New uses for old meds- benefit or drawback?

Implications: This article is important because it describes a growing concern that is not well known to the investment community or the public. Due to increased pressure from the generic companies, the FDA, and the public many companies are finding new uses for older medications. This is very true in dermatology and other smaller specialties where the cost of new drug development is higher than many smaller companies can support. Unfortunately this strategy, while good for keeping the bottom line high initially, will eventually hurt these same companies because the alternative uses will run out, and newer medications will be needed. Both strategies are needed in order to ensure a good pipeline of medications both old and new.

Analysis:   The companies in dermatology with good drug development programs, using both older and newly developed medications include Stiefel, Galderma,and to a lesser extent Medicis and Allergan. The rest,by and large, are smaller and are looking to get new uses out of older compounds, ar acquiring new technologies. Internal drug development is difficult and costly for these smaller companies.