Economy Hits Drugmaker Profits

The sale of prescription drugs isn’t what it used to be.

Sales in the U.S. rose just 1.3 percent in 2008, to $291 billion, according to information supplied by IMS Health Inc. The company gathers marketing data from drug companies. 

“It’s a new lower-growth environment than we’ve seen in the past, although some of the factors have been present for awhile,” says Diana Conmy with IMS.

The factors include the increased use of generic drugs, made to resemble the original when it goes off patent.  Other patients are apparently choosing to go without medical treatment, unable to afford private insurance or COBRA.

Prescription drug sales rose at a 3.8 percent growth in 2007 and eight percent in 2006. Previous years have seen double-digit growth.

Still the leader of the pack – lipid medicines that lower bad LDL cholesterol or raise good HDL cholesterol. Codeine and painkillers with narcotics followed with anti-depressants, two types of blood pressure drugs or ACE inhibitors and beta blockers rounded out the top five sales.

Just on the horizon is the sunsetting of patents for blockbuster drugs Lipitor (Pfizer); Plavix (Bristol-Myers Squibb); and Zyprexa (Lilly). All three drugs have patents that expire in two years.

The U.S remains the only country that does not regulate the price of prescription medications. Industry analysts fear that in an Obama administration, drugmakers may be forced to negotiate the prices of their name brand products. 

And diminishing profits are seeing mergers between previous drug rivals.

After shying away from acquisition, Merck has announced plans to acquire New Jersey drugmaker Schering –Plough for $41.1 billion. The merger will still be called Merck, and for the next two years will be headed by Merck Chief Executive, Richard Clark.

The deal echoes another one for two drug giants, Pfizer agreeing weeks ago to buy Wyeth for $68 billion.  #