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PHARMA: Pharma no longer a safe haven?

Merck, which span off Medco as featured in the previous story on today’s THCB, has not been having such a good time as its former subsidiary. It’s recent lay-offs of over 4,000 has lead to the now quite widespread belief in New Jersey that the sky is falling.  For instance this Reuters’ article says that the pharmaceutical area (is) no longer (a) safe haven for jobs.  It raises all the issues that THBC readers will be familiar with–Canadian imports, drying pipelines, Medicare drug coverage, expiring patents, government probes, generic competition, and more.

Perhaps it’s time for a little perspective here. No question that pharma is in a tight spot compared to the cream and jelly days of the late 1990s. However, this industry has always been tremedously profitable.  Some of my former colleagues some time ago went to see a company that’s now part of a giant UK conglomerate (the corporate name has expired but think of a common greeting). They toured the research facility and were amazed at the plushness, the marble sinks and the general over-abundance.  Their host noticed their observations and after noting that the policy consulting guys were always telling them to not be out in front with their profitability, said "we had to hide the money somewhere!" Even if big pharma’s profits fell by half, it would still be the most profitable business in America!

The last time the stock market beat down the Pharma stocks was in 1994.  If you’d bought Merck stock then at between $14 and $18, you’d still be very happy now.

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Joyce

I’m waiting eagerly for the day Medco DOES FAIL! I’m one of their unfortunate customers, forced to be so by my so called health insurance. Medco is in the business of making customers miserable instead of supplying medications. Time after time, I have to do battle with them to get what my doctor has prescribed. They’ve held prescriptions for over a month once or twice, and a wait on over three weeks in not uncommon. They even called up my doctor once to demand that she change my prescription because I already had that WATER PILL from another doctor. Yes,… Read more »