Taking the Gloves Off
5/27/2008 11:27:17 AM
By Karl Thiel -- Poor Amgen has got a lot to answer for this month. The new Ernst & Young 2008 Global Biotechnology Report reveals that in 2007, the entire biotech industry lost just $300 million in aggregate. That's the closest it has ever come to profitability. But E&Y had expected it to break into the black for the first time last year. So who can we blame for the fact that it didn't? Well, yeah, sure, the dozens of unprofitable companies...but more to the point, Amgen! If sales of Epogen and Aranesp hadn't gone into an unexpected decline on safety concerns, 2007 would have been biotech's year in the sunshine.
Despite this--and the fact that Amgen lost 32% of its value over the course of 2007--Kevin Sharer remains biotech's most highly paid CEO according to new CEO compensation data.
Incidentally, the industry's $300 million loss in 2007 represents just 0.5% of its total revenues. That's pretty close to breakeven--better than the payout ratio you'll find on the very best slot machines, which typically keep at least 2% of the money put into them. E&Y has not to date mentioned a "finally safer than gambling!" milestone for the industry, however. (And no, I'm not serious about this metric.)
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On a completely different note, there's an interesting wrinkle in the FDA funding debate. When we left our heroes last, Rep. John Dingell (D-Mich.) was pounding on a table at the House Energy and Commerce Subcommittee and screaming at commissioner Andrew von Eschenbach to admit that the Bush Administration's budget request for FDA was woefully inadequate.
In a completely surprise twist of events, von Eschenbach finally did! He wrote a letter to Congress asking for an immediate $275 million to keep the nation's food and drug supply safe. This may be the first time an FDA commissioner has ever gone against a president's budget request so boldly.
The request was written in response to a letter from Sen. Arlen Specter (R-Pa.), who according to an account in the New York Times, wrote in the margin, “Andy, I know the situation is extreme. I want to get you financial help now.” That makes it sound like some sort of emergency bake sale might be imminent, but legislation that would attach the $275 million to an emergency supplemental appropriations bill has already been penned by Rep. Herb Kohl (D-Wisc.).
What finally made von Eschenbach give up defending...or at least refusing to criticize...the President's budget? Chock it up to President Bush's waning influence, to the commissioner getting tired of the abuse he was receiving, or to a simple recognition that FDA couldn't just muddle through with its unfunded mandates without seriously compromising public health and safety. In any case, we should probably all be relieved.
Then again, executives at Cephalon might tell you that they'd prefer it if some of the Risk Evaluation and Mitigation Strategies called for under the FDA Amendments Act (FDAAA) were left unfunded. But more on that further down.