I always find it interesting to see how Wall Street yahoos react to announcements like the one from Pfizer:
1. Positive – Pfizer still has upside – Pfizer's Worst-Case Scenario
2. Negative – Pfizer and the rest of big pharma is too big for its britches – When Big Pharma gets too big
3. A borderline sensible reaction from Paul Kedrosky – Pfizer's Failure and the Future of Drug Development
Regarding Point 1, I have no idea if Pfizer stock is a good buy or not at this point. I am not an active stock trader, so I’ll leave that to the screaming professionals on CNBC. Caveat emptor.
Regarding Point 2, suggestions that pharma companies can “simply” pare down is overly simplistic, and ignores the fundamental (and yet unknown) reasons why torcetrapib disappointed. Point 2 makes no mention of the fact that this reaction by Pfizer is, in turn, likely a defensive reaction to push back from the FDA and the fear of lawsuits.
Regarding Point 3, Paul is correct in saying that the drug development process can stand to be improved. But, the entire point of research is to answer questions. Sometimes the answer you get is not the answer you want or expect. That’s the nature of research, especially when we’re talking about the first of a new class of compounds.
Novel mechanisms of action are more likely to fail versus established ones. It sounds rather obvious, but it’s a fact that’s rarely mentioned or appreciated by our friends on Wall Street.
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