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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

« Andy Grove: Rich, Famous, Smart and Wrong | Main | Reasons to Be Different »

November 6, 2007

Lights, Camera, Pharma!

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Posted by Derek

So, if we’re not going to learn from the chip-making industries, who should we be learning from? That question came up in the comments to the Andy Grove polemic, and it’s worth thinking about. I’ve wondered in the past about which industry is the closest to pharmaceuticals in its risks and payoffs, and I think I have a candidate. You might not like it, though: it’s Hollywood.

Think it through. The match isn’t perfect, but it’s a lot better fit than the semiconductor industry. The movie business, just like the drug industry, incurs most of its costs in the R&D and marketing areas - production costs are comparatively minimal. (Piracy, naturally, is a problem under these conditions). Sequels to past successes are a somewhat lower-risk way to make money, but those aren't sure things, either

And for both groups of companies, figuring out what will be a hit is extremely hard, sometimes next to impossible (remember screenwriter William Goldman's maxim about Hollywood: "Nobody knows anything"). Companies try to live from blockbuster to blockbuster, banking enough money to find the next one.

The differences? Well, there are several, with the advantages mostly going to Hollywood. There's regulatory pressure, for one thing. The entry barrier to getting a movie distributed is a lot lower than getting a drug past the FDA. That reflects the relative differences between entertainment and medical care - the latter is clearly going to get a lot more serious scrutiny than the former. Another difference is that movies can continue making money for a much, much longer time than drugs can. Copyright just keeps on getting extended - roughly every time the early Disney characters start to come close to going into the public domain, by some odd coincidence - but no one's talking about similarly lengthening patent terms, are they? And movies continue on in other money-making forms after their theatrical run (DVDs and the like). For their part, drugs go generic, and while there's still plenty of money to be made, it's not as much as during their patent lifetimes, and not much of it is made by the original company.

On the other hand, the studios have probably managed to target just about every possible need of their audience at one time or another over the years, whereas we in the drug business have a lot of unmet medical needs waiting for us to do something about them. And our knowledge base (what to target, why, and how) is increasing with time, albeit slowly and jerkily, while the movie industry doesn't look to become a science any time soon.

The single biggest breakdown in the analogy are the salaries paid to the top stars, and their role in making a movie popular. I can't think of a clear correlate in the drug business. Even so, are there some lessons we might be able to learn from those guys? The way different studios have been set up, perhaps, or how they work out portfolios of releases or handle different sorts of production deals? Worth thinking about. . .

Update: In a clear great-minds-think-alike situation, this exact analogy was covered here earlier this year. And for a crack at the same analogy from 2005, check out The Stalwart here, who got the idea from James Surowiecki in the New Yorker.

Comments (19) + TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History


COMMENTS

1. Deepak on November 7, 2007 12:17 AM writes...

Hopefully the quality of drugs is not half as bad as the usual Hollywood fare :)

One more point in common is how out of tune pharma seems to be with a changing environment that is making success difficult, not unlike Hollywood

Permalink to Comment

2. milkshake on November 7, 2007 2:54 AM writes...

No breakdown - look at the pharma top execs: They are all stars. Overpaid, vain, shallow as mud - and very "zen about it". The only difference is that their version of psychobable is called the management theory

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3. anon on November 7, 2007 5:39 AM writes...

The key to both industries is the degree of randomness (see Nassim Nicholas Taleb's work) associated with a hit; the difference is the epistemic arrogance in the pharmaceutical sector; ie, who would say in the pharma industry, "Nobody knows anything" and be taken seriously?

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4. Anonymous on November 7, 2007 5:50 AM writes...

First I fully subscribe milkshake's comment.
A clear difference to me is that the revenues for a successful drug are sustained over many years while for a movie you get most of the money in the few weeks post-launch...looks like the pace for the two industries is quite different and this explain why "our" industry seems not able to act proactively..
Another difference is that a movie is unlikely to kill anyone..at least directly.

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5. anon2 on November 7, 2007 7:10 AM writes...

I don't think pharma uses the "casting couch" as often in its hiring decisions, though I do think it's used on occasion.

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6. MTK on November 7, 2007 7:35 AM writes...

Big studios = Big Pharma
Indies = Biotech

The big guys are great at marketing, sales, distribution. They also have the money to produce expensive blockbusters that target a large audience. When one of these bombs, it's spectacular.

The little guys are often producing more novel products using innovative techniques. They may specialize in a certain area and target a smaller audience. They can churn out plenty of clunkers, too, but when you find a gem it can be beautiful.

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7. Smoki on November 7, 2007 9:02 AM writes...

What about professional sport? I think it has parallels to pharma because of the long, very laborious and highly risky journey from young, promising candidates to the big, fat-swads-of-money producing sport stars. What is the percentage of those that succeed in the end?

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8. Radcliff on November 7, 2007 9:06 AM writes...

Good analogy, Derek! Even if its not a perfect correspondence (with Hollywood getting the better side) it does illustrate many of the approaches of Big Pharma in a new light. They have even modeled themselves after Hollywood, with "blockbuster" drugs. Although, the motivations of neither field is well understood by their customers.

Regarding the timeline of profit-taking -- While the opening weekend is important in making a film profitable, it is not because most of the money is made then. Most of the money is made over the long haul, when it plays in theaters in foreign countries, and is released on DVD, and is on pay-per-view channels and airplanes. The opening weekend is used more in advertising, to be able to brag about how great the film "must be", if so many people went to see it.

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9. Enoch on November 7, 2007 9:19 AM writes...

This is a great analogy indeed, and one that was covered in the February issue of The Scientist. Check it out here:

http://www.the-scientist.com/2007/2/1/42/1/

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10. NJBiologist on November 7, 2007 9:47 AM writes...

So Exubera is our industry's Gigli?

I like the analogy, but I'd like it more if there seemed to be something in the movie industry we could learn from.

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11. PharmaProphet on November 7, 2007 9:49 AM writes...

Enoch,
Thanks for the link! I read this article when it first came out but had lost the reference. Also highly recommended is the JCI article by Pedro Cuatracasas (J. Clin. Invest 116, 2838, 2006)

http://www.jci.org/cgi/reprint/116/11/2837?maxtoshow=&HITS=10&hits=10&RESULTFORMAT=&andorexactfulltext=and&searchid=1&FIRSTINDEX=0&sortspec=relevance&volume=116&firstpage=2837&resourcetype=HWCIT

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12. SNP on November 7, 2007 9:54 AM writes...

As comments #32 and #33 on the previous story demonstrate, there's plenty we could learn from the semiconductor industry. Grove's problem isn't that he has nothing to contribute; it's that he's too vain to make the effort to figure out what it is.

That said, I'd say pharma is closest to speculative oil and gas drilling, but with safety regulations like those in the aerospace and airline industries.

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13. DaveL on November 7, 2007 10:37 AM writes...

Fairly close analogy I'd say. And Hollywood does have an analogy to the "FDA".... it's the board that designates the movie rating. Certainly not a "show stopper" like the FDA can be to a drug, but an R rating versus a PG-13 can mean a difference in sales potential.

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14. CMC guy on November 7, 2007 11:19 AM writes...

Pharma loves sequals too. Overall a comparator within limits can be made.

I also feel the discovery process is indeed like wildcat oil drilling and the whole complexity of development is comparable to aerospace pparticularly in linkage of multidisciplines.

The development and manufacturing side can learn and apply lessons from effective systems (i.e Toyota) because for too long COG not huge driver so have not really done good development and engineering unless project become big time. Pharma has not been forced to be effecient but think will be matter of survival in future.

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15. paiute on November 7, 2007 11:39 AM writes...

And the chemists are the screenwriters.

Because you know the old joke about the Polish actress who slept with the screenwriter....

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16. Poiano on November 7, 2007 1:01 PM writes...

An appropriate analogy as both industries increasingly replace artistic/scientific vision with pandering to popularity to increase sales.

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17. Gil Roth on November 7, 2007 4:05 PM writes...

As the guy who publishes your print column, I'm disappointed that you didn't mention my summer blockbusters and me too drugs From the Editor column.

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18. Anonymous BMS Researcher on November 7, 2007 6:48 PM writes...


So, when do we scientists in Big Pharma get a Guild like Hollywood writers have that can go on strike against the entire industry to make them share more of the revenues with us :-)

Of course, Hollyweird writers are somewhat less constrained by empirical reality than we are...

Permalink to Comment

19. JBJB on November 7, 2007 9:31 PM writes...

Josh Boger, the CEO at Vertex, makes a similar comparison between the business of Pharma and Hollywood in some of his presentations. I'm not sure where it originated, but the analogy is eerily accurate.

Permalink to Comment

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