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Friday, December 12, 2008

Is "Creative Destruction" the way to go for the Pharmaceuticals?

Roche Chief Warns of a Likely Shakeout makes an interesting admittance of the need for the change in the pharmaceutical industry.

World is seeing the automobile (premier) industry requesting salvation from the government as they drove themselves in a ditch. Are the Pharmaceuticals heading in the same direction?

Recent Wall Street article "How Detroit Drove Into a Ditch" is an excellent review of the auto industry. It clearly suggests that they lagged innovation and are suffering. Recent admissions by management of General Motors also stated that. Only way out is to innovate and do it in a hurry if they want to survive. Only time will tell but based on their past record, future looks bleak.

Pharmaceuticals have lived on the "blockbuster model" and have won. One player of the team has led them to victory for many years. Now it is time for the whole team to play together.

Unless R&D and Manufacturing become strong, Ethical Pharmaceuticals cannot compete in the global market. Marginally better drugs and personal medicines will not generate the revenue stream once the patents have expired. It is time to compete on the global scale i.e. serve the needs of 6.2 billion by serving across the globe rather than a small percentage of the population. Manufacturing and R&D need to innovate.

Dr. Severin Schwan, chief executive Roche Holdings AG is correct. It is time to change the business model. Are Pharmaceuticals Antithesis of Creative Destruction?
I do not think so. We need to innovate for the long term survival.

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