Ouch: PhRMA SVP says Valeant isn't 'innovative,' acts more like a hedge fund
- Robert Zirkelbach, Senior VP of Communications at PhRMA, has a pretty brutal message for Valeant. In a blog post on PhRMA's "The Catalyst," he wrote that the company is not innovative because it barely invests in R&D—which makes it an outlier in an R&D-driven industry.
- While PhRMA member companies invest an average of 20% of total revenues on R&D, Valeant invests less than 3%, Zirkelbach notes.
- Valeant's CEO, Michael Pearson, has openly stated that Valeant's strategy is different than the vast majority of biopharma companies and is not focused on R&D investment and innovation.
Zirkelbach makes a solid case for Valeant's lack of innovation in an industry that is literally driven by innovation. According to Zirkelbach, PhRMA members invested more than $51 billion in R&D in 2014.
Also, when it comes to the overall pharmaceutical industry, the sector happens to be the single largest funder of business R&D in the U.S. In fact, biopharma companies invest more in R&D relative to sales than any other manufacturing industry, according to research from the Brookings Institution.
The overall takeaway of Zirkelbach's blog post: The industry is focused on productive innovation, while companies like Valeant and Turing are focused on profit. And at the end of the day, companies that are not focused on innovation are not considered good members of the PhRMA community.
Clearly, PhRMA is feeling the PR pinch from the last couple of months, which have seen the Turing/Daraprim debacle lead to intense criticism of the pharmaceutical industry, culminating most recently with stunning allegations against Valeant saying that the company uses a shell distribution network and shoddy accounting to create sales out of thin air (you can read our explainer on the Valeant situation here). And as this blog post shows, the trade organization is getting more aggressive about dissociating itself from "bad apples."
BIO and PhRMA both slammed Turing's Daraprim price hike when that news broke, and BIO went so far as to kick the organization out of its roster.