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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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« Lights, Camera, Pharma! | Main | Dumber in English? »

November 7, 2007

Reasons to Be Different

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Posted by Derek

OK, now that we’ve thought over the Hollywood analogy to drug discovery, what about other industries? And if none of them fit, what is it about the pharmaceutical world that makes us so different?

Wildcatting for oil has come up in the comments, and that’s a pretty good one. The ratio of dry holes to gushers is probably pretty similar, and using geology to figure out where to drill isn’t that much different than trying to figure out what screening hit to start a new drug program with. The lead time between discovering something and making money off of it (and the amount that has to be spent first) also lines up pretty closely.

One difference, though, is that all oil wells yield the same thing (oil!), while drug discovery comes up with all sorts of things. The variety of our products can make it hard to do good comparisons. We can find exactly what we’re looking for, sometimes, and still lose our shirts because no one turned out to want it (Exubera!) or because the competition got there first. By contrast, everyone wants oil. That also means that the competition is much more direct in the petroleum business than across pharma. Light sweet crude, once it’s on the tanker, might as well be from anywhere, and will trade wherever you can dock and pump.

It goes for fluctuating prices, to be sure, which isn’t something that we worry about day to day over here. Our prices follow a more discontinuous model – as high as we can make them during the lifetime of the patent, and then down to a mere fraction once it expires. Patents are the very definition of wasting assets, and that’s another difference that makes many of these analogies break down. Not as many other industries have big ticking Jame-Bond-villain-style clocks sticking to the sides of their moneymaking products, counting down the days until they lose most of their value. (Fashion and food are two that I can think of, and cars to some extent).

Finally, we have the regulatory aspect, and that really sinks a lot of industry-to-industry analogies, as many people pointed out in the comments to the Andy Grove post. Intel does not have to submit its new designs and its test data to the Federal Chip Administration for approval, and its chips, if they behave in unexpected ways, are still unlikely to directly sicken or kill their users. The closest analogs I can think of are the aircraft and auto industries, particularly the former, since trouble with FAA certification has wiped out many new plane designs and sometimes the associated companies as well.

So, imagine drilling for oil. . .but instead of oil, you’re looking for something a bit different each time you drill, often something that no one’s ever looked for before. And if you manage to find it, you have to make sure, as much as you can, that it doesn’t harm or even kill your customers, because you never know, and satisfy a very hard-edged government agency of that before you can go to market. And after a set number of years, you don’t own it any more.

Comments (17) + TrackBacks (0) | Category: Drug Development | Drug Industry History


1. Polymer Bound on November 7, 2007 11:12 PM writes...

This discussion makes those people who accuse the pharmaceutical industry of hiding "cures" even more laughable than they were before.

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2. Trevor Covert on November 7, 2007 11:19 PM writes...

Don't you think "hard-edged government agency" is being quite generous in light of its recent missteps? (That's right: what have you done for me lately?)

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3. Bryan on November 8, 2007 12:23 AM writes...

So, imagine drilling for oil. . .but instead of oil, you’re looking for something a bit different each time you drill, often something that no one’s ever looked for before. And if you manage to find it, you have to make sure, as much as you can, that it doesn’t harm or even kill your customers, because you never know, and satisfy a very hard-edged government agency of that before you can go to market. And after a set number of years, you don’t own it any more.

Why do I want to be in this industry again?

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4. Thomas McEntee on November 8, 2007 6:20 AM writes...

Take a look at software development. Just as there are anti-inflammatory, cardiovascular, etc, etc, classes of pharmacueticals, software has its own therapeutic classes, apps to ease the pain of writing, performing repetitive calculations, accounting, preparing presentations, visualizing data, etc, etc. Many seemingly-promising apps die in alpha- and beta- releases, an analogy of clinical trials. Poorly-designed user interfaces get exposed when put in the hands of significant user populations...little details that kill momentum. Big companies sit and wait for innovative little companies to produce neat hacks that actually provide value, then gobble them up. Start-ups come and go, tons of money gets flushed down the toilet, and there's no lack of optimistic MBAs touting their ideas and visions of get-rich IPOs. Think about it...

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5. MTK on November 8, 2007 8:44 AM writes...

"What makes us so special?" It's an interesting question. One of my initial thoughts was that most the challenges boil down to one thing; high risk. Not only risky in the sense we may never succeed, but also in the sense that we are putting people's lives at risk. That leads to all the regulation of the industry and caution within the industry.

Then I thought of the food industry. It is the Food and Drug Administration after all. The food industry is constantly coming up with new formulations, snacks, sugar substitutes, additives, etc. They've got similar manufacturing regulations and they've got similar concerns about product safety. The discovery challenges are obviously a lot simpler (Is it edible and does it taste good?), but it's still about stuff going into a person and what it does to that person.

So what is the fundamental difference? Maybe it's that we're not providing something that people want, but often times that they absolutely need, ED and other lifestyle drugs notwithstanding. And maybe that's why our rep has gone downhill the last decade or so, because the industry has forgotten that. Mission creep in military terms.

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6. Gary Anderson on November 8, 2007 9:21 AM writes...

Well, I never produced a film, so I can't really identify with that analogy, but I do know one that may fit better: dating.

What! I'm the only one who pursued a number of failed relationships; spent significant resources; saw some fail early, some late; ran the gauntlet of parental approval/disapproval, and so on?

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7. Flem on November 8, 2007 9:52 AM writes...

I think one should consider Major League Baseball as analogous to the Pharma business. There are 10's of thousands of player worldwide analogous to potential targets; very few make to MLB and earn big bucks over a period of years comparable to a typical product patent life. Few people question the great salaries of top baseball players recognizing that they have unique skills and bring value to their teams and fans. How many people truly understand how many compounds get "drafted" by biotechs and big pharma but never make it to the "Bigs" and that those that do have unique skills and value to the company who own them and to patients who need them.

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8. Tom on November 8, 2007 10:27 AM writes...

as many people pointed out in the comments to the Andy Grove post. Intel does not have to submit its new designs and its test data to the Federal Chip Administration for approval

Actually, the analogy holds up better than you might think. Not every chip needs to, but many have to be submitted to the FCC (wireless chips in particular -- Intel makes plenty of 'em). And of course there are heaps of technical standards to which the designs must conform, although testing for compliance in those areas is rather easier than doing drug trials.

I feel like there's probably an analogy to be drawn to the photolithography process (and how the varying quality of the results leads to products being sold at different price points), but I'm afraid I don't know enough about pharmaceutical chemistry to posit the relationship myself.

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9. John Thacker on November 8, 2007 10:57 AM writes...

Don't you think "hard-edged government agency" is being quite generous in light of its recent missteps? (That's right: what have you done for me lately?)

No. Even in light of its recent missteps, the added expense in regulation and other costs in developing drugs kills more people on net than it saves, according to all research on the subject.

That's an unsurprising result to me, of course; one set of victims is much, much more visible than the others, and it's much easier to assign blame and bad publicity for a drug that actually exists and was approved than for all the drugs never developed or approved.

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10. Tom Womack on November 8, 2007 11:11 AM writes...

Could someone point me at a reasonable view of the downstream side of the pharma business? I'm in protein crystallography, and even industry-directed conferences tend to stop at 'so, we optimised this lead to be a nanomolar inhibitor of YAK-1, and sent it downstream'; one talk ended one step after that, with 'at which point we discovered that it inhibited the PTR1 protein but had no effect on trypanosomes'.

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11. New Kid on the Benchtop on November 8, 2007 12:07 PM writes...

I think that the comparison to MLB can be correlated in another sense--in baseball, you can put together a team of the best players in the game and still not make it to the World Series due to bad luck. In the same ilk, you can make a drug that shows good in vitro and in vivo potency, good PK/PD, and no other liabilities (CYP, etc) that just doesn't work like it's supposed to for reasons we couldn't forsee (e.g. Iressa). Then again, this also applies to movies with all-star casts that falls flat on its face due to public opinion.

However, the Hollywood theme is also particularly apt for another reason: that Hollywood has trends in movies (remember all of the disaster movies in the late '90s, and all of the fantasy movies recently) where a blockbuster leads to other movies in the same genre, that can be both better and worse than the original. In the same way, Big Pharma jumps on the establishment of a MOA from a blockbuster drug with me-too's that can work better, worse, or just slightly differently than the original. I dunno if somebody already said this one elsewhere, but I thought that putting it here would be valid.

Also, both Pharma and Hollywood can lose money from cheap duplications of their work--piracy can be crippling to both. However, Pharma has a lot better time of that one than Hollywood. Still, that similarity is true of any industry where the actual product is one of intellectual property, where anyone with the right skills can reproduce identical results.

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12. Wavefunction on November 8, 2007 12:34 PM writes...

How about the fashion industry? Investment is highly risky and expensive and returns can be low, and "attrition" is also high because people's tastes and competitors' tactics cannot always be predicted. In some ways I would think it is even riskier because unlike a drug's efficacy, the impact of fashion products cannot always be quantified.

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13. CMC guy on November 8, 2007 2:55 PM writes...

In response to Tom Womack inquiry regarding “downstream” this could cover a vast river and I would point to a Derek post on September 9, 2004 How It Really Works that perhaps might provide some info and perspective sought(and many other posts in this blogs archive if wish to poke around).

I cant think of a single source that captures the entire drug development path start to finish that deals deeply with all aspects. There are many books and articles on Drug Development out there although most tend to be like school textbooks or maps that provide an overall picture but lack sufficient details to give flavor of events or city. Most Pharma/Biotech companies and the PhRMA websites have brief description of the Phases but fairly basic. Probably most of us have learned the process on the job and realize it is fluid anyway and continuous adaptation required.

A rather unique feature in Pharma is the need for the effective combination of so many disciplines (sciences, engineering, medical, regulatory, logistics, business) to reach the same goal. Guess the Hollywood allusion still fits as take many skills to pull together a film but wonder if there are other such wide convergences out there. I know Aerospace/Shuttle program has been compared (Enrico Polastro, ref?) however pains me to think of NASAs failures.

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14. Jose on November 8, 2007 6:39 PM writes...

Sorry for a hijack, but can anyone confirm layoffs at Novartis(ex-Chiron) in Emeryville?

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15. RKN on November 8, 2007 7:28 PM writes...

Funny to see this analogy, I think I mentioned it in a comment sometime back.

I worked ~20 years for BigOil in exploration and I agree with the analogies, but there's more. For one thing, both BigOil and BigPharma enjoy the dubious similarity of being the object of fear & loathing by Americans in general.

Plus all oil & gas companies are in fact required to submit their drilling and overall development plans to a regulatory body (usually the at the State level) for permission to proceed with development. And they're continually under review from that point forward. At every phase BigOil, at least in this country, is VERY highly regulated, not only by the feds but the states where they operate as well.

You mentioned all wells are looking for oil, and while that's usually true (technically some are targeting natural gas) it is equally true that many new reserves are found via serendipity. Prudhoe Bay, for instance, the largest field on the North American continent was discovered serendipitously. Parallels in BigPharma?

Finally, there's an analogy after discovery. In BigPharma you make money on a discovery until the patent expires, in BigOil you do the same until the reservoir runs dry.

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16. Academe App on November 8, 2007 7:45 PM writes...

WAR. One may argue over weather it is an industry, but I think drug research is most similar to war (albeit with precisely the opposite end result). They are both unpredictable, subject to intense government scrutiny, require huge investments in methods that usually end up useless, labor intensive, hotly debated, and overseen by generals (MBAs) with little (no) experience. Everyone seems to have an idea on how to make each better, but neither ever gets "better". There are so many more similarities (attrition, logistics, etc.), it is mind numbing to think about.

I guess that's why my graduate adviser (in total synthesis) used to ask about my project by saying, "Is it like Vietnam, or Iraq? And not the current Iraq, I mean Desert Storm!?"

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17. Bruce Hamilton on November 10, 2007 1:56 PM writes...

A way out there comparison....

US automotive industry - heavily regulated for safety and environment. Management response to problems is to merge or acquire. US production and R&D costs higher than elsewhere due to compliance, rather than efficiency issues.

Lucrative globally, hence overseas companies keen to expand. US still biggest market, but intermediate potential is greatest in Asia.

Requires ability to predict market, and behaviour of regulators, and then produce approved products to match, purchasing IP as required, same as Big Pharma for last decade or so. Need diverse range of highly skilled employees to produce a product.

Lots of expensive research dead ends, eg electric vehicles, hybrids, biofuels, etc. - rather than addressing the obvious issue, a 1200 - 2400 kg vehicle carrying 100-200 kg of passengers.

Customers needs could be mitigated by modifying consumer behaviour, but probably would be political suicide.

Major western organisations structures so obese that internally-generated knowledge was/is devaluved and smothered, so innovation is purchased via acquisition or partnership with universities etc.

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