Between 2001 and 2007, Pharmaceuticals were down 0.7% a year and IT was down 0.8% annually. These were the only negative performers during the period.

These numbers tell me something about the global economy – namely that it's being dumbed down. Between 1985 and 2000, the companies that offered the best returns to shareholders were the ones that depended on intellectual property. Specifically, pharmaceuticals, financials and IT lead the way. Since 2001, the best performers have been energy and materials – while pharmaceuticals and IT have tumbled. And if the numbers were updated through 2008, the financials would likely be in negative territory as well.

Oilmen in the White House have fashioned a set of military and economic policies that have sent energy prices up five-fold while raw materials prices have tripled. To be fair, the pickup in price is also related to demand for raw materials from China and India.

But with two wars in the Middle East, the U.S. is borrowing $9.4 trillion and running a $410 billion deficit which substantially weakens the dollar and spurs inflation in the U.S. Moreover, the global instability adds a terror premium to oil prices.

Meanwhile, companies have cut back on innovation – creating a lost decade for IT and a dearth of breakthrough innovation among pharmaceuticals companies.

Part of the problem with pharmaceuticals is that it's faced problems from competitors in many different links of its value chain. These include:

• Manufacturing. Generic manufacturers around the world have been able to make drugs at far lower costs and pass those costs onto price-sensitive customers – the health maintenance organizations.
• R&D. Biotechnology companies have been far more effective at attracting and retaining the world's top scientists in specific disease categories. Thus pharmaceutical companies are having a harder time replacing products that go off patent.
• Sales. Moreover, expensive pharmaceutical sales forces accustomed to wooing doctors are becoming increasingly irrelevant because doctors no longer make drug purchase decisions – the pharmacy benefit managers do.

Starting next year, things will change. I can hardly wait until then.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.