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Many people are walking away with a wrong impression from Pfizer's (NYSE:PFE) torcetrapib's clinical trial being canceled over the weekend. Drugs stocks are up because investors think they're all in play with Pfizer, facing patent expirations and an emptying product pipeline, now seemingly forced to do a major acquisition.

But there is another side. The other side is that despite tocetrapib being crucial to Pfizer, despite it being touted by company execs two days before the trial was canceled, despite Pfizer running this trial with the best and the brightest, the trial failed.

And it happens all the time. Because what people forget is that Phase III drug failures happen regularly, something like 42% of the time, according to a McKinsey study. Granted, most of the time it's about placebo problems -- a drug doesn't actually do anything -- but safety failures, like this one, are common too.

So here's the thing: Drug development remains, as ever, a total crapshoot. Despite billions being spent on targets, platforms, and the like, and despite VCs' rediscovered semi-ardor for the sector, you can spend hundreds of millions of dollars on a compound, only to have scarcely better than a 50/50 shot at making it through a Phase III trials.

Far from boosting other drug development companies, you might think the news would take down the whole sector. Drug development is, in a word, broken.

PFE 1-yr chart

Source: Pfizer Failed: So What?