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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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February 4, 2007

Going Hollywood, For Our Own Good?

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Posted by Derek

The Scientist has a very interesting article in the latest issue, titled "Why Pharma Must Go Hollywood". The author, an executive in the industry, makes some good points. After pointing out the low-lying-fruit component to everyone's recent productivity problems, out comes this:

"The second critical and fundamental cause of pharma's productivity problem, which fortunately is potentially remediable, is what former R&D director for Burroughs Welcome, Glaxo, and Warner Lambert, Pedro Cuatrecasas, has referred to as the "pervasive mismanagement" of the R&D process. Cuatrecasas noted in a recent article in the Journal of Clinical Investigation that the rot started in the early 1970s when managers with business school or legal backgrounds, but no significant foundation in science or medicine, began to invade the upper echelons of pharma and introduce structures and practices such as "management by objectives" from industries lacking any significant R&D enterprises. This invasion was motivated by a desire to increase the efficiency of R&D and to prioritize maximizing the return on investment.

An even more stifling trend has been the recent importation of the "six sigma" business improvement methodology into aspects of pharma R&D. Six sigma was designed to improve manufacturing processes, but has been well documented to quench innovation. The intellectual bankruptcy typical of many current pharma leaders is well illustrated by the typical pharma response to faltering productivity and the resultant fall in earnings. Take, for example, Pfizer's acquisitions since 2000 of Warner-Lambert and Pharmacia. Rather than investigating and addressing the fundamental etiologies of the problem and contrary to the readily available data in the business literature, the leadership plunges into the short-term fix and ego-satisfying drama of a merger, which is almost guaranteed to stifle innovation even further."

As you can imagine, my response to this is to stomp my feet and throw roses, because it's exactly the sort of thing I've been saying around here for a long time. (I'm not alone, either). It's bizarrely refreshing to hear the phrase "pervasive mismanagement" used to describe the drug industry. I find myself sitting around repeating it in my idle moments, with mental illustrations from my own experience.

The "Hollywood" part of the article is the author's prescription for the industry. Noting the similarities between drug launches and movie launches (an idea that's been floating around for a few years now), he (or she) advocates learning from the studios that have been best at developing and managing creativity. We may, the article claims, have learned about all we can from benchmarking each other - we need to look outside the list of other pharma companies.

Why do I say "he (or she)"? Because, most unusually, the article is written anonymously. I'm quite curious about where it came from, but in the end it doesn't really matter. Anyone who works for a big company will recognize what's being talked about - the fixation on short-term results, the we're-sticking-with-this-decision-no-matter-what mentality, the command-and-control leadership style. No, William Goldman was right when he said about the movie business that "no one knows anything". And the same thing applies to the drug industry, too, but no one in the executive offices wants to admit it.

Comments (20) + TrackBacks (0) | Category: Drug Development | Drug Industry History


1. Couch potato on February 4, 2007 10:55 PM writes...

I agree with you, Derek, the rule of business people in the board rooms of today's pharma companies could be part of the problem. Pharmaceutical research is an erratic and unpredictable process which is just not understood by businessmen and lawyers.
A refreshingly different example is Genentech. Their CEO has a science background, same as five of their seven board members. And look how well the company is doing. Although this is just one example, it teaches us that scientists are perfectly capable of successfully leading a company.

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2. milkshake on February 5, 2007 12:08 AM writes...

Part of the problem is that MBA schools attract and produce smart and eager greedy people who want to rip at every oportunity, who want to have their mansion on the lakefront and fly their Learjet before they turn 35. You put this sort of guy in charge of drug discovery and he will run it to the ground.

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3. atompusher on February 5, 2007 1:10 AM writes...

Amen, a thousand times amen.

I can understand the benefits from acquiring another company for its R&D pipeline, but I fail to grasp how laying off your R&D staff is going to improve your future prospects. Let's see those MBA's at the top try to produce anything in the lab. In the end, they buy back expertise from Biotechs and CRO's at a much higher cost than if they had kept those workers in the first place.

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4. sciwriter on February 5, 2007 8:22 AM writes...

here's the author (listed on the online version:

By Liam Bernal

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5. sciwriter on February 5, 2007 8:24 AM writes...

ah, sorry, spoke too soon-- i read to the end and saw the note that it was written under a pseudonym. interesting.

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6. tom bartlett on February 5, 2007 9:14 AM writes...

A lot of my best discoveries have occurred when I was looking for something else. No MBA would understand this.

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7. John Thacker on February 5, 2007 9:16 AM writes...

Anyone who works for a big company will recognize what's being talked about - the fixation on short-term results, the we're-sticking-with-this-decision-no-matter-what mentality, the command-and-control leadership style.

FWIW, my current company seems pretty good on this score-- but they also have engineers and scientists on up the line all the way to the top. But yeah, this sort of idiocy can happen in any big organization, government included. A company will eventually be forced to face reality, but it can be a slow process indeed that will deliver pain to the employees as well.

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8. nobody on February 5, 2007 9:37 AM writes...

Should we really be looking to the movie industry to manage creativity? It seems like all the big movies these days are re-makes of mediocre TV shows (Dukes of Hazard?), or based on comic books and video games (Ghost Rider? That was a lame comic in the 70's and it's going to be a lame movie today). Hollywood's business model is to focus on safe, franchisable products that aren't particularly original, but lend themselves to marketing tie-ins. We're already seeing that with the repackaging of molecules (it's purple now!). Are we going to be seeing a Nexium happy meal in the near future?

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9. milkshake on February 5, 2007 9:52 AM writes...

Listen, we will have here an Executive Director,
Worldwide Head of Basic Research from Merck giving a seminar in 10 minutes from now - I am gonna ask what is the ration of business people to science people in higher eshelons of their company, who calls the shots and to what degree in her opinion mismanagement caused the current trouble of their company. Let's see what happens...

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10. MTK on February 5, 2007 9:57 AM writes...

OK, let me be the contrarian here. While I agree that business folks may not be the right folks to run an R&D organization, the solution is not necessarily to let the scientists run it either. While one can say Genentech is doing great because they have scientists in charge, I think there are scientists in charge of Big Pharma also, JP Garnier at GSK and Tom McKillop at AZ are both Ph.D. scientists, and I don't see them performing head and shoulders above their colleagues. So I'm not going to blame MBA's for pharma's productivity drops. Honestly, that's being a bit self-serving isn't it. Instead I'm going to blame size in and of itself as the brake on creativity and that that would happen regardless of who is in charge. Once an organization gets to a certain size, it becomes a bureaucracy and all that a bureaucracy entails, namely business processes such as six sigma. Now some organizations are better than others at warding off impeding (or is that impending?) bureaucracy and I think Genentech is one of them, but that'll end at some point as they keep growing. Heck, they've zoomed past 10K employees, so it won't be much longer.

Nobody beat me to it, but is Hollywood that really any more creative? In fact, the studios are so bereft of real creativity that there's even an Oscar award that goes for "Best Original Screenplay". Of the five nominees in that category this year, none are blockbusters and Little Miss Sunshine was top grossing with a 51st ranking. Of the Top 10 grossing films this year, 7 were sequels or based on a novel. Literally, me-too's.

I would agree, however, that the movie industry is a good model (which is why we use the term blockbuster) for Big Pharma. What are the big studios good at? Marketing and distribution. Sound familiar. What are independent filmakers good at? Making original, and often very entertaining quality films at low cost. Doesn't that sound a little like small biotech? I'll give you another similarity. Both industries are struggling. Box office receipts for 2006 showed very little growth. So even with the successes of Miramax and other independent filmakers, the industry as a whole is not very productive. While there are lessons from Hollywood that are applicable, I'm not sure that's where we really want to go.

Postscript: You want to really stretch the analogy, let's talk about simultaneous box office, DVD, and on-demand release as a model vs. prescription, generic, and OTC. OK, I'm only being provocative here.

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11. Canuck Chemist on February 5, 2007 11:02 AM writes...

I think one option for the loss of control that scientists have as an organization grows, is simply to be more entrepreneurial and look at starting new (smaller and more flexible) organizations. This is certainly easier said than done, especially because the capital investments and the risks are so high, but I think there could be more room for this. I read a recent story (can't remember where) about one of the old Novartis mergers leading to cancelled projects which were really quite promising. A group of the scientists were given permission to start a spin-off company based on the project. I'm sure there is lots of decent stuff which has been cancelled by big pharma due to a lack of blockbuster sales possibilities, but which could seed smaller and innovative research operations.

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12. curiousGeorge on February 5, 2007 11:02 AM writes...

True enough, mediocrity is the norm everywhere. But a few talents like Charlie Kaufman and the Coen brothers to name just a few to keep the
whole enterprise floating.

It seems like this used to be the norm --backing a few 'drug hunters'-- in pharma days past, and the switch seemed to change as they tried to 'bureaucratize' creativity. Perhaps a model more like Google's would serve the industry better.

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13. OneLonelyMBA on February 5, 2007 4:55 PM writes...

If anyone is curious, there is a very good book on this very subject (written by a business school professor, believe it or not) called 'The Innovators Dilemma'. Suffice to say, the innovation problem is one experienced by large and successful organizations across all industries (think of the old Digital Equipment Corp., IBM ten years ago, Microsoft today, or most of the chemical industry), and, as someone mentioned here, the problem really does stem from size and complexity. There is tremendous pressure in large business organizations (whether they are run by MBA's, engineers, or scientists) to do two things: to go for the big "blockbuster" product (i.e. only those that are large enough to make a difference in the financials reported to Wall Street), and to put together strategic financial plans (to keep said 'Street' from being surprised). As many on this list know, neither of these things are good for innovation. Pharma is no different from any other industry in this regard.

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14. eugene on February 5, 2007 4:58 PM writes...

Okay milkshake, so what happened? Did the Merck executive director turn into the Hulk and break your bones? Or did she say: "We have quite a lot of people with science backgrounds in upper management, including me (I'm not willing to do the googling to know if I'm right here), and I would not characterize our state of affairs as mismanagement or trouble. In fact we have several promising, blah, blah blah...."

We're waiting in suspense animation for your breath-giving report.

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15. Devices R Us on February 5, 2007 5:21 PM writes...

OneLonelyMBA reading of the Innovator's Dilemma is interesting. I have heard Clark talk a few times and I am pretty sure that he could have written a book 180 degrees opposed to what he said in the innovator's dilemma if he had chosen a different 3 industries to look at. The book is the classic case of finding data to support a pre-existing hypothesis, not the other way around. I think the biggest problem in big medical companies both pharma and biotech is the focus on short term quarter to quarter growth. That kills truly innovative stuff faster than kryptonite.

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16. hibob on February 5, 2007 5:42 PM writes...

just remember:
Gaffers don't get paid during post production.
"... A screenplay could be considered analogous to a drug. A compelling screenplay generates a quest to get a director with the best credentials to develop it. The chosen director then personally picks his key colleagues, generating a creative team with relevant complementary expertise and a compatible working style."
But consider how this analogy plays out. A director and chief science officers would be chosen and hired (If you want the best, you're not just looking in house) based on their scientific expertise. They would rent a facility (this isn't a permanent company), hire staff and subcontractors.They would hire people as their part of the pipeline comes up, and then fire people as their part of the pipeline is finished.
Gaffers don't get paid during post production; the same studio may hire them continuously but only if they are continuously shooting films. And the smaller the studio, the less that happens. That (and having employees and their unions largely responsible for their own health and retirement benefits) is how they turn a profit.
A leaner and meaner system may work well, but it's mostly leaner and meaner to the people who are doing the work, not to the MBAs.

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17. milkshake on February 5, 2007 7:36 PM writes...

Eugene, the truth is that I chickened out. But I have few good excuses: The lady is biologist by training and over her 25+ years at the company she worked her way up to the top management. What she presented was biology and some medchem, basicaly a project overview from start to finish and regulatory approval.

DPP-4 inhibitors are a very promisilng and pretty safe-looking class of oral antidiabetics. It was a risky project, their original lead (which was licenced-in failed clinical compound from a small company) had a severe tox problem and it was not entirely clear if the problem was off-target activity or mechanism-based. DPP-4 cleaves lots of targets and the wory was that some of them can be related to immune system, etc. So they had extensive look into what DPP-4 targets are and looked how these targets are affected in vivo too.

They also found out the actual off-target, showed that its inhibition caused the full spectra of toxicities of the original lead whereas a selective compound did not. They had knock-out mice too, that vere fully viable. At the end they produced a beatifull compound that is doing realy well.

I was taken back by this presentation because proteases are in generaly hard kind of target, the selectivity problem is notorious and they managed to steer the biology the right way.
Also the talk was a technically-detailed biology story, free of busines-speak.

So I had no basis to start asking about Vioxx.
What I did ask was a more polite loaded question "Your project seemed very risky at the beginning - before you proved that it could be done. So was it difficult to keep your project alive? My question goes to the management culture - I mean you as a scientist being in the high management you have to justify your project with the business people"

Unfortunately she did not elaborate too much on it, sayng only she got all the suport she needed, her team was originaly in quite uncertain position before the start of this work but soon they got convincing results - and the literature results were there also that made for a strong argument for keeping the project up and going with it on full speed.

I did not get to ask another question because the Q&A part ended quickly.

So despite my anti-corporate slant, my disapproval of the very existence of big-pharma worldwide heads and executive directors, it was a very good talk and I did not take the oppotunity to create trouble because for me as a chemist if would feel gauche to go after a bright biologist who gave a good technical talk, just because she happens to be high up in a big pharma.

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18. weirdo on February 8, 2007 11:41 AM writes...

What do you think about "Liam Bernal" being William Hasletine? If you look at his "C&EN Talks With" in the latest issue, the ideas are pretty much the same.

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19. wm on February 11, 2007 1:12 PM writes...

I agree with the statements that Hollywood isn't the best reference industry for creativity. For one thing, Miramax isn't an independent studio (it's owned by Disney) and hasn't been for more than a decade. And most of their early successes were due to "inlicensing" of foreign films rather than developing their own.

Drugs take longer to develop than movies, and they probably require more resources for a greater part of that time. For instance, I suspect that the first year or so of the development of a movie is relatively cheap, requiring only the services of a screenwriter or two. But drug development needs more money, effort, and teamwork from the beginning.

So I have a hard time imagining that adopting a more studio-like model could replace current practices. But to the extent that it would, I think you can see the use of CROs as an attempt to get specialized labor when you want it.

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20. srp on February 11, 2007 8:29 PM writes...

I've posted comments on these analogies in previous threads. The oil business has some of the same stochastic properties--expensive search, big bets with uncertain outcomes, etc.--but movies are more similar to drugs than oil is because of the variety of market targets and the variety of approaches that can be taken.

I don't think the Innovator's Dilemma is really an appropriate frame for understanding the problems of big pharma. That book talked about "disruptive innovations" that satisfy low-end niche markets at first (and hence don't interest industry leaders) that later grow up to displace the dominant product technologies. But the FDA won't let you put out a "low-end" product without incurring the same costs for testing as a "sustaining" innovation aimed at high performance on primary criteria.

The scientists may be right that R&D organizations in big pharma have gotten too big and bureaucratic and short-term oriented. (I'm skeptical on the short-term business, because the stock market clearly puts P/E ratios on firms based on their future prospects, but let's stipulate for argument's sake.) But the fundamental problem may be a) lots of good drugs are already out there, more launched every year, raising the bar on what a new drug has to do and b) the government (FDA and tort law) has significantly tightened up on standards for getting a drug to market.

You guys can't do much about these factors so let me speculate that another problem is c) R&D in the industry has gotten hooked on a model of rational drug design that is unfavorably "stuck in the middle" between inspired guesses and chemical screening on the one hand and deep understanding of fundamental biology on the other.

It sounds like you have all kinds of not-well-verified rules of thumb for rejecting compounds at an early stage. Hollywood has a bunch of unscientific methods for ruling out scripts and marketing campaigns, too. It's one thing to say that aspirin couldn't get past the FDA today; it's another to say that it wouldn't even get to the point of being considered for development today.

From reading Derek, it sounds like a lot of the stuff that was designed "rationally," got FDA approved, and was successful in clinical practice doesn't really work the way the theory said it should anyway. It's like when you guess the wrong word in a crossword puzzle and it helps you get some of the other words correctly. You wouldn't want to rely on that. Maybe paralysis by analysis in R&D is the fault of R&D, not MBAs.

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