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David Snodgrass Executive vice president and chief strategy officer Affinity Federal Credit Union Basking Ridge Numbers Show Smoking Ban Hurts Casinos I found it interesting that casino profits are down 22 percent and they're blaming the economy and competition as well as the smoking ban. Atlantic City's smoking ban will ultimately cost taxpayers not just millions, but literally hundreds of millions of dollars in lost revenue, and you can bet your bottom casino dollar that it won't be the lawmakers or the antismoking organizations that will pay the bill.
Carolyn Buck Luce THE NJBIZ INTERVIEW Cost-Cutting Done, Pharma Heads Weigh New Challenges NJBIZ: What did you set out to achieve NJBIZ: Are companies cutting back with the “Progressions” study? Pharmaceutical companies in New Jersey and elsewhere are rearranging their capital expenditures? Buck Luce: This was a survey of 40 top Buck Luce: We don’t get a sense executives at 15 global pharmaceuti- the pieces on their strategy chessboards, according to the latest “Pro- that there would be cutbacks. The cal companies to get their perspec- gressions” report on the industry that was released in November by con- pharmaceutical industry spent $60 tives not just on the transforming role sulting firm Ernst & Young. Carolyn Buck Luce, Ernst &Young’s New billion in R&D last year and of their functions, but also the emerg- biotechnology firms spent $50 bil- ing business model and the organiza- York-based global pharmaceutical sector leader who co-authored the lion — that is a $110 billion spend. tion to power the new business report, says cost-cutting remains one area of focus. But pharmaceutical Life sciences invests in innovation model. This is the sixth report so far for the future. executives are also mulling the new opportunities and challenges uni- and the second volume this year, and The question is how to get a bet- we completed the interviews between versal health care would bring, and new ways of defining the customer ter return. The pharmaceutical indus- May and September this year. and tapping new markets in the emerging economies. Buck Luce shares try has never aggressively managed its balance sheet the way lower-margin the report’s key takeaways with NJBIZ Staff Writer Shankar P. NJBIZ: Did pharmaceutical compa- industries have done. So in the last 12 nies in New Jersey lead the trends? months, we have seen a much greater Buck Luce: New Jersey has many glob- In the U.S., on the one hand, In the latest survey, 66 percent industry reputation. focus on receivables and inventory al pharmaceutical companies, and in there is continuing pressure on of executives said the most impor- management to get a greater return. many respects led the industry in prices, which will continue in the tant strategic initiative was reinvigo- NJBIZ: What makes a pharmaceuti- terms of the trends that impact their new administration. On the other rating the R&D pipeline, while 40 cal company successful today? NJBIZ: How are pharmaceutical competitors globally. What happens hand, the new administration has a percent said expanding into new Buck Luce: These current times are companies faring in boosting their in New Jersey for the pharmaceutical commitment to universal health markets and restructuring their creating a sense of urgency to look at product pipelines? industry is a critical component of care. What constitutes the bottom marketing and sales programs to short-term tactical responses to be Buck Luce: A large portion of com- what drives the industry globally. line is the price of the product and become more customer-centric able to preserve shareholder value panies’ new drug pipelines has unit value, and how well you manage were their main areas of focus. and make sure costs are under con- come from alliances and acquisi- NJBIZ: What are the main takeaways costs to bring products to market. trol. There was an awful lot of focus tions of biotechnology firms; we from the “Progressions” report? NJBIZ: What are the top concerns on on costs a year ago, when compa- expect that to continue and speed Buck Luce: There is a tremendous NJBIZ: Cost-cutting is no longer a a pharmaceutical executive’s mind? nies realized there was a lot of fat in up. The unfortunate aftermath of amount of change. The question is: prime focus area, the report suggests. Buck Luce: We asked the executives their companies and a lot of oppor- the credit crunch is the drying up how do you manage some of the Buck Luce: In our previous report, what they felt were the most tunity to cut costs. of capital for biotechnology com- short-term risks and pressures, and cost containment was one of the important pressure points forcing But there is only so much you panies, and the moderation of at the same time be able to take most important initiatives. In this changes in their business models. can cut before you begin to impair their valuations. advantage of the good news? report we found more of a balanced Seventy-two percent said driving the infrastructure for the future. Even though this is an opportu- The fundamentals are good. approach where optimizing cost product growth with a robust There is now a balance about how nity in the short term for pharma- Globally, more and more people are was [just] one the many
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