Roche CEO: Some pharmas will fail

Last week, some pharma types warned us that the recession won't leave the industry unscathed. But no one spoke as directly--or specifically--as Roche CEO Severin Schwan (photo) did in a Wall Street Journal interview published today.

Schwan predicts that some drugmakers will fail because they'll lack innovative meds that insurers are willing to pay for. Others could be forced into bankruptcy court or into mergers. And some may have to diversify into other businesses to survive.

It's simply common sense: As the recession continues to take its toll on jobs, business investment, and consumer spending, it will eat into tax revenues, too. Governments that are already cost-sensitive will become even more so, Schwan predicts. New expensive meds that provide only marginal improvements over older, cheaper therapies will get the thumbs down. "Those who fail to bring sufficient innovation will be squeezed out of this market," Schwan told the WSJ. "That applies equally to small companies and big companies.

Schwan thinks Roche itself is well positioned to weather the storm, though; it's spending more on R&D, and it already boasts treatments such as Herceptin and Avastin, cancer meds that are broadly effective--and widely covered by insurers.

- see the WSJ article

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