Friday, October 7, 2011

Swine Flu and Big Business

 [This article was first published in the local press in August / September 2009]

For the year, we forecast sales of Tamiflu to reach ¥53.0 billion, up 531.0%, due to expected resumption of government stockpiling in FY2009 and the ongoing recovery of the prescription rate for seasonal influenza.
(p3) – Chugai Pharmaceutical Co. Ltd. Annual Report 2008 

The recent announcement that the shelf life of Tamiflu could be extended by another two years got me suspicious. If it could expire in 2011, why did the suppliers print 2009 on the box? Was there a sinister motive underlying this decision to print an earlier expiry date?

We are also witnessing an unparalleled global scare fuelled by the internet and exaggerated media attention to a strain of flu. One has even come across online articles that extrapolate from the current small sample of 5-7 victims to conclude that the H1N1 strain prevailing in Mauritius is 100 times deadlier than seasonal flu. Even the practical advice that my illiterate grandmother used to give – wash your hands, do not sneeze or cough in people’s faces, etc – is made to sound like the latest scientific discovery. 
Needless to say that this scare reinforced by front page reporting on every single victim of flu-related problems has resulted in mass panic and rush to hospitals and unnecessary strain on the health system. It has also created conditions for many people suffering from flu symptoms to come in close contact with one another and thus possibly catch other infections.  

Bird flu and swine flu
 This scare is similar to the one that was created around bird flu. A bird flu pandemic was predicted by the United Nations to kill 150 million people worldwide. Did someone “invent” the swine flu when the bird flu “threat” failed to materialize?  
One possible reason why the bird flu scare was not very effective was that it was associated with chicken and anyone who was not in direct contact with live chicken did not feel too concerned. The only ones who could potentially be affected were mainly poor people in the countryside. This unfortunately led to the destruction of thousands of chicken on a number of farms. We noted the same reaction initially with swine flu when a large number of pigs were killed in Egypt earlier in the year.  
Targeting the ‘Right’ Market Segment
 It would appear that those “responsible” for spreading the fear did not want to repeat the ‘mistake’ they made with bird flu. It was soon decided (does this not remind you of the propaganda machine in George Orwell’s ‘Animal Farm’?) that swine flu had nothing to do with pigs. And the media helped us to believe this. More importantly, the disease was deftly associated with some rich school children who could afford foreign trips, or wealthy people on a cruise liner off the Australian coast.  
This also made sense from a marketing perspective; we are now targeting a segment that could afford the treatment either directly or through the public health service. It is rather strange that people in very poor countries (whose governments are unable to afford expensive drugs like Tamiflu) appear to be somehow immune to H1N1. 
The business of Tamiflu
 My suspicion led me to Google search ‘Tamiflu’, ‘profit’ and ‘shareholders’ and I stumbled on the 2008 Annual Report of a Japanese pharmaceutical company (cited above) that was predicting a 531% increase in sales of Tamiflu in 2009 after a 78% fall in the previous year. Not many directors would forecast such a huge increase in sales unless they had a definite marketing strategy in mind.  
One could also read a report on an 8% drop in profit at Roche reads as follows: “Sales at the flagship pharmaceutical unit suffered from the fall in Tamiflu revenue. The drug had seen healthy sales in earlier years when governments bought in bulk to stockpile to be prepared for the possible outbreak of an influenza pandemic.” The pandemic somehow appeared inevitable.  
The same Google search followed by one on ‘Tamiflu’ and ‘Rumsfeld’ yielded a report that in 2005 President George W. Bush pushed for and won $7.1 billion in emergency funding to prepare for an influenza pandemic that was not even yet on the horizon. This occurred at a time when Donald Rumsfeld was Defence Secretary. It so happened that the latter had headed Gilead Sciences – the company that discovered and developed Tamiflu – for four years until he resigned in 2001.  
Tamiflu is now made and sold by Roche, which pays Gilead a royalty on every tablet sold. Gilead made a loss in 2003, the year before concern about bird flu started. Then revenues from Tamiflu almost quadrupled, helping put the company well into the black. One need not be a financial wizard to guess what the impact of the current swine flu scare on Gilead’s results would be.  
Manipulation and lies?
 It would not be proper to jump to conclusion and speak about foul play, manipulation or lies. But what would prevent us from remembering Colin Powell brandishing a tube containing some white powder at the United Nations in 2003 and presenting it as irrefutable evidence that Iraq had been manufacturing weapons of mass destruction to justify the invasion of that country? The rest we know is history.  
While the danger associated with H1N1 is real and while it is potentially more lethal because it is a new virus against which most people have not yet developed immunity – thus the need to take all necessary precautionary measures – one may still need to be wary about the information floating around since the scare linked to bird flu that was also considered to be deadly did not materialize. In other words, the danger represented by H1N1 (however real it may be) does not seem to justify the scale of the prevailing fear campaign.
Cynics even wonder whether the pharmaceutical marketers are not trying to emulate their peers in the computer field where antivirus programs have to be continuously updated to deal with the threat represented by new viruses popping up everyday. Others are speculating whether this is not a ploy by some to divert attention from the prevailing financial crisis. 
Crying Wolf
 If this fear campaign is truly part of a sinister global marketing strategy to boost Tamiflu sales – as early as May 8, 2009, I received an email from a local pharmaceutical company with the following subject line: ‘Tamiflu – pandemic flu preparedness plan’ – it would appear that with all the hype about swine flu we could be ‘crying wolf’ one more time. If this is the case we could be playing a very dangerous game – even though it is yielding huge benefits for some – as it would become more difficult to get people to listen in the future if we really have a dangerous pandemic. In fact, the sense of doubt and suspicion underlying this article is largely attributable to the bird flu hoax, to the size of the related Tamiflu business and its financial ramifications and to past attempts of blatant manipulation like the one involving Colin Powell above.  
One idea to consider would be to authorize pharmaceutical firms (in low-cost countries like India) to manufacture generic versions of relevant patented drugs in case of WHO-declared pandemics and distribute them at reasonable prices in the third world. The only risk in this case is that pharmaceutical companies in developed countries may prevent real pandemics from getting declared as this would open the door to generic drug manufacturers.

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