines, is retained and expanded, or compromised and scuttled, as a result of this merger. This is because there is ample supply and competition among players in the generics drugs market in the country and many parts of the world. It is in the innovator medicines where problems are cropping up, and ironically, at the time where people are getting more demanding, more impatient, for more “miracle drugs” that can treat their various diseases quickly and safely.

The Pfizer-Wyeth joint statement said that the merger will result in more “synergy” between the research capability and output of the two companies, enabling the single entity to produce more output at lesser cost. Technically this will result in cheaper price of innovator medicines, unless external distortions like multiple taxes and fees and health regulations will also rise, which can erase and neutralize the gains in corporate synergy and efficiency.

The "cheap at all cost" and "access for all" medicines mantra is all around the world now. Understandably in poorer countries, but in rich and industrialized countries like the US, this seems to be ironic.

There is also another irony for many health bureaucracies around the world, like Department or Ministry of Health in many governments, and the WHO: there is huge if not panicky focus on "access to cheap medicines for all" that often result in discouraging medicines innovation, but these agencies are also highlighting "emerging and re-emerging diseases" that need medicine innovations. In the Philppines for instance, the DOH is watching ebola, new avian flu virus, etc. and hinted at the need for "new medicines".

This irony is posing danger to humanity. My observation though is that if you create enough "noise" at the DOH- or WHO-sponsored or co-sponsored fora, they tend to listen. Some sanity should emerge later, when they finally realize the long-term risks of their interventionism and anti-innovation policies.

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