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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: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

« Vial Thirty-Three, And More | Main | Looking Backwards »

October 24, 2007

Come On. Improve, Already.

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Posted by Derek

GSK opened up their books today, and the magnitude of their Avandia problem has become clear. This was a big part of the company’s sales, and the recent cardiovascular worries have really knocked down the numbers. The response, as has been the trend this year, is for the company to announce layoffs.

And man, have there ever been layoffs in the industry this year. There’s a list of the larger ones over at FierceBiotech, and it does not make for cheerful reading. In January, Pfizer announces 10,000 job cuts and closes their Ann Arbor site. That same month, Bayer-Schering closes the doors on research buildings in Connecticut and California (layoffs which were announced in 2006 and are thus not on the Fierce list). Bayer-Schering, who really should have run that B-S initial thing past a couple of native English speakers, announces 6,100 more job cuts in March. In July, AstraZeneca doubles down on its earlier layoff announcement and says that 7,600 jobs will disappear, and J&J announces a 4% reduction in its workforce (5,000 jobs). Then in August, Amgen cut over 2,000 jobs of its own.

In September, most everyone held on to the jobs for the moment But Novartis said this month that they’re going to trim over 1200 positions in the US, mostly through attrition. And now we have GSK with disappointing earnings and an announcement of unspecified layoffs, and bear in mind, this is just the news from the big outfits. The usual turmoil has been going on among the smaller companies (Idenix, Palatin, Sonus, and others), whose fortunes depend more on single drugs.

What a year – and hey, there’s still time to announce more layoffs before the holidays, so we may not be through yet. It’s tempting for some people to look at a list like this and say “Outsourcing! China! India!”. And I can’t deny that some of these jobs have headed there, just as some possible hiring expansions have been muted for the same reasons at other companies.

But outsourcing isn’t the whole story. Many of these job cuts have been in the sales forces, and they’re definitely not outsourcing the sales reps to Shanghai. Ditto for the people in Regulatory Affairs and Legal. Outsourcing is changing the size and shape of layoffs, but it’s not providing the motive force for them. That force, simply enough, is just that we’re not selling enough drugs, mostly because we don’t have enough good drugs to sell. Some areas have had too few projects even to start with (anti-infectives?), and everyone has had too few make it all the way through the clinic and the FDA.

And some of those failures have been extraordinarily large and expensive. Unfortunately, this has been the case for a while now. Over the last few years, we’ve had drugs that have failed terribly late in the clinic (torcetrapib, among others), drugs that have made it through trials but failed at the FDA (rimonabant, among others), and (most expensively of all) drugs that have made it to market and been pulled back early in their product lifetimes, after the big promotion money’s been spent and before any of it gets made back (Bayer’s Baycol and Pfizer’s Exubera – among others).

Add in the ones that never lived up to their planned potential (Iressa, Macugen, yes, yes, among others) and you have a gigantic revenue shortfall. Now, it’s true that not all of these would have made it under any conditions. Drugs fail. But do they fail like this, so relentlessly and so expensively? And it’s not that we aren’t killing all sorts of stuff off earlier in the development pipeline – no, these things are what’s left after the dogs are gone.

What to do? If I knew how to answer questions like that, I'd be dictating this from the deck of my yacht. The glass-half-full perspective is that there sure are a lot of opportunities for anything that can open up some new therapeutic areas or help with drug failure rates in the existing ones. It won't take much, considering where we're starting from. Yesterday I was encouraging people to try out some high-risk ideas, and here, in case anyone was wondering, is an excellent place for them.

Comments (13) + TrackBacks (0) | Category: Business and Markets | Clinical Trials | Drug Development


COMMENTS

1. Kay on October 25, 2007 7:32 AM writes...

Are you really so sure that the projects killed off early were "dogs?" Drug development looks pretty random to this drug developer.

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2. MolecModeler on October 25, 2007 9:45 AM writes...

The amount of target favoritism and political favoritism that goes on would blow your mind. Science seems to play a small role in what moves forward, and the whole enterprise is often an excercise in box-checking.

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3. Flint on October 25, 2007 10:16 AM writes...

So like why is there a loud and passionate scream for more chemists? Read last weeks C&E news for more delusional commentary from our reps. It's not just delusional, it's near psychotic. No doubt faculty all over the US are mailing in those false statements to the Politicians.

Got to get those wages down down down.

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4. anon on October 25, 2007 10:49 AM writes...

"54 The Birth of Stochastic Science: Rewriting the History of Medicine

Amioun - Controlled experiment can easily show absence of design in medical research: you compare the results of top-down directed research to randomly generated discoveries. Well, the U.S. government provides us with the perfect experiment for that: the National Cancer Institute that came out of the Nixon “war on cancer� in the early 1970s." more details in the link, don't forget to scroll down to 54.

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5. milkshake on October 25, 2007 11:26 AM writes...

The problem is not lack of talent in research - the source of difficulties is in horrible mismanagement at big pharma. This is due to very slow research-to-business cycle in industry and unrealistic and short-term-focused expectations of stockholders. Corporate megalomania and management dishonesty are contributing in the prolonged agony of big pharma

What you see now is just a market correction that has been 10+ years in making.

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6. anon on October 25, 2007 7:33 PM writes...

We don't know anything about who will be cut in philadelphia as a result of avandia, but there definately is alot of concern to say the least. R&D will have a meeting mid november; hopefully we will have more of an idea of what is going to happen then.

Some people outside of our department will supposedly receive notification of their status on Dec 3. There does not seem to be any "safe" department to be in now (including legal and hr).

I just went through this last year as one of Derek's former colleagues. This definately feels like deja vu. Hopefully my other former colleagues are doing well.

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7. Petros on October 26, 2007 2:04 AM writes...

And of course GSK is shifting some R&D to China- Shangai to be precise.

Some of the work from Harlow is going there and a lot of people have had to reapply for their jobs in the UK- I thought that was all resolved buy maybe not after this week's announcement

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8. processchemist on October 26, 2007 4:24 AM writes...

Mismanagement is the main problem.
I know of a drug development project in stand by from two years. The candidate has excellent perspectives and waits to enter phase I trials. And It will wait more and more, because every year that passes by the management cuts the R&D budget, waiting for the annual income to grow before taking a decision.

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9. Chemist of Sorts on October 27, 2007 8:34 AM writes...

At the risk of being unpopular, I think some of this reflects a lack of creativity in chemistry. The era of 'patent mining' and 'me too' drugs has got to let up. I understand that this is often the quick road to success, but it isn't a good strategy for long term prosperity. Develop your own stuff in house and take the time to do it right (regardless of deadlines set for candidate nomination by management). And don't cut corners. A compound with lots of warts before it goes FIH is not likely to get better with time.

Permalink to Comment

10. milkshake on October 28, 2007 11:45 PM writes...

No, it is the bad management, uber alle.
Not that the targets are getting harder - and we have more chemistry and biology and automation methods at our disposal than ever. And lab chemists are getting cheaper, too. It is good leadership that is lacking.

http://pubs3.acs.org/acs/journals/doilookup?in_doi=10.1021/jm040195b

By the way, 20 years ago Paul Janssen was already making himself unpopular, by hinting that the current style of pharma research will end up in tears.

Permalink to Comment

11. Anonymous on October 29, 2007 8:42 AM writes...

Sales too can be effectively outsourced. The industry may well take a closer look at companies like inVentiv Health for example (of which I am a shareholder).

Ralph (Zz)

Permalink to Comment

12. eman on November 4, 2007 2:03 PM writes...

Many drugs die early on because a good solid state form can't be found. Polymorphs and salts of the drug candidate often fail to pass the physical properties guantlet.

Co-crystals may offer some hope. They may significantly expand the field for current candidates and they may revive abandoned ones.

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13. Roche Victim on November 20, 2007 10:15 AM writes...

The pharmaceutical industry is totally cut throat. I am a recent victim of the layoffs at Roche Canada. The senior management, so called leaders, couldn't manage their way out of a paper bag. They have inexperienced people in senior positions who have absolutely no idea what they are doing. Forecasting and budgeting - the haven't a clue. My question, why don't the executives (Ronnie Miller & his team of VP Losers) who make the decisions pay the price when there are job loses, instead of the "little folk" who just do their job and do what they are told. Of course there is no problem spending $300K on physician advisory boards. What a hypocritcal bunch. May they all rot in hell for what they have done to many families.

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