For all its faults, the pharmaceutical industry remains one area in which the United States is still a competitive world leader. But without drastic changes in the way the FDA regulates the industry, this advantage may not last.
Back in the early 1980s I worked for one of the major airlines, a company you have probably heard of, even though it hasn’t flown in over a decade. This was shortly after President Jimmy Carter had deregulated the airline industry. My employer, a pioneer in commercial flight, had grown accustomed to doing business in a certain way and lacked the foresight and skill to adapt to the new environment. Prior to deregulation, airlines needed to have lots of lawyers, whose main job it was to lobby the federal government to get and keep valuable landing slots at major airports. Once you had those, you could count on a steady stream of profits, since the Civil Aeronautics Board limited competition on most routes, thus ensuring high load factors, and also set fares the airlines were allowed to charge. Overnight, things changed 180 degrees, and airlines had to pay attention to things like customer service and efficiency. My employer failed to make the cut.
We may be seeing the opposite phenomenon in the pharmaceutical industry. According to a recent report by KPMG, industry returns on R&D spending have fallen from 18% in 1990 to 10% in 2010, and annual growth in R&D spending has slowed from an average 10% between 1999 and 2006 to just 1% since 2007. Pharmaceutical companies may be turning to lawyers and the regulators to make up the difference. [click to continue…]
I recently joined a new frequent flyer program, which is not something I expected to do. I am already a member of several, covering each of the three major airline alliances, and I thought I was pretty well set. But as I sat in the departure lounge in Lomé, the capital of the West African nation of Togo, waiting to board a flight to Abidjan, Ivory Coast, a pretty young lady in company livery invited me to join the ASky Club. ASky is a new, mostly private, airline that serves a substantial West and Central African route network, operating Boeing 737 and Bombardier Dash-8 aircraft. It is affiliated with Ethiopian Airlines, which offers connections to North and South America, Europe, and Asia. [click to continue…]
If any event could illustrate the fragility of the BRICS conceit, it is the recent blackout in India, which left as many as 600 million people without power for up to two days. More than anything else, it reveals the sorry state of India’s governance. Yes, there are some extenuating circumstances: an unusually hot and dry monsoon season, which has reduced the available flow in hydroelectric plants while also causing the wealthy to use more power to run their air conditioners, while at the same time farmers are using more power to run pumps bringing up irrigation water from deep wells.
But the real story is under-investment in power generation, in coal production, and in transmission and distribution infrastructure, which in turn are attributable to monopoly pricing, hugely inefficient subsidies, endemic corruption, and political stagnation. The power outage was unique only in its extent and duration. Businesses, households, and public institutions all rely on diesel generators, which to a large extent have gone from a backup to the primary source of electricity, as “load shedding” – the system of rolling blackouts that utilities impose to reduce the strain on an overtaxed network, which often deprive whole areas of a city of power for as much as 14 hours a day. The event, and the global publicity it has attracted, has put a dent in India’s self-image as a nascent superpower. India has nuclear weapons and a space program – it launched a lunar probe in 2008 and has announced plans to send an orbiter to Mars next year – but it can’t keep the lights on. [click to continue…]
Curt Schilling is a hero to Boston sports fans. In 2004, at the relatively advanced age of 38, he valiantly pitched and won two critical post-season games while suffering from an ankle injury so severe that his sock was soaked with blood, propelling the Red Sox to its first World Series championship in 86 years. But Schilling’s career outside of baseball, especially since his retirement in 2008, has been less than stellar.
In 2006 Schilling founded a company, Green Monster Games – subsequently renamed 38 Studios – to develop and market MMORPGs – Massively Multiplayer Online Role Playing Games – for which he has a longstanding passion. Earlier this week, barely three months after release of its first product, 38 Studios laid off all of its 400-odd employees and closed its doors for good. How and why this happened is a cautionary tale for those who think it a proper function of government to provide financing to private companies. [click to continue…]