About this Author
DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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January 2, 2005

Finishing, And Starting

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Posted by Derek

Silly me. I thought that 2003 was a bad year for the drug industry, and said so here a year ago. How was I to know that 2004 would make it look like a bowl full of strawberry ice cream? That trend had better not continue, or by about 2007 I'm going to be wearing a paper hat and standing behind a french-fry machine.

On one level, things can't continue to deteriorate the way they did this year. The world still needs pharmaceuticals, and it still doesn't have any way to get them other than from the drug companies (large and small.) Those drugs are going to continue to have side effects (large and small!), and regulatory agencies, doctors, and patients are going to have decide case by case if those are acceptable risks or not. We can't just pull everything off the market and start over. There's no "over" to start from. So in that sense, at least, things can't go on like this.

But there are some bad events coming toward us as if they were riding on rails. Celebrex is in trouble, clearly, and I'll sit down to a bowl of gym-sock soup if Novartis isn't delaying - or canceling - their own COX-2 launch. Crestor is in trouble, too, which means that AstraZeneca may have to decide what they want to do this year: take on Lipitor in a mighty struggle, or be the second company to have their statin yanked from the market. (They can ask the folks from Bayer how much fun that is.) And there are other companies and drugs with problems, which we'll be talking about in the coming weeks (hi, Lilly!)

Merck's already laying off people, and I suspect that they're going to end up laying off even more. Pfizer and AstraZeneca are going to have to follow suit if their compounds get pulled, which would make this a truly awful time to try to find a job in the pharmaceutical industry. The last time we went through something like this was during the uncertainly of the Clinton health care plan proposal, and people were holding on to their jobs with every adhesive at hand.

That wasn't a good time to go for that big promotion or pay raise, for those of you who weren't around back then. At some companies, the attitude was "Raise? You're lucky you have a job," and I wouldn't be surprised to see some of that again. (I remember being asked to hand out a 0.8% pay raise to one of my direct reports back then, which was a pretty memorable experience for both of us. I advised him not to spend it all in one place.)

But you know, we came out of that one. And we can come out of this situation, too. Some good clinical results, some decent product launches over the next couple of years, a few months without a major product going down in a buzzing cloud of lawsuits - is all that too much to ask? We're going to find out. I advise my readers in the industry to just try to hang on - we're going to be telling stories about this era for a long time, and we just need to hack our way through to the other side of it.

My other advise is going to sound a bit perverse, but it's sincere: if any of you research types have been harboring some odd ideas, some out-of-the-ordinary stuff that's seemed too risky to try - well, now's the time. We're going to need some new magic tricks, and they might as well come from you. This might seem like the worst time to take chances in the lab, but no one thinks about doing that stuff when times are good. It's mother-of-invention time, folks. Let's get cranking - the job you save may be your own.

Comments (11) + TrackBacks (0) | Category: Drug Development


1. Greg Hlatky on January 3, 2005 12:28 AM writes...

We're just pulling out of three of the worst years in the history of the petrochemical industry. Whacking cuts in people, consolidation among companies and so on. I hope your troubles don't last that long.

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2. kay on January 3, 2005 6:37 AM writes...

In ordert to follow your advice, the industry must stop NIH. If the large companies had pipelines, then the recent bad news would amount to speed bumps. Maybe it's time for the behemoths to stop playing Not Invented Here (NIH) and to be civil and welcoming to the small innovative companies. Since the small guys cannot get venture money these days, nothing will be available for purchase in a few years unless the behemoths step up, finance some of these companies, and save their own skins in the process. [Derek: please describe the lack of productivity by the large companies ... Pfizer makes a nice case study. Your non-industry readers may not know how listless the R&D portion of this industry really is.] I do not see how the behemoths can suddenly become productive again, so internal efforts to quash NIH may separate survivor from failure.

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3. Phil-Z on January 3, 2005 10:41 AM writes...

Things must have changed dramatically at Pfizer since my years there in the 80's and 90's. I typically had 3 to 5 reactions running at any one time depending on their complexity and I was pretty average. The burnput rate amoung the techs was very high. High throughput synthesis and screening were just coming on line when I left.
None of my old friends I've spoken with have mentioned anything about slowing down, if anything the pressures even higher to produce or be fired. So do you have any idea just WTF you're talking about?

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4. kay on January 3, 2005 7:05 PM writes...

Society does not define productivity of this industry by measuring parallel reactions. You work feverishly, but nothing much gets to patients. The big model - as it's practiced in 2004 - no longer works. The small model does appear to be very capital efficient in comparison and is the source of much of the industry's innovation. Quiz: when did Pfizer introduce its latest product that it discovered? Investors have no reason to be happy about this. The jig is up. Either i) be nice to the small fry, or ii) tear down (and geographically separate) these companies into 15-person units wherein management can actually identify the lucky, the heros, and the clock watchers.

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5. Phil-Z on January 3, 2005 8:29 PM writes...

Have any examples of these small companies? I'd love to work for a company that has such insight.


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6. weirdo on January 4, 2005 12:48 AM writes...

I fail to see how "the small model" is "very capital efficient". Take 100 biotechs -- about 30-40 will something into the clinic. About half of those will get partnered by a big pharma, about 10% of those lead to a marketed drug. Out of those 100 biotechs, maybe 5-10 will still be in business 5-6 years later. How is that efficient? Take a look at my home town -- San Diego. How many hundreds of millions of biotech R&D spending over the past decade? How many important drugs? (Two?) Being nice to the small fry isn't that important -- they really don't know what they're doing, usually, to find an actual drug.

I don't think "Big, Bad, Big Pharma" is particularly inefficient or inept on the discovery end. They lose it on the development end -- presumably where they are the best. Why? Too much marketing analysis early in the game -- if it ain't a $billion molecule, it doesn't get to go forward. If it has the slightest "tox flag", it doesn't go forward. But who can really tell the potential market for all those early-stage, non clinically validated targets? And the "tox flags" have too many false negatives (and probably too many false positives; see: hERG channel screening).

Breaking up the biggest of the big into smaller units makes a lot of sense. The only way we're going to get through this is to try multiple approaches to drug discovery and development, and 2-3 huge companies won't find a better way.

10-15 medium sized companies probably will, however.

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7. Phil-Z on January 4, 2005 9:23 AM writes...

Thanks, I've been hearing this BS about how big pharma is inefficient quite a bit lately, but I can never drag any real life working examples out of the folks making the claims. Claiming that big companies don't try innovative discovery approaches only shows the ignorance of the person making the claim.

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8. lcb on January 4, 2005 2:05 PM writes...

"Too much marketing analysis early in the game -- if it ain't a $billion molecule, it doesn't get to go forward."

Indeed. Gleevec is a good example. Novartis didn't expect that to be a blockbuster. Look at it now.

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9. kay on January 4, 2005 5:27 PM writes...

Dear Phil, please take the quiz: when did Pfizer introduce its latest product that it discovered. Please use the FDA definition of NME. Spray-paint jobs such as Lyrica do not count as innovation. Although few NMEs are being introduced these days, from where do many trace their origins? I trust that you worked hard, but the system reversed your efforts.

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10. Harry on January 4, 2005 7:50 PM writes...

I'm a bit prejudiced in this area, as my company (basically a kilolab)is in the business of providing custom intermediates, mostly for pharma applications, and consolidation has had a negative effect on us. It seems to me that a lot of the empty pipelines can be traced to the consolidation in the industry over the last few years- just look at all the R&D that has been shut down in the name of economization. It MAY make sense for a say Pfizer to acquire the products and pipeline of say Pharmacia, but once that is done, and Pharmacia's R&D is RIF'd Pfizer still is no better off in the long run, since their overall effort is not much, if any bigger.

Across the industry as a whole, the total number of projects being pursued is neessarily smaller.

Secondly- my understanding is that projects are cut sooner in the process. Again- this makes sense in the short term, but it probably also means that things like Minoxidil may be cancelled before the interesting or useful effects crop up. This is the age old question of when to cut your losses, and there's no easy answer, but again, it seems to me that a larger number of research centers pursuing a larger number of projects has a better chance of finding the diamond-in-the-rough (or maybe better the lemonade-in-the-lemons).

Finally, it also seems to me that the things that were supposed to make the industry more productive (i.e.- combinatorial chemistry, computational chemistry, genomics, and informatics, etc.) have yet to prove out their promise.

I don't have the answer to these problems, but I don't think the idea that consolidation will enable bigger players to do more with less will fly much longer.

Personally I think a partial answer lies in at least partial decentralization of research efforts, a willingness of companies to back "blue-sky" ideas, and maybe as Derek says, a larger focus on basic research into tougher drug targets for tougher diseases and conditions.

Even if they are profitable, another generation of Viagaras, Prilosec/Nexium, Claritin/Clarinex, etc are not going to produce patients with a stake in the success of pharma, rather they will generate more bad press(however unjustified) about me-too drugs, and putting profits before patients.

Just my $0.02, your mileage may vary.

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11. Neo on January 12, 2005 12:14 PM writes...

As a retiree from a pharmaceutical behemoth now working in the semiconductor industry, I can say without equivocation that .. you never had it so good .. or at least I'm sure it will get better for you before it gets better here.
Our last three years have been a living nightmare. Imagine losing over half of the company, that's enough employees to fill a minor league baseball stadium. It was never this bad back with my pharmaceutical employer.

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