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Executive Summary

Since 1960, "The Pink Sheet" has maintained an Index of the performances by the publicly-traded companies in the pharmaceutical and related industries. As an adjunct to the traditional year-end analysis story about the investment community's view of the industry, "The Pink Sheet" editors have compiled a separate set of significant details as a way of portraying a different kind of index on the investment decisions in the drug industry. Drawn primarily from material covered by "The Pink Sheet" during 1989, the statistics have been chosen to present a kaleidoscope view of some of the key current numbers in the industry -- representing costs of business, regulatory activity and political climate. Many of the "facts" included in this list have appeared previously in "The Pink Sheet." All have been checked with sources available to publication. Like all facts, however, they are a bit factitious. 10,000 patients in an antimicrobial NDA Lilly reports conducting clinical studies on 10,000 patients to support a pending antimicrobial drug application -- compared to a similar program for Ceclor 10 years ago which took only 15% of that number (1,493 patients). $75 mil. for Proleukin development The eight-year Proleukin (human biosynthetic interleukin-2) program at Cetus has cost the company $75 mil. (conservatively) and can be calculated at $150 mil. when the cost of production facilities, capital formation and the establishment of a marketing effort are added. The product is still not approved; Cetus hopes for the middle of 1990. $75 per MD office visit Upjohn's baseline estimate of the cost of each detail visit is $75. The company says that is an old figure "that may need to be updated." 30 mil. detail calls An industry-wide estimate (from the Scott-Levin consulting firm) for the total number of pharmaceutical force sales calls in 1989: average MDs are receiving about two-to-three visits per week from sales reps. 190 pending NDAs and PLAs The number of pending applications for new approvals at FDA, according to information in an F-D-C database of R&D pipeline projects. That figure compares to FDA's in-house tally of 219 pending original NDAs as of Dec. 31, 1988. The similar figure 10 years ago at the end of 1979 was 228. Three Japanese purchases (1) Yamanouchi acquired Shaklee in March for $395 mil. (2) Fujisawa bid over $650 mil. for the remainder of Lyphomed; the deal is expected to close by April of 1990. (3) Chugai offered $100 mil. for Gen-Probe: a premium of 90% above the pre-offer stock price. One in five Americans with mental illness The current government estimate on the frequency of mental disorders is one in five adults over a lifetime or one in eight adults within any six-month period. Some of the big areas of mental illness are anxiety (14 mil. Americans suffer every six months); major depression (4.7 mil. in a six-month period); Alzheimer's and dementia (3 mil. cases per year); and stroke (1.9 mil.). Congress named the 1990's "The Decade of the Brain" and a continuing surge in publicity about mental disorders and neurological disease can be anticipated. 211 drug product recalls FDA listed 211 drug products recalled in 1989. After a modest 77 actions in the first half of the year, the agency recorded 134 product recalls in the last six months, an increase reflecting the generic drug investigation. Lack of assurance of bioequivalency/ANDA discrepancies appeared as a new category of recalls prompted by the investigation. FDA re-learned that recalls, as well as approvals, make good press for the agency. User fees as 24% of the FDA budget For FDA's FY 1991 budget, the Bush Administration will recommend $617 mil. (including close to $150 mil. from user fees). Despite repeated tries by the White House, there has not yet been an FDA appropriations bill passed by Congress with user fees included. The first FDA user fee proposal, in fiscal 1985, was for $5 mil. in user fees, or just over 1% of the agency's budget that year. $62,700 for starting FDA medical officers The starting base salary for FDA medical reviewers is$62,700, with a range up to about $85,000 for senior reviewers. The agency competes for talent in the D.C. area with hospitals, which reportedly have a "standing offer" for FDA reviewers, with salaries starting at $140,000. Eight reg letters from FDA Advertising & Labeling Division FDA's Rx Advertising & Labeling Division issued eight regulatory letters or notes of adverse findings in 1989. Three were issued to Schering. A particularly harsh reg letter was sent to Wyeth-Ayerst in December attacking an "intolerable" record of non-compliance. Those complaints provide the context for Capitol Hill interest in promotion excesses. Sen. Kennedy (D-Mass.) already has alerted the industry that he might wade back into an investigation of promotional practices. Eleven prescription drugs promoted with direct-to-consumer ads The industry advertised at least 11 products directly to consumers, including several new additions such as Fison's Nasalcrom. The Rx cough/cold/allergy category is getting more competitive for the ultimate consumer's attention. 9.3% prescription drug price inflation at consumer level The Bureau of Labor Statistics' Consumer Price Index for prescription drugs rose 9.3% from November 1988 to November 1989. Drug prices rose twice as fast as the CPI for all items, which increased 4.7% in the same period. Through the 1980s, prescription drug prices grew at a compound annual rate of 9.6% versus the overall CPI, which grew at an annual compound rate of about 5%. House repeal of Medicare Catastrophic Care -- 360-66 Where does Congress go next? Proponents of the outpatient drug benefit, like Rep. Waxman (D-Calif.), tried to save the drug program by amendment in the House. But by the time the bill went to conference with the Senate, Waxman sided with a full repeal to clear the slate for a new plan in the future. The next drug cost control effort is likely to come through the Senate in the form of a proposal -- probably led by Sen. Pryor (D-Ark.) -- to cajole states into tighter reimbursement programs for Medicaid drugs. Five drugs with over a billion dollars in sales worldwide Glaxo's Zantac, with well over $2 bil. in sales last year, heads a list of four drugs -- SmithKline Beecham's Tagamet, Merck's Vasotec and Bristol-Myers Squibb's Capoten -- that will again top $1 bil. in sales in 1989, and a fifth drug -- Ciba-Geigy's Voltaren -- that is expected to top $1 bil. in sales when results for last year are compiled.

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