October #85 : Merger Mania - by Liz Highleyman

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Table of Contents

Tough Act to Swallow

Worlds Collide

Alone on the Range

Two-Timin' Man

New Head, Same Hydra?

Mup Roar

Land of Oz

Merger Mania

AZT Fraud?

Off The Cuffs

Red Scare

Hardish Times

Fatwa Skinny

What's In A...?

Epis Appeal

Mining for Meaning

Losing Control

No Guest List

Hep Hooray

Home Remedy

Did You Hear?

Status Seeking

Editor's Letter

Mailbox

Obituaries

Sins of Transmission

Porn Again



Most Popular Lessons

The HIV Life Cycle

Shingles

Herpes Simplex Virus

Syphilis & Neurosyphilis

Treatments for Opportunistic Infections (OIs)

What is AIDS & HIV?

Hepatitis & HIV


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October 2002

Merger Mania

by Liz Highleyman

Should HIVers shudder in terror at the spectre of big drug companies being swallowed up by bigger ones? Or are these monster mergers, as the industry claims, good not only for profits but for R&D of HIV meds? This quandary reared its head again in July when Pfizer announced it would acquire Pharmacia. With $48 billion in annual revenue, the new "drug combo" will control some 10 percent of the global market.

Like Hollywood, Big Pharma increasingly runs after (and on) blockbusters -- cash-cow drugs for such common, chronic conditions as depression and high cholesterol -- and these two companies are no exception: Pfizer, which hit it big with Viagra in 1998, got Pharmacia's Caverject in the merger, sewing up the lucrative erectile-dysfunction market. In comparison, HIV meds are so much chump change. As Martin Delaney wrote in last summer's RITA, "[Pharma] faces a long list of disincentives to [developing HIV meds]. The market size is not growing much in countries able to pay for the drugs. Another is the public pressure...on companies to provide drugs for free to developing countries. Yet another is the sheer number of drugs already available. From the company point of view, each new drug shrinks their potential market share."

Pharma mergers are the industry trend. Pharmacia and Upjohn merged in 1995; in 2000, Pfizer swallowed Warner-Lambert, which had gobbled up Agouron in 1999, adding Viracept and Rescriptor to its long list of products. But after flying high in the '90s, Pharma is struggling to replace powerhouse earners that will lose patent protection in the next decade, while facing threats of government drug-price regulation. Mergers can save money by consolidating staff and systems, but high-risk, low-stakes development of drugs for challenging diseases such as HIV are often the first cost-cutting casualty. "Do companies increase R&D expenditures after these mergers?" the Consumer Project on Technology's James Love asked rhetorically. "No. I think pink slips go out and R&D efforts decline."

One bright spot? Mergers of firms with competing products allow for more convenient combos, since cross-company collaboration is anathema. But once-a-day warm-overs are poor substitutes for whole new drug classes. "I read that Pfizer CEO Hank McKinnell is 'approachable' and 'meets with people down in the hierarchy,'" said Treatment Action Group's Mark Harrington. "Perhaps AIDS advocates should seek a meeting with McKinnell to discuss the impact of the merger on HIV." At press time, no such meeting had been planned.




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