Bayer CEO decries pressure to lower drug prices

Wed Sep 19, 2012 5:27pm EDT

* Dekkers says such pressure threatens innovation

* Says pressure in U.S. is not as great as in Germany

* Says pharmaceutical firms' R&D model under threat

By Ros Krasny

Sept 19 (Reuters) - Pressure from governments to lower drug prices risks undermining medical innovation, Bayer AG's chief executive said on Wednesday, echoing complaints of other drug company executives.

Speaking at the Boston College Chief Executives' Club, Marijn Dekkers said there was "tremendous pressure" on drugmakers to lower prices.

"The danger of pushing the prices of prescription drugs down, down, down is that at some point the business model of developing these drugs will lose its attractiveness," he said.

Although many governments involved in setting drug prices face budget pressures, Dekker said that it was easy to attack pharmaceutical companies rather than focus on more complex methods of controlling health care costs.

"Here (in the United States) the balance is quite good," he said, speaking to reporters after his speech, "but in Germany it is more of a problem."

Drug companies are also facing increasing pressure from generic competition as they lose patent protection on some of their biggest selling products.

On Monday, Bayer said an Indian patents appeals board rejected its petition to block the entry of a generic version of its cancer drug Nexavar.

"India is becoming very reluctant to respect IP (intellectual property) for Western companies, and that's a challenge for us," Dekker said.

Last week the company said it had agreed to buy Teva Pharmaceutical Industries Ltd's U.S. animal health operations for up to $145 million.

Dekkers has said in the past he will try to boost the group's healthcare and crop protection and genetically modified seeds units through acquisitions, but that organic growth is its most important priority.

On Wednesday, he said that Bayer has "a very strong financial foundation" and "good cash flow" but is not angling for an increase in its credit rating, which is currently A-minus.

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