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Week-in-Review Editorial: 31 August to 6 September

Welcome to the Week-in-Review editorial

The party's over
The holidays are over for most of us and certainly the increased scrutiny of Big Pharma by investors and government continues to challenge and confound in equal measure.

The UKís largest pharmaceutical firm GlaxoSmithKline (GSK) faced a shareholder rebellion in the form of a demand for a fundamental overhaul of the company, including a possible break up.

The shareholder discontent was prompted by the company's poor share price performance and even invaded discussions between investors and Chairman Sir Christopher Gent over the impending retirement of CEO Jean-Pierre Garnier.

Shareholders have asked that the new CEO consider spinning off manufacturing, contracting out R&D activities, reducing sales forces and divesting non-pharma operations.

Other investors added that the Big Pharma model was no longer appropriate for the current regulatory climate.

UK self-regulation criticised
More pressure for the UK industry came in the form of a report in the Financial Times (FT) which criticised the current system of self-regulation.

One of the main points is that when the Prescription Medicines Code of Practice Authority (PMCPA) investigates ethical breaches by drug companies, the authority talks only with the company and not the complainants.

Several pharmaceutical companies added that they were not entirely happy with the system either and said that there had been cases where they had been scrutinised by the PMCPA more than once about very similar allegations.

R&D moves to Asia
The big story of last week was attempts by Big Pharma to make cost savings by moving R&D to cheaper bases in Asia.

At the International Pharmaceutical Federation (FIP) held in Beijing, AstraZeneca (AZ), GSK, Eli Lilly and Pfizer revealed details of their new China-based research centres.

A July 2007 report from the Chinese National Development and Reform Commission showed that international drug companies have to date invested more than USD 500m to establish R&D centres in the region.

Not all bad news
Pharma welcomed the UK government's new health research strategy, 'Best Research for Best Health'.

The new strategy combined spending to improve infrastructure with administrative changes, which would make UK hospitals more attractive to the pharmaceutical industry.

The reorganisation will replace multiple research contracts with a single contract, which will reduce pharmaceutical company negotiation times with individual hospital trusts. A unified ìadoption committeeî will decide within two weeks if a proposal should be carried out in the NHS.

30th September 2008

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