Medivation, Pfizer End Work on Alzheimer's Drug by Rockoff and Lamar - Essay Example

In order to gain a competitive edge by developing a treatment drug for Alzheimer’s disease, of which 18 million people suffer around the world, Pfizer decided in 2008 to give Medivation a large amount of $225 million and $500 million more if it was able to successfully produce Dimebon. The feasibility of the drug as well as the extravagance of the deal was widely criticized, though past evidence from Russia suggested that the development of such a drug was possible.

          However, when the drug was tested by introducing it to moderate Alzheimer’s patients in phase 3 trials, it failed to achieve the expected goals. Consequently, with the termination of the partnership contract, the dreams of the two companies to gain a substantial edge in the Pharmaceutical industry collapsed too. Since Medivation used to rely heavily on its partnership with Pfizer to generate returns, the extinction of the agreement has resulted in more serious financial losses for Medivation in contrast to Pfizer.

          This is certainly not a good signal for Medivation as well as Pfizer. The stoppage of the development of Dimebon has caused financial setbacks to both companies. During the first three quarters of 2011, Medivation’s shares have dropped drastically by 3.3%. At the same time, Pfizer’s stock rose only slightly by 0.4%.  The plans of the two companies to become future leaders in the market have crashed along with their product. Consequently, the financial outcomes are bound to remain low for at least some time in the future.

           As far as the competitors of the two companies are concerned, they have been presented with a very good opportunity to gain an edge in the market. The competitors are already aware of the significance which Alzheimer’s drug holds and the number of sales it could trigger. Moreover, information about the failure of Medivation and Pfizer in the phase 3 trial will result in competitors being further careful in developing the product and avoiding the mistakes which were committed by the two companies.

            As a result of this news, the Pharmaceutical industry will see potential developers of Alzheimer’s drug springing up in the long run. However, witnessing the breakdown of Medivation and Pfizer, other companies will tend to be more circumspect and economical in developing such a product. I believe that what has now happened is not only unpleasant for the two companies, but also for Alzheimer’s patients; however, it will benefit the industry in the future if stronger developers of this drug would come up, providing patients with the much-needed medication.  The current failure of the two companies is not a good sign owing to the fact that this may lead to a further delay in the development of drugs for treating Alzheimer’s disease. Furthermore, their failure may result in slowing the progress in further investments in these drugs as other companies would not wish to face such heavy losses.