1. Pharmacology II.
The Business of Sick

2. Pharma – A Business Model from the 20th Century
The pharmaceutical industry develops, produces, and markets drugs licensed for use as medications.
Pharmaceutical companies are allowed to deal in medications and medical devices.
They are subject to a variety of laws and regulations regarding the patenting, testing and ensuring safety and efficacy and marketing of drugs.

3. Pharmaceutical Milestones
Morphium 1827 Merck Ger pain
Aspirin 1898 Bayer Ger pain, fever, inflammation
Heroin 1898 Bayer Ger pain ‘nonaddictive’
Insulin 1921 Eli Lilly USA diabetes
Prontosil 1932 Bayer Ger 1st antibiotic
Redoxon 1934 Hoffman-LaRoche Switz Vit C
Penicillin 1942 Merck USA antibiotic
Valium 1957 Hoffman-La Roche Switz sedative

4. 2011 - Top Ten Pharma Company Headquarters Revenue USD million
Employees
Pfizer
USA
67,809
122,200
Novartis
Switzerland
53,324
138,000
Merck & Co.
45,987
74,372
Bayer
Germany
44,200
106,200
GlaxoSmithKline
United Kingdom
42,813
106,000
Johnson and Johnson
37,020
102,695
Sanofi
France
35,645
100,735
Hoffmann–La Roche
33,547
100,289
AstraZeneca
26,475
50,000+
Abbott Laboratories
22,476
66,800

5. How to Make a Drug? There are 3 main stages Drug Discovery
Drug Development
Drug Marketing

6. 1. Drug Discovery
Structured research: chemical compound design and synthesis, invitro and animal studies
3 – 8 years
10-50 scientists
cost: 2-8 Million USD
Patent: dated document giving the inventor exclusive rights for manufacturing, sales and marketing of drug for 20 years
The most promising drug candidate enters Stage 2: Drug Development

7. Drug Development
Hundreds of health care professionals, administrators, lawyers, scientists
Humans Trials: random, blind and placebo controlled – clinical studies
Phase I: Safety - healthy subjects
Phase II: Efficacy - subjects with disease
Phase III: larger group, statistics
FDA Application for approval of drug
cost: 1 Bio USD

8. Manufacturing, Sales and Marketing
Permits, building of production facilities – where?
Packaging, branding
Targeting of medical communities
Advertising, Sales Rep Force
revenue flow varies

9. Drug Market Classifications
Original Drug: full priced, patent protected, maximum revenue phase: 8-10 years
Generic Drug: expired patent, everybody can manufacture, price drops
Orphan Drug: drugs for very small patient group/ rare diseases, little revenue, public funds help offset cost, extreme high price
Me Too Drug: similar products/incomplete patent protection, lowers revenue base
Blockbuster Drug: highly effective drug with large patient base, symptomatic life-long treatment, broad substance class patent protection

10. Economics of Drug Development
Total costs: up to 2 billion USD (includes costs for failed drugs)
Only 3/20 drugs can recoup that
A pharmaceutical company needs to produce a block buster drug every 5 years
Top Selling Drugs