Pharma Future: Is the Glass Half-Empty or Half-Full

The size and scope of the troubles at Bristol, Merck, and Schering, has prompted much questioning of the basic Big Pharma investment proposition. In interviews with IN VIVO, four experienced buy-siders and one veteran sell-side analyst all read the same signs and come out on both sides of the question. Some of our investors see the company problems as more spectacular than generic-driven disasters faced by earlier companies like Syntex and SmithKline, but ultimately cyclical and different merely in degree; others see a shift in investment advantage to smaller companies who, with similar access to new product opportunities, can grow faster in percentage terms because they are growing off smaller revenue bases. All four investors, however, generally fault top management for a series of big and little mistakes which have greatly exacerbated problems-but which can probably be summarized either as overconfidence in pipelines or as an unwillingness to prepare in time for the downside.