First of all, it's important to know how innovation is being defined. Normally, innovation is defined on the basis of patents or financial gain.
Financially, the pharmaceutical sector is very innovative. It makes a lot of money. The issue comes into play on the therapeutic side. The indicators we have right now tell a very different story in that regard. What we see in place is a dominant business model that actually favours little therapeutic innovation and often produces “me-too” drugs. The industry uses existing molecules and tweaks them slightly.
For instance, Prilosec became Nexium. It isn't any better than Prilosec, but the manufacturer launches a huge marketing campaign, endeavouring to change doctor's prescription-writing habits, and then everyone starts prescribing Nexium because it's the flavour of the week or month.
That practice is based on a business model. There aren't any financial incentives to encourage companies to invest in more innovative therapies.
I'll give you an example. The year that Merck closed its Merck Frosst facility in Quebec, its profit margin was 47%. Just try to make a 47% profit margin. The company merged with Schering-Plough. It closed two labs: Merck Frosst in Quebec, and Organon in Holland. Those labs were recognized as the company's two most innovative facilities. The reason they closed is simple: under the business model, that type of innovation is less profitable than the “me-too” innovation that will be done in other labs.
What we're saying to these companies is, “we're going to leave the financial incentives in place for you to maintain the business model supporting mediocre but profitable therapeutic innovation”.