August 27, 2007
A few months ago the giant pharmaceutical company Pfiezer laid off 10,000 people, or about a tenth of its global workforce. There are many factors that are draining the industry of profits including the fact that patents eventually expire allowing generics to compete, it is extremely costly to develop new drugs, and the industry is caught in a vicious advertising/marketing arms race that is diverting significant percentages of development costs (in similar proportions to the marketing of a big budget Hollywood movie).
There is plenty to chew on here in terms of how intellectual property laws are impacting human rights (keeping lifesaving drugs out of many patient’s reach) and the notion that as “mission critical” drugs come out of patent, drug companies are busy inventing new “lifestyle illnesses” for which they conveniently sell the cure. The concept of illness has become a major US export, as the documentary Does Your Soul Have a Cold? begins to explore.
But what really caught my attention in this story is the idea that the pharmaceutical industry is witnessing a phenomena that is becoming familiar to the media/entertainment industry – the death of “hits” or the multi-billion dollar blockbuster.
As Henri Termeer, chief executive of Genzyme, a big biotechnology firm, argues, â€œthe blockbuster model becomes less important over time as specialized therapies take off.â€
As Chris Anderson describes:
The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of “hits” (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.
Anderson does anticipate this economic trend extending beyond media and entertainment, but it is still a real trip imaging these forces playing out beyond the realm of information goods/services and in the realm of physical goods. I mean, I have often heard that media can be considered a drug, but the reverse is a bit harder to swallow – drugs as a form of media?
Of course, as I speculated when I was conjuring Free Energy if It really is derived from Bit then we shouldn’t be at all surprised to learn that the economic forces that govern information systems also apply to physical goods. (You can probably arrive at a similar conclusion without resorting to quasi-mystical metaphysics, but I like invoking this perspective).
The forces at play in the world of pharma are actually strikingly similar to the entertainment world. Perhaps the rise of
genomics and personalized pills (not very far off) is equivalent to user created content on the internet.
Hit-driven economics is a creation of an age without enough room to carry everything for everybody. Not enough shelf space for all the CDs, DVDs, and games produced. Not enough screens to show all the available movies. Not enough channels to broadcast all the TV programs, not enough radio waves to play all the music created, and not enough hours in the day to squeeze everything out through either of those sets of slots.
This is the world of scarcity. Now, with online distribution and retail, we are entering a world of abundance. And the differences are profound.
It’s certainly a tall order to replace a multi-billion dollar pipeline overnight as a drug comes out of patent, but perhaps the end of the blockbuster, one-size-fits all drug will lead to a healthier world of personalized treatment tailored to an individual’s needs, not a lab rat’s.