CHEMICAL & ENGINEERING
NEWS VOLUME
40,
NUMBER
29
T h e Chemical W o r l d T h i s W e e k
JULY 16, 1962
Antibiotics Hit by Price Cuts New prices bring synthetic penicillins into direct competition with several older fermentation-derived products The price cutting wave that hit the synthetic penicillin industry appears to be over. Within the last few weeks, Chas. Pfizer reduced prices by 15% on Maxipen, a synthetic penicillin. The Bristol Labs division of BristolMyers cut the price of its oral synthetic penicillin, Syncillin, by 24 %. Other producers followed suit. The new price cuts bring synthetic penicillin into direct price competition with the several older fermentationderived penicillins. And, in so doing, they fulfill a promise that the synthetic route would introduce economies of production which could be passed on to the consumer. Darcil, a synthetic penicillin made by Wyeth, a division of American Home Products, and Pfizer's Maxipen are now selling at about 19 cents per 250-milligram tablet. Bristol's Syncillin is now priced at 20 cents per equivalent tablet. These new prices are competitive with fermentation-derived penicillin. For example, Eli Lilly's fermentation product, V-Cillin, is now selling for about 20 cents for the equivalent dosage in capsule form. Pulling the Trigger. The whole round of price cutting apparently started with a reduction of 15% in the price of tetracycline broad spectrum antibiotic products by the Lederle Laboratories division of American Cyanamid. Pfizer Laboratories, a division of Chas. Pfizer, and Bristol Labs, the two other major tetracycline producers, followed with similar 15% reductions for their broad spectrum products. Upjohn, which buys tetracycline in bulk, also followed ANTIBIOTICS. Pfizer's fermentation tanks are filled with nutrient medium, inoculated with culture in a step to produce antibiotics
Penicillin Output Has More Than Doubled Since 1958 (Production for human and veterinary use only) Thousands of Pounds
Source: U.S. Tariff Commission
suit. Abbott Laboratories cut the price of its erythromycin, also a broad spectrum antibiotic, by 15%. But Parke-Davis, with its personnel responsible for making price cuts on vacation, held the line on its broad spectrum antibiotic, Chloromycetin. And there the matter rested. Or so it seemed, at least, until Eli Lilly kicked off another round of price cutting with a 15% price reduction for its penicillin V. Pfizer matched this move with a price drop of 15% for its Maxipen and Tao (triacetyloleandomycin), a medium spectrum antibiotic. These two moves then triggered Bristol Labs' and Wyeth's reduction on their synthetic penicillin prices. Squibb, a division of Olin Mathieson, says it will also remain competitive. Both Wyeth and Squibb make synthetic penicillin under license from Bristol Labs. Planned Cuts. Because of the size of the synthetic penicillin price reductions, the industry speculates that they may have been planned for some time. As a matter of fact, at least insofar as the leaders are concerned, all the price reductions may have been imminent. Thus one company's move led to an easy chain reaction from the other companies. The March-through-October months are traditionally the time of year when price reductions in such products are made, principally because retail stocks are at the lowest levels for the year. Therefore, the amount of money that the producing companies would re24
C&EN
JULY
16,
1962
bate to the stores for merchandise on hand is also at its lowest. The fact that the Kefauver investigations of the drug industry have ended may also help to explain the price cuts, since the firms can now lower prices without losing face. In addition, many of the firms now may have recouped their investment and can pass along any production and distribution economies that have evolved during the last 12 to 18 months. No Foreign Push. Not a factor, according to most industry spokesmen, is any real increase in competition from foreign producers, although there is some bitter feeling on the part of U.S. drug makers toward what they consider unconscionable drug pirating by Italian drug makers. U.S. penicillin production has risen rapidly since 1958, reaching 1.1 million pounds in 1961. And figures for the first half of 1962, although not yet available for the industry as a whole, indicate that this year's production will be up again. Not involved in the price cuts at this time are bulk sales of penicillin or the specialty penicillins, such as those specific for staphylococcus aureus. Such specialty drugs, although specific and quite potent in treating staph infections, are thus far low volume items. Physicians are reserving use of the staph-specific drugs for purposes where their use is absolutely necessary. By so doing they hope to stave off evolution of new generations of staph organisms resistant to these drugs. The broad spectrum antibiotics are,
for the most part, bacteriostats that inhibit but do not kill the offending microorganisms. Instead these broad spectrum drugs cause the microorganisms to mark time until the body can marshal its own defenses. The penicillins, on the other hand, are narrow-to-medium spectrum bacteriocides that act against gram positive bacteria but not against gram negatives. Their efficacy with staph, however, has held them in good stead, even though they do occasionally sensitize certain persons. The coming of the synthetic penicillins has given hope to workers in the field that broad spectrum penicillins will be developed. But the term synthetic is a bit misleading. Although penicillin has been made through wholly synthetic routes, the efficiencies of the method are such that the method is uneconomical. Instead, a fermentation route is used to make 6-aminopenicillanic acid, which is then used as the starting material for chemical syntheses, leading to a wide variety of active antibiotic homologs. The efficacy of the fermentation-derived penicillins appears to be no better or worse than the so-called synthetic penicillins. There is, however, a marked difference between the older fermentation-derived penicillins and, for example, penicillin G, also a natural product. The older penicillins had to be injected into the body and were slow to raise the blood penicillin level, yet were dissipated quickly from the blood. Penicillin G, on the other hand, raises the level of blood penicillin rapidly and remains at effective levels for at least 48 hours. For this reason, penicillin G is the most commonly used form of penicillin and the one with which synthetic penicillins with the new lower price tags are now directly competitive. Saving $ 3 0 Million. The total market for antibiotics is about $175 million a year at the producer's level. Retail sales figures are hard to estimate because pharmacists can set their own prices. Nonetheless, Pfizer estimates that on broad spectrum antibiotics alone, the potential savings to consumers as a consequence of the industrywide price reductions will run to about $30 million per year. Basing its estimates on plans of the producers of broad spectrum antibiotics to make shelf stock adjustments to both retailers and wholesalers, Pfizer's guess is that drug makers will give refunds of from $3 to $5 million.
