1. Dennis on January 26, 2007 12:03 AM writes...

You know you're just begging for someone to leave a comment about lazy Americans with that last bit, right?

2. Kay on January 26, 2007 7:54 AM writes...

The article does a poor job describing why the small outperform the large (NME/$).

The culture (and lack of funds) of a small company forces workers to worry about the mortgage even while the cart and horse are linked.

The culture of large companies leads most workers to worry about the mortgage only after the cart and horse are separated.

Constant pressure promotes results.

3. Wavefunction on January 26, 2007 8:26 AM writes...

That's one reason why Indian companies are now also investing in basic R & D, so that they won't have to forever depend on generics (although generics still play a big role in their income). Foreign companies are also now locating some of their R & D units in India. Think of how much a salary of a mere (by company standards)40,000$ a year will mean for a bright young Indian scientist, when it is translated into rupees (1 $= approx. 45 Indian rupees). If he can work in his own country with that salary, he would put his soul into his work.

4. John Timmer on January 26, 2007 8:27 AM writes...

To some extent, big pharma has allowed biotech to try a lot of the risky stuff using other people's money - Californian venture capital, for the most part. Biotech companies are generally small and have very rapid turnover. If they ever actually do hit on to something that might be useful, they have no infrastructure in place for human testing, and wind up having to partner with big pharma anyway.

The net result is that the traditional pharma companies for the most part haven't had to put out the cash or take the risks on new approaches in order to have access to their benefits. That may change if startups begin to view the few successful biotechs like Amgen and Genentech as better cultural fits for partnerships, but trends like that probably won't be obvious for another 5 years or more.

5. M. Singh on January 26, 2007 8:50 AM writes...

Ranbaxy's boss, Malvinder Singh, scoffs that Big Pharma “is struggling to come up with true innovation”.

...because making generic drugs is sooo innovative!

6. John Johnson on January 26, 2007 10:56 AM writes...

I would argue that there's plenty of room for innovation in the generics industry, especially in manufacturing efficiency and, um, legal issues.

On to the (hopefully) more substantive part of this comment. I don't think all of Big Pharma thinks of genomics as a "money pit." Indeed, a lot of investment has to be put into the area before returns can be realized, and in some cases the genomics gambit has paid off very well. The best example is Herceptin, which, without the companion HerceptTest (or whatever it's called) which tests for HER probably could not pass enough muster on the efficacy end to get approval. One of the other big recent cancer drugs (Erbitux? Gleevec?) relies on something similar. Of course, that's only a few examples along with many failures, something that Big Pharma is quite used to.

However, given the interest at the FDA over this, especially concerning drug safety (e.g. revisiting Warfarin as in May 2006 Nature Biotechnology's article or revisiting Strattera in terms of genomics/metabolomics), I think that genomics will remain a "money pit" for some time to come. Hey, it might even pay off:

* salvaging failed or failing compounds by enriching target populations
* testing for susceptibility or presence of a genetic disease so treatment can begin
* immunotherapy
* revascularization treatments; other tissue growth

7. MolecularGeek on January 26, 2007 11:59 AM writes...

My take on this is that Big Pharma has become risk averse at the wrong time. No matter who does the counting or what the number is, there are a finite number of druggable targets in the human body (and the pathogenic entities that take up residence therein). The low-hanging fruit is picked and patented. The NIH is cutting way back on their funding of the basic research that undergirded so much of the industrial target selection process. The FDA is raising the bar, both for avoiding collateral damage and for new therapies to be shown to be more effective. And don't even get me started on what percentage of the drug-like compound space is under some form of IP protection. New discovery and development ventures will be more challenging and have a higher failure rate on the road to marketing.

In short, the costs are going to be going way up, and evaluating new technology is not going to be an optional program. The street and big pharma are going to have to adapt to this, or the latter are going to be as much dinosaurs as Univac, Honeywell, Burroughs, Control Data, and Sperry Rand are in the computer world today.

MG

8. tom bartlett on January 26, 2007 12:21 PM writes...

Moleculargeek has it exactly right.

And, I'd like to add, there aren't enough start-ups being formed fast enough to make up for the rate of research capacity erosion brought about by the bonus-oriented idiot MBA's running Big Pharma.

9. CA prof on January 26, 2007 12:48 PM writes...

I'm curious what Derek and the other posters think of this question: If the idea that academic labs are churning out drugs and leads is silly (and other than very few exceptions, this is true), then what is the role for us academics in the drug business? Like many in Pharma, we're motivated by the idea of having an impact on human health. Goodness knows we're not in this for the money. In the eyes of industry, what should we be doing?

10. Duncan on January 26, 2007 1:05 PM writes...

OT: Is it just my lack of observation, or has this blog always carried Spam ads such as "VIEW THE 3-MINUTE VIDEO THAT WILL CHANGE YOUR LIFE!"

11. Derek Lowe on January 26, 2007 1:22 PM writes...

Nope, Duncan, it hasn't. They're driving me nuts, too. At least that one isn't as bad as the damned colon cleanser one. I'm working on it. . .

12. daen on January 26, 2007 1:39 PM writes...

"Mental fogginess" ... yeah, I can relate to that ... maybe my colon needs cleansing? Hmmm *click* "Irritable bowl" ... never seen one of those before ... *click* Hmmm ... "Improve bowel movements" (surely "bowl" movements?) ... *click* "cleanse your internal organs" ... hmmm. No, on second thoughts, my colon is fine; maybe my semicolon needs cleaning?

13. Erik on January 26, 2007 1:40 PM writes...

The oversimplified view of an academic post doc (hopefully not through too rosy glasses) - 1) Companies make lots of money in 1990s through a combination of luck/achievement 2) Companies grow too big for their britches 3) Sales go back to normal, companies are too big, time to readjust back to before.

There are many other factors here which have been discussed on this blog (generics, for instance....) but the one with the potentially biggest impact is the lack of important new targets for the drugs, as Derek pointed out a while back. Maybe the low-hanging fruit has been picked. From what I can tell without being in the trenches, that is the biggest issue.

14. Derek Lowe on January 26, 2007 1:44 PM writes...

CA Prof, that's a great thing to ask, and you've just handed me Monday's post topic. I'd like to ask everyone to hold their thoughts on that "what should academia be doing" question, so they're all in one place. Thanks!

15. Anonymous on January 26, 2007 2:17 PM writes...

#13 Erik is a bit correct. There has always been and always will be a fairly large ebb and flow to the pharma industry. Companies that role with the punches and stay calm (i.e. not undergo a merger/aquisition cycle) fair best. Some economist have described typical companies as an organism...growth is good, but uncontrolled growth is a cancer. The companies that have survived the longest know this and simply stock pile money in the good times (instead of increasing head count) and weather the bad times. There is such a thing as an "ideal" size for a pharma company...big enough to push products fast, but small enough to change quickly with the times. Just once I would like to see a CEO declare that their size is perfect and they're aren't going to change. There was a good analogy in a recent New Yorker where they discuss Nintendo being perfectly happy as the third largest game maker. They have the highest profit, whereas Microsoft and Sony lose money, or break even in the game market.

16. Enoch on January 26, 2007 3:02 PM writes...

Derek, I can't wait to read Monday's post and the resulting discussion re: what academia should be doing.

On a related but seprate topic: in today's WSJ (subscription may be required) there was an article on why foundations and charities are now funding for-profit companies to develop new therapies. The reason? "Nonprofits that have traditionally funded academic scientists have started giving millions to for-profit companies, after becoming fed up with breakthroughs that fill journals rather than medicine chests."

17. TFox on January 26, 2007 3:50 PM writes...

Re #7: I concur about the finite number of druggable targets (and hence a finite number of drug therapy revenue streams). I like to call it Peak Drugs, analogous to Peak Oil. As old targets get exploited, and stop generating revenue, new targets become more expensive to find, and take longer, and require more money, to exploit. Unfortunately, it's even worse for the drug industry than the oil industry: at least a reservoir doesn't shrink while you are figuring out how to tap it, but a drug target's patent starts ticking away immediately.

I believe it's disaster, in the form of a slow, gradual dimunition of opportunity, but nevertheless a disaster. The old model -- spend money, make a discovery, get a fixed term monopoly on that discovery -- is broken. Society will have to come up with new models, if we wish to continue the advancement of drug therapies.

18. milkshake on January 26, 2007 4:26 PM writes...

Lack of druggable targets and low-hanging fruit being picked up are lame excuses made by business windbags who would want to take the uncertainity out of research. I assure you that people that have been working on targets that turned out to be so profitable did not see them as low-hanging fruit when they started out...

Management of few big companies is ruining the entire industry. When you have a #1 company that sqeezes maximum profit from finished products while axing the very people who discovered those products - and does it in a recidivist manner - eventualy there will be huge internal debt in the research. You can cover it up for a number of years, you can finance yet another takeover based on future profit expectations. Eventualy the profits will not materialise (because of some unforeseen disaster) and the stock will fall. The productive drug-discovery milleau is destroyed at enormous cost - but for first ten years the management can pretend as if nothing bad was happening - they would even brag how they saved yet another 2 billions per year on synergies. Meanwhile they reward themself hundreds of millions on bonuses and stock options for their efforts. The people who are actually paying for all this lunacy are the stockholders and patients.

Unforeseen disasters like COX-2 fiasco always happen - it is just the management that makes wishfull profit projections and is then unpleasantly confronted with reality of medical research.

Another problem is that stockholders demand quick returns on their investment and pharma business is inherently very long investment cycle. If you tie the multimilion bonuses of the top managers to the momentary stock fluctuation, you invite these managers to take the don't-rock-the-boat and cover-my-ass attitude, to be dishonest about the company problems and its real prospects. It invites the management to take steps that are nonsencial from the long-term profit perspective.

When a drug succeeds and makes money every pinstripe suit rushes to take a piece of credit. Unforeseen disasters are apparently caused by sunspots.

So unrealistic expectations of investors, management megalomania and poor accountability throughout the management structure.
Dilbertisation of productive people in a corporate "culture" is another cause of pharma problem, and it is a natural outcome of the reality-decoupled management.

19. Chrispy on January 26, 2007 5:39 PM writes...

It has been mentioned before on this blog, but the industry has become too risk averse.

Aspirin would never even see clinical trials today due to the stomach bleeding, and ibuprofen wouldn't, either, due to liver tox.

Whimps don't make drugs. So here we are.

20. MouseAnon on January 26, 2007 6:21 PM writes...

"Where else is Ranbaxy going to get those generic drugs to sell, do you think? From elves?"

As commented previously, it is highly likely that generics companies, such as Ranbaxy, will be dabbling with some R&D of their own.

21. Molecular Science on January 26, 2007 8:39 PM writes...

Get rid of that disease called WallStreet and stop wasting so much money on the useless 'education system'. Eg. Why pay someone to teach undergraduate mathematics? Its a commodity which can be learned from books.

22. S Silverstein on January 26, 2007 10:03 PM writes...

"The problem is, those dramatic scientific advances have so far, almost without exception, not produced a single new marketed drug."

Could this article help explain why? - "Why Most Published Research Findings Are False," PLOS Medicine, http://medicine.plosjournals.org/perlserv/?request=get-document&doi=10.1371/journal.pmed.0020124

23. Chrispy on January 26, 2007 11:02 PM writes...

Advances made in recent pharmaceuticals are pretty good if you look at antibodies. Phage display, scFc, whatever. These puppies are wired in every possible configuration. I guess we have yet to see how well they do clinically but even the humanized mouse strains (e.g. Medarex, Abgenix) provide truly novel (or at least convenient) access to human antibodies.

24. TFox on January 27, 2007 9:52 AM writes...

Re #18: "When you have a #1 company that sqeezes maximum profit from finished products while axing the very people who discovered those products ... eventualy there will be huge internal debt in the research."

Note that this is precisely the rational behavior expected if you believe that future opportunities are worse than past opportunities. Big Oil has done this too -- cut exploration despite major increases in oil prices. I'd love to believe that the current troubles is merely a management problem, or a failure of investor imagination, but I fear that it's more fundamental: that it's actually true that, as everybody keeps saying, that drug discovery is hard, and getting harder.

25. eugene on January 27, 2007 1:15 PM writes...

Chrispy, this isn't about antibodies, but bacteriophages are a really good 'recent advance' as well.

Bacteriophages was done in the Soviet Union in the 1970s since they needed a cheap way to stop people from dying after an operation. Just to give everyone's favorite failed communist state the appropriate creds. Of course, they couldn't market.

It's criminal that the west has only picked up on this by now. If I had my way, I'd throw someone in jail (probably a funding agency head or something...) for letting so many people die due to mistrust of Soviet Bloc medicine. Which, should have been trusted in some instances.

26. Flash-column Jockey on January 27, 2007 4:04 PM writes...

"Why pay someone to teach undergraduate mathematics? Its a commodity which can be learned from books"

I wept for civilization when I read this...

27. ConservativeMutant on January 27, 2007 5:25 PM writes...

eugene, therapeutic bacteriophage predate the USSR: Felix d'Herelle was first using them for therapy in 1919. For a time, they were thought to be the latest & greatest thing in medicine, appearing in Sinclair Lewis's Arrowsmith, for instance. They went out of favor largely because of quality control problems, I think, and interest in the West largely turned towards antibiotics.

28. Kay on January 28, 2007 8:31 AM writes...

Re #8: "there aren't enough start-ups being formed fast enough to make up for the rate of research capacity erosion"

I agree.

29. Philoctates on January 28, 2007 11:59 AM writes...

To CA Prof:

In my opinion, simplistically, academics should be advancing fundemental organic chemistry knowledge (e.g. discovering new synthetic methodology and furthering understanding of exisiting reactions). Such advances will be readily used by medicinal chemists to synthesise new targets and process chemists to develop efficient processes to candidate drugs.

30. weirdo on January 28, 2007 12:19 PM writes...

Kay--

Do you have any studies/evidence that smaller firms are more "efficient" than larger?

I've worked at a biotech and now a big pharma. When at the biotech, I thought as you do. But of course I didn't see all of the other things, outside the collaboration, that went on at our Big Pharma partners. Now, I see numerous biotechs come in and tell us they have "Phase 1-ready" molecules, look at their data, and say "no, you don't".

It is clearly true that many biotechs are willing to do less work on their molecules before pushing them ahead. I guess from one point of view (the MBA's) that makes them more efficient. I also see us killing molecules by running that one more extra experiment that raises the perceived risk, but "might" not be relevant in humans, anyway. But I don't see any evidence that fewer experiments is paying off for them in the long -- or even medium -- run.

31. Erik on January 28, 2007 3:16 PM writes...

For those of you with more experience than I - when was the last time the drug business was in such a "cyclical downturn", or trouble, or whatever you'd like to call it (assuming it's not a larger problem we're facing)? How would you describe it, and how did it end? Curious....

32. Kay on January 28, 2007 4:27 PM writes...

#30, Weirdo:

I you think that innovation scales, then I will put some time into providing an answer.

Kay

33. eugene on January 28, 2007 7:06 PM writes...

Innovation is not necessarily required for discovering and bringing a new drug to market. It is necessary if you want to expand into new areas.

Kay, you have to admit, you do sound very arrogant when you talk about "Constant pressure promotes results", and that some people are "not ready for the new paradigm [of working on weekends]". These are simple, one size fits all statements that are generally not true in most situations in the real world if you pause to think about it, and sound like something that would come from a politician. Thus, an answer to weirdo, instead of another arrogant post, would be much appreciated by not just weirdo.

While I may share the views expressed in posts #7 and #8, which you do as well, I am averse to much of what you write because it is much more contrary and unexplained.

As that saying goes: "We're waiting with bad breath" (since we're under constant pressure to come in on the weekends and we forget to brush).

34. Chrispy on January 28, 2007 7:25 PM writes...

Bacteriophage clarification:

Phage display is a method for finding antibodies -- I wasn't talking about phage therapeutics, which have been largely discredited, anyway.

The point is that we now have very powerful ways to make therapeutic antibodies, and these could play themselves out in very interesting ways once we move a bit away from desperately sick cancer patients typically treated now with antibody therapies.

You guys making small molecules better watch your backs!

35. eugene on January 28, 2007 8:18 PM writes...

I wasn't talking about phage therapeutics, which have been largely discredited, anyway.

Not true. This is a good way to prevent infection after surgery. This isn't exactly the same thing though. Here you just rub a cream that contains bacteriophage on the incision. Germany is funding studies on this (I read it in Die Zeit a year ago, but couldn't find the reference) that are conducted mostly by immigrant doctors from the former USSR. According to the Die Zeit article, operations with bacteriophage are becoming a norm pretty quickly.

Although, phage therapeutics (something different) have been discredited, apparently, maybe someone should take a look into it again. From my ignorant vantage point, it seems like it would be less expensive to screen petri dishes with virus/bacteria colonies, than it would be to come up with new antibiotics. Especially, if all that is necessary during a particularly nasty antibiotic-resistant bacterial infection is just a few extra days for the body's own immune system to catch up, it could be helpful.

Once again, I'm mostly ignorant when it comes to this topic, but I'm just interested in it.

36. Kay on January 29, 2007 7:12 AM writes...

#33: "Innovation is not necessarily required for discovering and bringing a new drug to market."

I focused on the word "new," then wept for patients as I read this.

37. weirdo on January 29, 2007 11:01 AM writes...

eugene,
RE: Kay
You tried being civil, I tried being civil, all we got was more of the same. Pretty typical of the Gen Y "I know I'm better than you are so don't have to prove it with facts, just psuedo-pithy comments" breed.

Kay,
Innovation scales? Of course not. But, if you truly knew anything about drug discovery AND development (or even read Derek's blog), you'd recognize that the "discovery" part is such a tiny piece of the puzzle that your comment has no meaning.

38. Hap on January 29, 2007 1:59 PM writes...

Kay-

If the paradigm of the pharmaceutical industry is to be small companies and the high-risk/high-gain environment, then it seems like a legitimate question to ask where research is going to come from. Small companies and startups favor a risk-seeking personality, but with 6-12 years of investment (either direct or in opportunity cost) in schooling, the financial risks for the individuals in research are significant. Why spend that time learning to be a chemist or biologist when for less money and schooling, you can be a lawyer, MBA, consultant, or finance person and be likely to make more money with less education and a similar level of risk and with a similar or greater level of reward, as well? There will always be people who love chemistry and don't care about the money, but since most of the pharmaceutical business operates as a for-profit business, it seems unreasonable to assume the pool of future workers will not make such such calculations for themselves.

39. Kay on January 29, 2007 6:27 PM writes...

#38: I agree with this sentiment. With the way things are going with big companies, however, I am not sure how many positions will be available to non-high-risk-seeking personalities. As a result, I think that many will move to other fields. This is sad, of course.

Since innovation does not scale, why would large discovery organizations win on a NME/$ basis? As for development, CROs are way more efficient than internal programs (again, on a NME/$ basis).

40. Mouse Anon on January 29, 2007 8:24 PM writes...

Re #34: "You guys making small molecules better watch your backs!"

Not really. Although I agree that antibodies have a huge amount of scope, people will opt for a pill over an injection everyday of the week.

41. Canuck Chemist on January 30, 2007 7:33 PM writes...

How's this for a different thought in contrast to the rather pessimistic feelings we all have these days: If personalized medicine can become more of a reality in the not-too-distant future, there could be substantially more demand for medicinal chemistry and it's practitioners (and the scale-up chemists to go with them), in order to make more lead compounds to serve more fragmented populations. The major costs of bringing a drug to market are not the discovery costs, they're the clinical costs. If the clinical side can be better understood (and more predictable), this could free up more investment in productive early-stage science. Thoughts? (I'm trying to find a silver lining in this cloud, especially since I'll be finishing my postdoc soon...)