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Tylenol And The Thalidomide Scares: Moving Forward

Old and new bottles of Tylenol products.
AP
Old and new bottles of Tylenol products.

This week it's 25 years since the first of seven people in Chicagoland died after taking Tylenol laced with cyanide. The scare led to new industry-standard, tamper-resistant over-the-counter drug packaging and became an enduring textbook case for corporate crisis management.

Johnson & Johnson , which makes Tylenol, doesn't break out its sales numbers for the product line, but the company does say that today it is the top-selling brand of adult pain reliever. But for a huge, diversified healthcare company like J & J that does $53 billion in annual revenue, Tylenol is a relatively small product.

The Tylenol poisonings were the worst drug scare since thalidomide which, coincidentally, was launched 50 years ago this week. The drug was intended to help pregnant women with morning sickness, but ended up causing birth defects. It eventually disappeared from the market and was abandoned.

Thalomid
AP
Thalomid

But today, the biotech company Celgene is spinning straw into gold. The company's co-founder and CEO, Dr. Sol Barer, along with another scientist dusted off the drug thinking it might work on HIV/AIDS. That didn't happen, but to make a long drug redevelopment story short, today Celgene has two thalidomide-related products in Thalomid and Revlimid that are extending the lives of people with blood cancer.

Most analysts believe that Revlimid, in particular, is a mega-blockbuster in the making. And investors seem to be betting on it. The stock hit another all-time, intra-day high this morning of $72.79 before trading lower. But CELG shares are up about $20 over the past six months. And just look at a three-year chart.

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The company now has a market value of $27.5 billion. Outside of investment circles, though, Celgene has taken some hits for charging so much for Revlimid--nearly $9,000/month retail. The company has set up a program to help some patients with the cost.

The question, of course, is whether the stock is not only being driven by Revlimid and the company's drug pipeline, but also on speculation that some cash-rich, pipeline-poor big pharma will buy Celgene. While that may or may not be an accurate scenario, one thing is for certain--the price of a Celgene takeout keeps going up.

Questions? Comments? Pharma@cnbc.com

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