New York 23rd of November 2020 By Philipp Mark --
…an interesting overview of the Pharma industry by Loik Le Floch Prigent and Irina Duisimbekova who had advised some of the largest M&A healthcare transactions in 2020.
The care brought to people by professionals has always been the subject of remuneration. The one who heals is always thanked not for the time spent for the act but for the result resulting from the experience. We used to travel to see the healer, but also to have the product that would relieve, and get us back on our feet… now, modern life and the 21st century have changed nothing to this mechanism, but just the knowledge, tools, and behaviors have changed and we entered a world more and more precise and regulated in most countries so that the game of actors has changed considerably.
Loik Le Floch Prigent
Irina Duisimbekova
Since it is above all a question of protecting the health of citizens and prolonging their lives, States have looked into the possibility of universal coverage of health care and therefore cost control.
“Medical or chemical artists have been put in line, there is authorization to perform acts, controls, as well as certification of health care products placed on the market and analysis of the prices charged by manufacturers” precise Loik Le Flich Prigent; “So there is always supply and demand, but the regulations are strong and have led to a squeezing of margins”.
Medical and pharmaceutical fortunes still exist, but nothing like what happened a hundred years ago with world-renowned surgeons, renowned specialists and pharmacists distributing products at unbeatable prices. The global philosophy that underlies today's operation is that humanity must be able to come to the aid of all humans regardless of their condition . Everyone is well aware of the limits of the application of this principle, we know, for example, the propensity of the Presidents of States to go to prestigious establishments more suitable than others to be able to prolong the existence of these indispensable men or women.
As far as pharmacy is concerned, i.e. products capable of treating, relieving and curing, the solvent demand, i.e. the ability to maintain an acceptable remuneration in view of the financial efforts involved, has tended to be cut at both ends: …”The reimbursement of drugs by public or private insurances has weighed on marketing authorizations, and the possible side effects have led to more expensive pre-launch studies, laboratory tests, animal tests, tests on human samples...all of which are long and expensive, while remuneration must be hard to negotiate”…. Highglight Irina Duisimbekova…; “One can still hope for the paradise of success, but one must also bear the costs of failure and the profitability of all these years is far from guaranteed”- added President Loik.
Over the last fifty years, the pharmaceutical world has experienced an unimaginable concentration of companies, with five or six large companies dominating the world in the production and marketing of the main products administered by patients. Hundreds of family-owned companies that have grown out of pharmacies have been "swallowed up" in this way over a period from 1970 to the present day. This disappearance of the "small" ones led the "big" ones to also buy each other, so that most of the available products come from these firms. We know their names, Merckx SD, Glaxo SK, Bayer, Sanofi, Pfizer, Roche, Novartis...leaving far behind followers who seek to concentrate on a few large niches and finally companies that survive in the shadow of the big ones by working in generics, over-the-counter products and cosmetics. A lawsuit, an error, a failure, can be fatal, even to the biggest, and we are even now witnessing a sharing of risks between these large groups!
It is in this world that three major events occurred that was able to redistribute the cards:
1- The first is the advent of biotechnologies that could revolutionize the field of drugs, both in terms of discovery and development. Biotech" appeared on campuses and groups began to chase away the "start-up" that was going to bring them the new product, either universal, making major progress on a classic disease, or attacking a phenomenon that is still misunderstood (autism, polyarthritis, etc.) or that could lead to a vaccine (of the order of 130 in preparation, including that of AIDS). ...) The sums put on the table to buy out small teams in the making leave one stunned, but the large groups no longer have inventors, only staff likely to "smell" promising start-ups.
2- The second is the advent of digital technology and artificial intelligence, which makes it possible to use algorithms by swallowing an incalculable amount of data. As a result, leading specialists in the sector have married up with one or two major pharmaceutical groups and are analyzing both molecules and treatments, advancing knowledge in all health-related sectors around the world. Computer scientists have therefore come to meet the major pharmaceutical groups and both are hoping for profitable advances.
3- The third is recent, it is the covid-19 pandemic, the fear that has gripped the whole world, the containment that has damaged the economy but which has allowed the big pharmaceutical groups to make profits that were unthinkable yesterday! However, the other side of the coin is that they have all incurred enormous expenses for the realization of vaccines, but immunological research is still not very advanced and despite the cries of victory and the pre-financing provided by a few States or patrons, there is no certainty about the result because it will be necessary to go through the multiplication of clinical trials to obtain permission to enter the market.
Some "biotechs" believe they have succeeded, they will be bought, but nothing indicates that their financial success will be assured. Indeed, in the face of this globalized pandemic, public opinion has been moved by the need to make the results of work available to all humanity free of charge if they are successful, which means for the major groups an illusory return on the current huge funding. So there will be universal demand, but will it still be solvent? It is the entire economy of the pharmaceutical world that could be shaken up in this way. At the time of the mergers, there was a debate in France on the legitimacy of earning a lot of money, or not, on vaccines, in the tradition of the great national researchers of the Pasteur Institute, but the humanist arguments had been swept aside, and we find them today!
However, the future is far from being written and some specialists now recommend another way, that of trying out old prescriptions on new diseases that have been accepted by the market, that are sold at moderate prices and whose side effects have been appreciated by millions of patients for fifty years. It is clear that if this idea were to have a point of application accepted by the scientific community, it could weaken the constitution of these global pharmaceutical monsters because these products are no longer patented and belong to the public domain. It is clear, in any case, that the pandemic has brought to light for all populations the power, the power of a few large multinational corporations and that in the collective unconscious it is frightening.
Phillip Mark
Prysma Media