Thursday, 31 January 2008

Is Big Pharma going down?

The pharmaceutical market is huge, worth around $640 billions yearly. Within this industry the 10 largest companies represent about 40% of the yearly sales. But how are this companies doing?

A lot has been written lately about their questionable business strategies and behaviour. Furthermore, there is lot of talk about their pipelines being weak and their best-seller, so called blockbusters, having patent running out. In this industry, dependent on intellectual property, this is a threat. But is it true?

Many blockbusters are running out of patents soon, but there is also many new drugs in the late stages of the pipelines coming up to fill this spots. Also the first generation of drugs built on biotechnological applications have recently reached, or will soon reach, the customers. This is not a real threat. Also many of the larger companies have acquired smaller companies to use innovative drugs in their pipelines.

What however is threatened may be the blockbuster business model. The objective in this model is developing those best-selling drugs, rather than a broad range of drugs. Today, the buzz is about pharmacogenomics and the ability to make drugs specific for the (genetic) characteristics of a person. This is not in tune with the blockbuster business model and may give larger room for smaller players. It remains to see how Big Pharma will adapt.

Furthermore, another threat is the increased generics market (generic drugs are copies of another drug which has run out of patent protection). This are gaining ground due to the fact that they can be sold to a lower cost, because of lower R&D expenditures. But this is only a threat after the patent has expired, and by then a drug should have sold enough to cover it's development process and then some.

There will still be a place for Big Pharma, however these companies will probably change to adapt to new settings.

Downloading is not Stealing

If you follow the debate about filesharing in the news, you will inevitably hear: Downloading music/movies is stealing.

This argument is wrong in several ways. Firstly, if you are charged for downloading, the crime is copyright violation, not theft. This is merely a definition but still valid. Furthermore, if you download a song the original file will still be there. Hence, you have copied it, not stolen it.

This should be easy to understand, but apparently it is not. Maybe this is because of the general generation gap between the younger pro-downloading side and the older anti-piracy side. I guess the older side just has a lack of understanding of the technology used.

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Tuesday, 29 January 2008

The next World War?

What will be the reason for the next big war? Is it a trigger-happy US president, a fundamental muslim ayatollah, an imperialistic Russian leader, a communistic Asian leader or terrorist attacks?

Another possibility is climate change. When the climate changes for the warmer, some areas will turn uninhabitable and water will become scarce in some areas and too abundant in other. This will have an enormous effect on the politics during the rest of this century.

Furthermore, the climate change will generally have the worst effects on developing countries, because of their geographic locations and smaller economic resources. This is a huge moral issue, since these countries have only contributed marginally to the emission of green house gases. Will the Western World take their responsibility in helping the developing countries?

Also this change in climate will create streams of refugees, some quoting numbers as several hundreds of millions. How will this be solved? Will they be let in to their neighbour countries? This is likely to start major civil unrest and probably opportunities for strong leaders to spread questionable ideologies.

This future also sees the booming economies and emerging power factors China and India meeting a shortage of water, and also competing with each other for the existing water. Is this the source of the next war? Water and inhabitable soil?

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Saturday, 26 January 2008

Jerome Kerviel: Societe General must have known

It has been hard to miss the €4.9 billion fraud of Jerome Kerviel. Obviously, this is a huge deal and an enormous amount of money that has been lost in speculation on the market. When this secret came up to the surface it shook the french bank, and while probably affect it long-term credibility, and thereby its business.

However, I find it impossible to believe that this was not known by the bank until now. There must have been several, both external and internal, control systems. The bank claims his background in backoffice functions made him able to avoid being detected by these control systems.

Or is he just a scape goat for a period of questionable investments and decision from the french bank?

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Thursday, 24 January 2008

How red is the Red Dragon?

The Chinese dragon is moving, and the economy is growing on the brink of overheating. Is this the first economically succesful communist state?

This question needs two considerations. First is the economy succesful? I would say yes, with a but. Their is a backside of the economic growth, the environment is suffering, inequalities are growing and the considerations of human rights are far behind the west. However, I believe the growing middle class, the increased education levels and general increased prosperity will create a demand for democracy, sooner or later. And then comes another question will China resolve this peacefully and how will this change China?

So what about the communism? Well on the surface China is still a communist state, but it's moving towards what is could be described as a state-controlled market economy. There are private or publicly owned companies competing on the same market as large state-owned enterprises, such as PetroChina. The governing body of the Communist party has already removed some of the older traditionally communistic hardliners. This is a clear indication of a shift towards market economy. Furthermore, a recognition of the potential gains of foreign direct investment is spreading.

My describtion of China would be a market-driven authoritarian regime. Which in some senses might be a contradiction, but this is where China seems to be going. What the future hold for the Red Dragon is yet to be decided.

Wednesday, 16 January 2008

Sustainable Population

With today's usage of resources the population is too large to be sustained by our planet. I have seen several numbers for this, but in general a consensus idea seem to be that in about ten years time we will need 3 planets to support us.

With huge populations in China and India seeking the same standard as in the West, sustainability is far away. I am not arguing, that they should not seek the same standard. This striving is good, it is what drives growth and innovation. However, it needs to be done with the environment in mind and the use of resources need to be more efficient.

Tuesday, 15 January 2008

Science and Technology is the answer

Firstly, there is a need to acknowledge that there is a such a phenomenon as climate change caused by human activities. This is not arguing the fact that there are natural climate changes as well, and that such has occured throughout the history of our planet. However, what is happening today is not solely caused by natural factors.

Secondly, this is a problem that needs to be solved or at least to be slowed down. In order to solve this, the emission of greenhouse gases needs to be decreased. But there are some troubles with this on an international level. Rapidly growing economies, such as China and India, are also rapidly increasing their effects on the environment. Justifying it by pointing out the fact that, the Western world has has much higher emission rates for a long time.

Obviously this situation is not sustainable. The growth of these new economies cannot be halted, but there need to be a shift in focus. For example, today 16 out of the 20 most polluted cities in the world are in China (according to the World Watch Institute).

This environmental challenge will not be solved by a stop in consumption or lower standards of living. It needs to be done in a way where our standard of living can be kept, but rather focusing on scientific and technological change. There are a lot of technology already available to battle this, but there need to be a willingness to invest in and commit to technology changes.
Furthermore, the industrialized countries with an ability to change need to take the lead in this process.

Sunday, 13 January 2008

Prisoners of War?

The United States has repeatedly been exposed violating human rights for prisoners of war. It has happened in Guantanamo, Abu Ghraib and in prisons in Egypt and Eastern Europe. How can the world's most powerful nation and one of the largest democracies do this repeatedly?

The prisoners in Guantanamo are not officially prisoners of war and therefore, according to the US, the Geneva Convention does not apply. Is it this easy to strip a person of his human rights? It is unbelievable that there is not more diplomatic pressure on the US government to stop the illtreatment of prisoners.

The prisoners in Guantanamo are not informed of where they are or why they are being hold captive. They are inprisoned under inhumane conditions and are subject to torture. This is carried out in a very elaborate way, and always outside of the US. The Guantanamo prison camp is not the only place this goes on, another exampless are the Abu Ghraib prison in Iraq. Also several reports tells stories of suspected terrorists being arrested under suspicious circumstances and flown to prisons in Eastern Europe and Egypt to be tortured in a search for information.

The prisoners are held without being told what they are being accused of and without a trial or even a trial date. The only trials being held are closed military trials, which are not in line with democratic ideals.

My personal hope is that the next elected president will be a democrat with a willingness to clean up after the previous regime and hold them responsible for their actions.

A couple of links:
Tortured Logic
Life in a Guantanamo Cell

Thursday, 10 January 2008

Is there a need for the big players of the music industry in the future?

It is rather obvious that the big record labels that have been ruling the music industry is not up to date with the demands of today's customers. The major players of the music industry (eg. the major record labels) seem to have an idea of themselves as prerequisites for a commercial supply of music. However, with current technology, such as computers and internet, dramatically cutting cost for recording and distribution of music this is not the case.

Today even small band can reach massive audience by internet marketing, this could be accomplished by sites built around users sharing information, often referred to as web 2.0. Proof of this is the phenomenal outreach of sites such as Youtube and Facebook. Furthermore, in a world where (digital) distribution of music is very cheap, everyone can make a song available for download.

So where should the big recording companies go to keep their power?

A hard question, one which I cannot answer. However, I have a few thoughts. A solution like Itunes is definetely one thing I see for the future, but (actually a big but) Itunes has serveral major flaws:
  • It requires downloading of a client. A future solution should be web based.
  • The file format is strange. You cannot do what you want with your downloaded music, it is even hard to find the files and use them outside of itunes or ipod. A more straightforward file management is needed.
  • It is too expensive. I believe it should cost maximum half of the cost at itunes, preferably free. This could be accomplished with efficient advertising.
The digital solution brings some where attractive possibilities:
  • To show the users new artists / music, for example via a service showing "if you like this band, then you might also like...".
  • Accesability, the possibility to keep larger library of music, which can be searched in easily. Also because of the low storage and distribution costs, a song or album needs to be sold much fewer times for it to be ecnomocially feasible to offer for the record label.
The record industry might be under pressure and far behind when it comes to keeping up with technology advances. But I believe the big record labels will still be around in 10 years, although their form might have changed a bit. Much of this could also be applied to the movie industry, which are to a large extent interconnected with the music industry. I guess the bottomline is, the record companies cannot make any money if all the customers have moved on to another market and to another technology.