Amgen’s R&D and Roche’s Tarceva Patent Mediation In India: Risks, Prices, and the Right off Access to “Essential” Drugs

There are two stories in the recent pharma news that are completely unrelated. In this week’s post I will ponder their possible relationship. In the first story, Damien Garde of FiercePharma reported that a highly-regarded biotech industry analyst, Geoffrey Porges, is highly critical of Amgen’s ambitious and risky R&D efforts.1 In the second story, also in FiercePharma, Eric Palmer reported that a court in Delhi, India, has ordered Roche and Cipla to enter into mediation of their dispute over the patent on Roche’s cancer drug Tarceva.2
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Profits or Drugs?

There are two stories in The New York Timesthat, although not directly related, are the basis for today’s post. The first, by Andrew Ross Sorkin, Do Drug Companies Make Drugs, or Money?, appeared in the Business Section on page B1 on June 3, 2014. The second, by Andrew Pollock, New System for Treating Cancer Seen as Hopeful, appeared on the same page of The New York Times on the same day. Sorkin’s provocatively titled article focused on Valeant Pharmaceutical International’s takeover bid for Allergan and on Valeant’s strategy, which Sorkin characterized as buying pharmaceutical companies with revenues produced by active and successful pharmaceutical research programs and then increasing profits by cutting back on R&D. Sorkin’s article, as the title indicated, posited a tension between focusing on rewarding investors with increased profits and investing in the development of new and innovative therapies. My purpose in highlighting Sorkin’s article alongside Pollock’s is not to take issue with Sorkin’s analysis of Valeant’s business strategy, but to respond to the article’s title question. The answer is that pharmaceutical companiesprimary obligation is to their shareholders and that means their primary objective is to reward those investors with increased profits–that is,“make money.” However, as Pollock’s article about a very promising new class of anti-cancer drugs illustrates, developing new and medically-valuable therapeutics is a major, although not the only, way that pharmaceutical companies seek to earn those increased profits. Now if all I had to say about these two articles is that pharmaceutical companies, like all other businesses, attract and reward investors by making profits and developing important new drugs is a way of making large profits, I would only be stating the obvious.

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