A few days later Montedison S.p.A announced that it was trying to completely take over Erbamont, the Stamford, Conn. drug company that produces the anti-cancer agent, Adriamycin.

The day the Bristol Myers-Squibb deal was announced, investors drove up the price of all drug companies. The Wall Street Journal explained:

"Speculators are betting that drug companies will...succumb to a widely held fear that smaller pharmaceutical firms won't survive in the 1990s....only larger firms will be able to afford the increasing costs of drug research, compete on a global scale in the U.S., Europe and Asia, and achieve economies of scale in marketing and distribution" (July 28, 1989).

Otherwise, they might "find themselves in the arms of foreigners," said one analyst. And in fact, Japanese and European giants are casting a shadow on a field traditionally dominated by American companies. "The new company will have the necessary size and the necessary strength to be able to compete with the Japanese," Jere Goyan, former FDA commissioner, told the New York Times (July 30, 1989).

Huge size will give the new company increased power in the global market, especially the United States, Germany and Japan, according to another pharmaceutical research specialist.

The drug industry has been a highly concentrated and profitable sector of the economy. The cancer drug market is highly monopolistic. This is both because patents create legal 17-year monopolies and because the number of companies which dominate any particular disease-category is small.

"Drug prices are largely determined by patents," wrote the New York Times, "that give the holder a temporary monopoly and by the demand generated by large sales forces that visit hospitals and doctors to explain and promote the merits of the products" (ibid.). The Bristol-Myers chief's comment on the merger was telling:

"There is nothing else in the health-care field that can do what a good prescription drug can do--on the money side. It is a business to be envied by all" (New York Times, July 28, 1989).

Prescription drugs are "tremendously profitable" said the Wall Street Journal. The top 12 U.S. drug companies produced an average return on equity of 29 percent. A number of drugs, such as Tagamet, Zatec, and Squibbıs own Capoten have sales of over one billion dollars each per year.

At the same time some companies are confronting the classic bind of a falling rate of profit. "Profits are under pressure," said the Journal. "Prescription drugs face increasing competition from generic drugs, an over-supply of distributors, and a shortage of new products. Drug research costs are rising, and the patents on many existing drugs will expire in the 1990s, putting their manufacturers in a bind." In fact, Bristol-Myerıs rate of growth has recently slowed from 15 to 12 percent. By combining with Squibb, the combined company will return to a 15 percent growth rate, according to Neil B. Sweig, a drug industry analyst (New York Times, July 30, 1989).

THE CANCER CONNECTION

The two men who struck the multi-billion dollar deal in a Central Park South apartment are both important figures in the cancer drug field. Richard L. Gelb, 65, chairman of Bristol-Myers and Richard M. Furlaud, 66, chairman of Squibb are both prominent members of the Memorial Sloan-Kettering Cancer Center (MSKCC) Board of Overseers--a fact unmentioned by either the Times or the Journal. (Gelb is also a director of the New York Times corporation.)

American Express chairman James Robinson III, another Bristol-Myers and MSKCC director, served as go-between for the merger (Wall Street Journal, July 31, 1989).

With three top officers, the new company will have a major presence on the Memorial Sloan-Kettering board‹and the cancer world.

This gives them access to the latest developments in biomedicine. They oversee the use of their own products at the Center and even the ownership of company stock. (As of December 31, 1987 MSKCC owned stock in the two companies worth $1.8 million at today's prices.) Most importantly, however, their position gives them an influence on the overall direction of cancer medicine.

Their contacts are many and invaluable. Furlaud, for example, is a personal friend of former Memorial physician Burton Lee, M.D., who now serves as President Bush's White House physician. Lee has, in fact, indicated a willingness to serve as a go-between in clearing the way for new drug development (Village Voice, August 1, 1989).

This merger is being hailed on Wall Street as a "marriage made in heaven" (Wall Street Journal, July 31, 1989). It may be less than heavenly for the cancer patient who wants a choice in medical options. By concentrating greater power in fewer hands, this merger bolsters the patented-drug solution to all problems, even when prevention or non-toxic therapy provides a better way.

The drug companies, major research centers, and the major media fall into fewer and fewer hands. We can thus look forward to higher prices, more propaganda in favor of the drug approach, the suppression of uncomfortable facts and, of course, a stepped-up ³quack attack² on those who dare propose alternatives.

At the same time, the deep-seated crisis which is driving mergermania brings with it many opportunities. The greatest is presented by the impending radical reform of FDA. We must continue to press for removal of the Kefauver efficacy requirement so that not just Bristol Myers and Squibb will benefit from a deregulated pharmaceutical marketplace.

PART TWO: THE JAPANESE CHALLENGE
(from Cancer Chronicles #3)

"Most of the profit is now in the ethical drug business," said one analyst. "Ethical" in this case means patentable.

At the end of October, Chugai Pharmaceutical Co. of Tokyo agreed to purchase the San Diego-based Gen-Probe, Inc. for $110 million. Gen-Probe makes diagnostic products called "genetic probes."

Are these haphazard purchases? Not likely. The Japanese government has set a national goal of having 10 to 11 percent of its entire gross national product come from biotechnology (Wall Street Journal, October 31, 1989). There are fears on Wall Street that "Japanese companies will buy American know-how and use it to obtain the upper hand in biotechnology trade and competition" (ibid.). The Japanese are simply beating the Americans at their own game. In cancer, at least, the American drug industry has become conservative and is afraid of technological innovation.

The Japanese are not newcomers to medical research. In 1915, they were the first to demonstrate in the laboratory that chemicals could cause cancer. They had a national cancer institute long before the U.S. did. But while they certainly have a large drug industry, it doesnıt begin to dominate the $127 billion world drug marketplace. Hence the growing competition.

We should not join in chauvinist appeals to fight the Japanese, or anyone else. Our interest is in the conquest of cancer, by any means necessary. Japanese vs. American competition may actually be useful in that regard. When Dr. S.R. Burzynski could find no acceptance for antineoplastons here, he turned to the Japanese. Fair studies are now underway at Japanıs Kurume University. The FDA managed to stop these tests for three years on the grounds that antineoplastons were not approved in the USA and therefore could not be exported for testing. Catch-22! But all such moves must be read against the background of what the Wall Street Journal has called "the biggest economic battle of the future...America vs. Japan" (Nov. 14, 1988).

Ralph W. Moss, Ph.D. is director of the The Moss Reports for cancer patients. Dr. Moss is the author of eleven books and three documentaries on cancer-related topics. He is or has been an advisor on alternative cancer treatments to the National Institutes of Health, the National Cancer Institute, the American Urological Association, Columbia University, the University of Texas, the Susan G. Komen Foundation and the German Society of Oncology. He wrote the first article on alternative medicine for the Encyclopedia Britannica yearbook. He is listed in Marquis Who's Who in America, Who's Who in the World, Who's Who in the East, and Who's Who in Entertainment (as a film documentarian). This Web site does not advocate any particular treatment for cancer. We urge you to always seek competent medical advice for all health problems, especially cancer. Before consulting our site please read our full Disclaimer statement.

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