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The Econo Miss

by Archives October 23, 2007

Since the Vioxx scandal, drug companies have not been favourites with investors. Despite their efforts in research and development, one drug after another is quietly scrapped. Pfizer, the struggling US pharmaceutical giant discontinued its inhaled insulin drug, Exubera after it failed to spark the interest of doctors and patients.
Exubera was thought to be the next big thing; a product that would finally make Pfizer some money after the lost of sales from the rapid expiration of its patented best sellers. The company’s profit fell 11 cents per share. Pfizer is still struggling to substantially increase their profits and offset losses on their patents.
To bring a new drug to the market, it can take global drug companies up to $1 billion. However, producing a drug in India may cost only one fifth of that. Ranbaxy, India’s largest pharmaceutical company is opening a branch of research and development. Most drug companies in India produce only generic drugs and this news from Ranbaxy may pave the way for other pharmaceuticals to begin researching their own drugs. It is hoped that this news will spark the interest of investors. Ranbaxy is already in the mid clinical stages of testing a new anti-malarial drug. It also hopes to research in the areas of oncology, metabolic, and respiratory diseases. Despite the good intentions of Ranbaxy and Pfizer, drug companies are still too risky for many investors and since the Vioxx scandal they are hard to trust.
Crude oil prices will continue to climb; the increasing tensions in the Middle East and China’s economic boom will ensure that. The Bank of America has reported they see defaults not only in housing, but also in the levels of consumer debt. Although some analysts are saying the credit crunch may be good for the long term. While Canada is at a low for unemployment, the US has had a jump of 28,000 new unemployment claims last week.

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