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Picks and shovels |
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| There is, of course, the old aphorism that if you want to make money in a gold rush, the most reliable way is to sell picks and shovels. In the days of the California and Alaska gold rushes, miners who struck it rich were few, but traders and tinkers of mining equipment were well employed, at least until the mining area played out.
Today’s pharmaceutical and biotech markets bear some resemblance to those gold fields of the 1800s. Big pharmaceutical companies are seeking the next billion-dollar drug to treat diabetes, heart disease, or osteoarthritis. Huge sums are being invested in research, development, and marketing. Thanks to direct-to-consumer advertising, pharmaceutical names are as common in everyday conversation as those of sports teams. Finding these blockbuster drugs is a little like striking it rich. Last year, Celebrex and Vioxx each generated over $2 billion in revenue, Lipitor over $5 billion, and Prilosec over $6 billion. Clearly, there’s gold in “them thar hills”. But there can be a downside. Consider the Bayer Corporation and its cholesterol-lowering statin drug, Baycol. Taken by 700,000 Americans before its removal from the market last August, Baycol caused rhabdomyolysis in some people. In this disease, skeletal muscle breaks down and releases myoglobin into the blood plasma. Bayer withdrew Baycol after it was associated with 31 deaths in the United States and at least 9 deaths in other countries. At the time of its withdrawal, it accounted for nearly $1 billion in Bayer’s revenue. Ironically, that could be offset by soaring sales for the company’s antibacterial, Cipro, due to anthrax bioterrorism. Nevertheless, according to The Wall Street Journal, the long-term loss of Baycol income may cause Bayer to exit the pharmaceutical market. That’s the trouble with the pharmaceutical business. Until we get really good at pharmacogenomics, in which we can tailor a drug to the particular genome of an individual, cases like Baycol probably will continue to arise. But it’s a different case with the drug industry toolmakers. These are the biotech companies that make liquid-handling equipment, robotic analytical instruments, bioinformatic and molecular modeling software, and the like. In a briefing sponsored by a consortium of German state development agencies, Qiagen general manager Peer Schatz gave his view of this market from both a German–European and a U.S. perspective. According to Mr. Schatz’s figures, there were 1300 U.S. and 1600 European companies in the biotech market in 2000, employing nearly a quarter of a million people. While these companies were relatively small, with an average of 130 employees in the United States and 40 to 60 in Europe, they were nonetheless growing almost twice as fast as the large pharmaceutical firms. In point of fact, there will likely be shortages of skilled vocational and technical labor in the biotechnology industry. Companies such as Qiagen are directly funding vocational and technical schools in Germany simply because they need an assured source of labor. If you think of the path by which drugs are discovered and ultimately produced, it’s no wonder that no one pharmaceutical company has all the skills needed for success. In one sense, biotech firms providing tools and resources to different drug companies offset the risk of the ambiguities of the drug discovery process and the vagaries of the business cycle. Pharmaceutical companies do not have to be expert in every facet of the drug discovery process. They have the pick and shovel companies to help them in their mining efforts. — |
