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Offshoring Trends Net Biotech Firms
Makarand writes "According to this article in the San Francisco Chronicle, BioTech, once considered to be
the next innovative sector to help offset the jobs losses from IT offshoring, is
showing
signs of riding an
offshoring wave of its own. Foreign governments with a national
priority to attract biotech businesses with highly trained research workers and new
research centers are the new forces to reckon with in preventing the
exodus of biotech
jobs. Drug developers are looking at ways to cut costs of drug development as Americans and their employers are starting to constantly worry about the high price of prescription drugs. The lower costs of clinical trials and the ease with which human subjects can be recruited for drug tests in other countries are making biotech jobs susceptible to offshoring."
Sometimes there are subtle differences between the label and generic drug(s) that can justify the label drug.
One particular case is thyroid hormone replacement therapy, where it is generally accepted practice to not switch product, whether it be generic->label (synthroid) or label->generic. Doing so requires recalibrating your thyroid hormone levels...
Many times, patients want the label drug...
Doctors tend to leave the decision of what drug to actually fulfill the prescription with to the pharmacist...
Some health insurance plans have acceptable formularies that only include generics where possible or policies that pharmacists must provide generic instead of label, where possible.
I've long been disappointed that biotech is so damn conservative about trying to just go for it and take some chances. We're all dying after all. It's like the absurdity of cancer therapies that can't be tried on terminally patients because they might have side effects. Jesus Christ on a crutch, that's like some kind of absurd joke.
Indeed, I'm testing the waters of bionformatics myself lately so I can stop compaining and do something about it. But that's another story.
What caught my eye was the thing about being able to use stem cells. The whole stem cell story is so amazing and yet it seems that there's this amazing potential and nobody wants to try anything amazing with it. The attitude is like, yes this is amazing but we can't use it in amazing ways because it's experimental and we don't know what might happen.
If I had a research budget and I was in this competition, my idea would be to create embryonic stem cells of my mouse and just inject them into the thing like it was a pin cushion. Damn the torpedos.
So what's the worse things that's going to happen? A dead lab rat? What if the thing stays young forever? Let's pick up the pace people!
Interesting discussion: http://gigaom.com/archives/2004/04/dark_side_of_ou tsourcing.html
Check an interesting discussion on offshoring. Read the the comments after the article and the first comment. Things are not as cheap as they made out to be. There is no space between 'o' and 'u.' http://gigaom.com/archives/2004/04/dark_side_of_ou tsourcing.html
The US's traditional position on R&D is not as special as you might think - in the pharmaceutical industry, R&D competition from India is nothing new - think of Ranbaxy, Dr Reddy's Labs to name a few. Yanks probably haven't heard of them but they are happily producing generic copies of Western blockbuster drugs -even when they are still patent protected (India only recently subscribed to Western -style patent protection). These companies now have the cash to start up significant R&D projects of their own. If this isn't enough, AstraZeneca have a major new R&D (not just manufactoring) plant in India. Don't be so arrogant as to assume that the R&D in the US recently was conducted only by Americans. You benefited hugely from a brain drain of talented individuals from all over the world.
I'm caucasian, and live in a not so well off western country.
I am down the road from a biotech firm. A lot of males, including myself, sign up whenever possible for the next avaliable drug trail. American drug companies pay a sizeable fortune.
The drugs are extensively tested on animals first, and then we try them being the first human test subjects. The last time i did it, i was placed in a lab for a day under observation and earned enough money to buy a round the world trip. Not bad for a days work. You are well looked after, and the american company also provides you with health insurence and to date there has been no deaths or long term effects on any of the thousands of people that sign up for it.
Plus you know your advancing science and that you helping save peoples lives.
To practice law, you have to be a member of the bar of the state in which you want to practice. To be a member of the bar, you have to pass the bar exam and graduate from an accredited law school. To graduate from an accredited law school, you have to have spent a minimum of two full years attending law school (with few, minor, and expensive exceptions). Attending a law school means being in residence, regularly attending classes. In other words, you can't take correspondence courses.
Bottom Line: To practice law in America, you must have an American legal education.
European companies like Siemens have allready started to do some of their R&D in eastern Europe, for example in Poland. Know-How is not longer limited so a small group of countries. Every country has to think about the cost of its workforce in order to stay competitive.
Explain to me why drug costs are cheaper in Canada if they get their drugs from the same sources as Americans.
I'm posting as AC because I work for a multinational pharmaceutical company.
Legislation in Canada keeps drug prices down. We aren't selling there at a loss, but we do get a lower margin of profit per pill. Despite the internal PowerPoint presentations explaining that we continue to sell drugs in Canada out of concern for the Canadians who need our medicine, I suspect we're there because we make more in the Canadian market than it costs us to be there.
However. Drugs are expensive to develop - and it's not enough to recoup the costs of the scientists who discovered them, the clinicians who tested them, and the Anonymous Cowards who support their computers. We test about 10,000 compounds for every one that becomes a drug, and only one drug in three makes money.
Moving from the established numbers to the entirely fictional ones, suppose that we invent a drug that's prescribed to 50 million patients in the US, and 25 million patients in Canada. In the US, it's priced so we make $5 per patient. In Canada, we have to sell it for less, and we make $1 per patient. Our total profit: $275 million, ten percent more than if we'd just ignored the Canadian market.
Now let's suppose that third parties drive up to Canada on the drug bus, buy up 50 million doses at Canadian prices, and re-sell them in the US. Our total profit: $75 million. That's $200 million less to offset all the other drugs we worked on that didn't go anywhere. We simply couldn't stay in business if our returns were cut by more than two-thirds.
(It's my personal opinion that health care, like roads and utilities, is a public benefit that shouldn't be privatized. But that's not what the original poster asked, is it?)
Okay, firstly I'd like to point to an article stating that Japanese are more prone to alcohol poisoning than Westerners because they lack or are deficient in an enzyme required for to break the substance down. Ergo, people from different parts of the world have different reactions when exposed to the same substances.
There's a similar case here.
What got me thinking about this was that a friend of mine often does clinical trials, and he mentioned one 'live-in' trial, in which 50% of the people were British/caucasian, and 50% were of cantonese origin. The trial was for a drug which was already on sale in the US/Europe, but the corp wanted to open the Japanese market, and so it had to be tested all over again.
Apparently there were no side-effects for the western subjects, but their oriental counterparts were in need of diapers fairly soon.
If you are a medical expert, then you might like to read Geographical/interracial differences in polymorphic drug oxidation, and Prostate Cancer Test Works Well for Black Men, in which it is stated that Black males have more of a certain enzyme than white males.
Would it be so easy to find a mixture of 773 asians, orientals, afro-americans, latinos and caucasians in Delhi?
Well, according to Y2K financials compiled in:
Off the Charts: Pay, Profits and Spending by Drug Companies [Act Up]
net income for the industry ran an average of ~20%, which is a great profit margin for any manufactured product.
Marketing, advertising, administration costs ran between 15% to 39% of expenses.
Research and development ran an average of ~15%.
Chart which illustrates this. [Act Up]
The profit breakdown has been extensively reported elsewhere, as this is derived from SEC filings, and the margins continue to this day, this is just the first source I goggled. NOVA on PBS had a great documentary on this issue last month which had similar stats.
The pharma industry enjoys record profits, pays its corporate officers extravagantly well, and charges the American public more for the same products than any other market in the world.
At the same time, we allow the pharma companies to deduct the expenses of R&D costs, clinical trials, marketing, et al, and give them patent protection so that they enjoy a protected revenue stream for many many years.
This industry then takes its profits and buys congress, ensuring that the government does not use its buying power (MediCare) to negotiate better pricing, and pass legislation which keeps americans, states and health providers from purchasing the very same drugs from Canada (Bush's recent drug bill).
Drug bill a well-financed victory for industry [USA Today]
For many, they have no choice: buy drugs or die. I do not believe the patent system was intended as a means to extort money from vulnerable citizens. In my opinion it's high time that our government bullies the pharma industry to arrange its affairs, so that pharmaceuticals are again priced fairly.
They can start by restricting advertising for pharma products just like they have done for cigarettes and alcohol. That should shave 20% right there.
For all the apologists out there who will claim "it's capitalism; they have no responsibility except to their shareholders", let me remind you that the government grants corporate charters and allows businesses to exist to benefit the public good, not just to extort money from the sick and vulnerable.
"You have liberated me from thought."