With the waves of layoffs going on, and all the nasty structural changes we're seeing in this business, it's easy to start feeling a toxic combination of fear and despair. And while I understand that, I'm going to try to briefly argue against it.
(1) I think that, in the years to come, that people are most definitely going to need medicines. And by that, I mean new ones, because there are a lot of conditions out there that we can't treat very well. As the world gets (on the average) older and wealthier, this need will do nothing but increase. In many cases, pharmaceutical treatment is cheaper than waiting and having surgery or the like, so there's a large scale cost-saving aspect to this, too.
(2) I also think that many of these medicines are still going to be small molecules. Now, biological products can be very powerful, and can do things that we can't (as yet) do with small molecules - mind you, the reverse is true, too. And I think that biologics will gradually increase their share of the pharma world as we find out more about how to make and administer them. But it is very hard to beat an orally administered small molecule for convenience, cost, and patient compliance, and those are three very big factors.
(3) What we're witnessing now is a huge argument about how we're going to make those small molecule drugs, where we're going to make them, and who will do all those things. And it's driven by money, naturally. We don't have enough new products on the market, which means that we have to sell the ones we have like crazy (which leads to all sorts of other problems, legal and otherwise). At the same time, we're having to spend more and more money to try to get what drugs we can through the whole process. These trends appear unsustainable, especially when running at the same time.
(4) But as Herbert Stein used to say, if something can't go on, then it won't. Right now, the only way out that companies can see is to cut costs as hard as possible (and market as hard as possible). Those both bring in short-term results that you can point at. Long-term, well. . .probably not so good. But in that same long term, we're going to have to find better ways of discovering and developing drugs. If we can improve that process, the fix can come from that direction rather than from the budget-cutting one.
(5) And those improvements don't have to be incredible to make a big difference. We have a 90% failure rate in the clinic as it stands. If we could just work it to where we only lose 8 out of 10 drug candidates, that would double the number of new drugs coming to the market, which would cheer everyone up immensely.
(6) The questions are: can we improve R&D in time? Can we improve it with the resources we have? I think that the demand (and thus the potential rewards) is too great for a solution not to be found, if there's one out there. And we still know so little about what we do that I can't imagine that answers aren't out there somewhere. Who's going to find them? How long will it take? Where are they? I've no clue. But that looks like the way out to me.