Big Pharma - "flatliner"

The Economist has an excellent analysis of Big Pharma's Big Problem.

Yet the clouds have darkened over Big Pharma. The industry's share prices have performed pitifully and a new report from Accenture, a consultancy, calculates that a whopping $1 trillion of “enterprise value”, which measures future profitability, has been wiped out because investors have lost faith in drugmakers' growth prospects.

And:

For a while the industry has found comfort in free-market America, where most big drugs firms earn half or more of their profits. But America's willingness to pay over the odds for new treatments could be coming to an end.

And:

In America, where firms have been allowed to peddle pills on television, consumer drug advertising has shot up from $1.1 billion in 1997 to perhaps $4.5 billion last year. The reason firms headed down this path is that it seemed to work. AstraZeneca's boss, Mr Brennan, is a former drugs salesman and he acknowledges that companies may have gone too far. Visits by numerous different salesmen to the same doctor have escalated into a costly practice. Pfizer now plans to restrict such visits. GSK's boss, Jean-Pierre Garnier, has vowed to cut marketing expenditure and use the money for drug discovery.

This is a great read.