Noting that many of the pharmaceutical industry’s best-selling products will soon lose their patent protection, industry analysts have reportedly suggested that the potential loss of nearly one-third of industry revenues in the near term could account for recent merger activity among the world’s largest pharmaceutical companies. While patent losses affecting 18 of the top 20 prescription drugs will apparently be welcome to consumers and insurers by providing access to cheaper generic versions, the industry is bracing for “the sharpest revenue decline in history.” The industry is cutting costs by reducing staff, but is also diversifying product lines, expanding into new geographic markets and investing more in research.
The so-called “patent cliff” may just be part of the “cyclic nature of science,” according to some observers, pointing to periodic scientific breakthroughs that lead to new drugs. One pharmaceutical-research firm operator was quoted as saying, “The paradigm of medicinal chemistry that pharmacology has been operating on for 40 to 50 years has been pretty well exhausted. The low-hanging fruit has been picked.” See The Philadelphia Inquirer, November 12, 2010.