The movement to allow cross-border prescription deliveries is going to break the pharmaceuticals market in the United States. States are lining up to begin a protracted fight against the arbitrarily high prices paid by Americans for their prescriptions.
This is going to hurt Big Pharma in the short-run, as price pressure will redefine the life cycle of the "blockbuster drug," taking some of the early high margins out of the equation but replacing it with a much larger initial customer base. Why? Because if you can price for U.S. use at a lower price, the relative price around the world will fall, as well, bringing new drugs and therapies into the reach of many more people.
But Big Pharma won't go easily. It will be like the record industry, fighting this change every step along the way. American drug retailers, too, are going to fight this. So, it all comes down to: Are we going to legislate reimport of American-made drugs at lower prices or is the pharmaceutical channel going to recognize the inevitable and change its strategy? Since drug companies are run by humans, my bet is that they will fight change. That's why I would not want to be a short-term investor in pharmaceutical development; long-term, though, this is potentially the biggest wave of global technology adoption yet to come along.
Posted by Mitch Ratcliffe at October 20, 2003 09:18 AM | TrackBack