The pharmaceutical industry puts a heavy premium on innovation – the ability to come up with new drugs. Indeed this separates the boys from the men. Generic pharmaceuticals however are seen as similar to any other commodity manufacturing sector.
However, in the last two years one generic and one innovator have been both done in by manufacturing issues. Ranbaxy’s controlling family threw in the towel when it found it had no appetite to set right persistent quality issues at its manufacturing facility. More recently, Genzyme has become fair game to predators such as sanofi-aventis after it lost investor confidence over manufacturing problems.
More and more innovators are outsourcing manufacturing to cut costs with what some regulators believe could be inadequate oversight. If they are not careful it might be this and not drying research pipelines that could trip them up.