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STOCKWATCH: Pharma reptiles find new skins but risk auto-cannibalism

This article was originally published in Scrip

Executive Summary

Plato, among other ancient sages, described the ouroboros, a mythical snake which ate its own tail. The ouroboros represents cyclicality, eternal return and re-creation. For the pharmaceutical industry, its own symbolic snake traditionally depicted wound round a staff or goblet, ouroboros means lifecycle management, maximizing the return on investment over a drug lifetime that extends beyond patent expiry. But now, as illustrated by the earnings numbers released in the week beginning 22 July from Roche, Shire, and Biogen Idec, pharma is adopting another reptilian characteristic, easing its existing franchises into a new, larger skin. Achieving the transformation successfully, though, means avoiding product cannibalization.

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