Pharmaceutical stocks and exchange traded funds (ETFs) may need a new prescription based on upcoming competition. The near future prognosis for pharma looks unhealthy, as some of the top-selling drugs in the industry will become history as the patent protections expire. Barbara Martinez and Jacob Goldstein for The Wall Street Journal reports that the generics will stream in at lower prices, and generic competition will wipe out around $67 billion from top companies. This amount is projected for 2007-2012 as more than 3 dozen will lose their protection.

The signs for needed change are everywhere, as the old method of finding chemicals to treat disease are producing fewer drugs, and the industry is at risk if there isn’t change. The future sales decline may be the beginning of the end of a century-old way of doing business. It will be up to the companies to find a way to turn it all around.

Pharmaceutical ETFs and their year-to-date performance include:

• Pharmaceutical HOLDRs (PPH) up 8%
• SPDR S&P Pharmaceuticals (XPH) down 0.5%
• iShares Dow Jones US Pharmaceuticals (IHE) up 5.6%