Strong third qtr Pharma results 'due to cost-cutting, M&A, not organic growth'

The strong quarterly results that have been announced recently by several large pharmaceutical companies over the past week or so may not be all they seem, says industry observer Steve Webb, chairman of pharmaceutical software supplier Interactive Medica. He believes that the good financials are due more to short-term cost cutting and mergers rather than organic growth. In fact, he notes, profits mask major structural issues with pharmaceutical sales models in Western Europe and the USA.

Third quarter results for organisations such as Merck & Co, Novartis, Bristol-Myers Squibb and Schering-Plough exceeded or met market forecasts, helped by cost cutting and growth in new markets. However, this is not sustainable given the fast-moving changes in the USA and European pharmaceutical markets. The traditional, one-to-one sales relationship is becoming more complex, involving more stakeholders and increased regulation, including authorities such as the National Institute for Health and Clinical Excellence (NICE) in the UK, all influenced by a larger ecosystem of information sources, says Mr Webb.

Sales models must adapt