Drug Companies Try Sharing

The multi-billion-dollar drug sector has endured a decade of under-performance. "Pfizer’s (PFE), Eli Lilly’s (LLY), Merck's (MRK), and Bristol Myers Squibb’s (BMY) stock is trading at half of their value 10 years ago and GlaxoSmithKline (GSK) is faring slightly better at a negative 25%," reports Steven Breazzano on Seeking Alpha.

By 2012, many of the most profitable products will have gone. Pharma is facing the so-called “patent cliff,” when the patents for many blockbuster drugs will expire and lose their legal protection. Generic versions will flood the markets, taking billions in revenue from big Pharma. Merck's Singular, Pfizer's Lipitor, Bristol-Meyer Squibb's Plavix, and Eli Lilly's Zyprexa are among the several set to expire, and there are few other promising products in the pipeline to replace them.

In The Innovator’s Prescription, authors Clayton Christensen, Jerome Grossman, and Jason Hwang argue that future profits in pharma will come not from finding a single blockbuster drug suitable for everybody, but from the ability to learn from failed drug trials to discover a more personalized approach where a larger number of drugs benefit smaller, more individual segments of patients.