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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

« Back On the Air | Main | Plants For Cancer? »

January 3, 2008

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Posted by Derek

There are quite a few news items to catch up on after the break – I’ll start off with a note that John Lechleiter has become the CEO of Eli Lilly. The main reason this catches the eye (and the main reason it got e-mailed to me!) is that he’s a medicinal chemist who worked his way up the ranks.

And that doesn’t happen very much, which is a topic that came up around here a couple of years ago. There are several companies run by chemists, but most of them got there as founders. Going from the bench all the way up to the top of an organization, that’s taking the long route for sure, especially in a place the size of Lilly.

Is there a reason for that? The sample size of large drug company CEOs isn’t particularly large, so it feels risky to generalize, but it’s been my impression that in many companies the scientific talent is under-represented in the top executive ranks. (That would make business degree holders and lawyers over-represented, I suppose). If that’s true, there are several possible explanations.

One is that fewer scientists are willing to devote themselves totally to the job of climbing said ladder, as opposed to their regular work. Many go into research because they like to do research, and don’t have as much of a taste for managing. But if you’re on the business side of things, the climb is much more related to your job description to start with, I’d say. Starting at the bench means that at some point you’re going to have to completely drop the work you were first hired to do and start doing something different.

That’s not to say that there aren’t plenty of chemists (and biologists) who do just that, but they’re generally aiming at positions lower than CEO. Scientists who become managers usually end up managing other scientists, as section heads, associate directors, directors of research, and so on. That makes a lot of sense, because they understand the work that’s going on under them – you’re not going to import a lawyer to be Director of Translational Biology, right?

And that brings up another possible problem. Scientists, taken as a class, do not always turn into the best managers. No particular group produces a huge number of good managers, to be sure, but I’m pretty sure that researchers run on the low side. Putting it delicately, there are a number of personality types reasonably well-suited for science, but not so well-suited for supervising and developing other people. Such subsets exist in every other profession, but those categories are particularly roomy in the research labs. Ugly situations can ensue when these people are perforce given direct reports. It’s even worse in academia, where some truly borderline personalities are year after year turned loose on 22-year-old grad students.

But inter caecos regnat luscus, and if a scientist does have good skills as a manager or leader, then so much the better. These people will stand out all the more.

Comments (13) + TrackBacks (0) | Category: Business and Markets | Drug Industry History


COMMENTS

1. milkshake on January 3, 2008 10:27 AM writes...

There is no good track record that would show lawyers and business-degree people are better as CEOs. Maybe they are just smoother talkers, unburdened by the knowledge of specifics.

Also the pharma industry model is quite unusual kind of business (very slow and expensive development cycle, patent horizon, etc) and recruiting in top execs from more conventional types of industry, say Coca-Cola, can hardly help to bring about the competent pharma management.

People who have no appreciacion of how research works can do horrendously bad things to the innovation, and in pharma industry they have been getting away with it for many years. There is always some small startup company to buy for its drug.

Rotten top management is the chief cause of this current Big Pharma crunch.

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2. Hap on January 3, 2008 1:03 PM writes...

I can't figure that management is as stupid as Dilbert portrays it to be, or at least my experience is not entirely congruent with the portrayal. I wonder if the stock market or the emphasis on stock options doesn't distort the incentives of upper management - while in the long term, stock incentives and the company's long term interests should converge, in the short term they often do not. In the short term, the interests of upper management (paid to increase stock prices and unlikely to be around for the long term) and of the company aren't the same, and people usually choose self interest over the interests of others. The dishonesty and short-term maneuvers that characterize our image (and some of the reality) of management are direct consequences of this. Information or particular knowledge of the details of science and finance leading to drug development doesn't matter if it tells you things you don't want to hear and which don't benefit you. Maybe long-term (rather than short-term) stock options as compensation might help (though, if you aren't going to be around to see them and your replacements will have a large effect on the value of the options, they might not be a compelling incentive), but I don't know.

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3. emjeff on January 3, 2008 1:30 PM writes...

I think Hap has it right. Short-term issues like stock price and year-end bonuses have a way of incubating stupid decisions. This is why, for example, that we see horrible molecules selected for development in November and December.Everyone knows that they will go nowhere, but someone's bonus depends on a certain number of candidate selections, so there you are. We have to find a way of rewarding people for good decisions, and not for "number of molecules rubber-stamped into development"

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4. CMC guy on January 3, 2008 4:42 PM writes...

In general the education and training as scientists typically does not include much on teamwork and management skills so unless at a place that provides effective instruction to promoted lab people the results can be bad all around (I offer that James Tingstad has a couple good books on the issue for self learning). If one is fortunate to have had good scientist as supervisor(s) can follow the example(s) when one starts to manage others although experience to mold to each individual is still tough to achieve well (very much like parenting). It usually is a big career shift to no longer directly do lab work and in majority of companies becomes necessary to do this and continue to advance.

The control by Sales Business Legal types that pay only token attention to R&D along with repeated drive for short term profits (at expense of long-term foundations) does make one wonder if industry can make progress. Having strong science pharmaceutical experience in management is critical, particularly for establishing the culture to spawn and develop ideas into drugs. At the same time a bench scientist who does comprehend the spectrum of issues in development, approval, manufacturing and marketing could not be successful. This is often a bigger problem in Biotech I fear. Whether in a single person or a management team it takes a diverse combination to stimulate research, develop a pipeline and market drugs.

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5. Anonymous on January 3, 2008 5:11 PM writes...

emjeff,

Hhhmmm. Have a tiered bonus system, where one still gets a bonus for a compound that makes it to development, but gets an even bigger bonus each time that compound clears a clinical milestone.

Of course, there may need to be a disincentive for just throwing more stuff over the wall, which is tougher to deal with. Not advocating this necessarily, because I can foresee the problems, but how about the following:

Compound selected for development: $X bonus
IND submitted: $2X bonus
Phase I start: $3X bonus
Phase II start: $5X bonus

You get the picture, some multiplier for Phase III, NDA submission, FDA approval, etc. That still wouldn't keep someone from just pushing anything forward, so I'll add that throughout a manager's career she can only collect the bonus at each stage some set number of times. For example, if the limit for development compounds is 4, then she doesn't get anything for that 5th one until it reaches the next milestone. Once it reaches that next milestone she not only gets that bonus, but she also gets the lower bonuses. If she hasn't reached her limit at the lower levels, the further the compound goes her lower limit gets raised. Sort of like extra lives in a video game.

Just a wacky thought on how to make an incentive system which is more long term.

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6. Lilly alumni on January 3, 2008 8:36 PM writes...

A small nit to pick. I believe that John Lechleiter came up through the ranks starting as a process chemist. I don't think he ever put in appreciable time as a medicinal chemist.

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7. TNC on January 3, 2008 11:26 PM writes...

What is the word on Lechleiter? It'd be interesting to see how he was as a manager of chemists.

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8. Stroom on January 4, 2008 8:24 AM writes...

I think CMCguy got it right when writing:

"Whether in a single person or a management team it takes a diverse combination to stimulate research, develop a pipeline and market drugs."

I'd say that the success of any pharma/biotech, regardless of size, builds upon having the right people with the right skill-set in the right positions. Having an MBA in the CEO-chair is not necessarily a bad thing, since he och she is inevitably going to be accountable towards investors, board-members, shifting markets, and the public. Hopefully, there's a strong CSO from a science background bridging the gap between business and research one step below. Since the average life-span of a CEO seldom comes close to the time it takes to bring one compound from concept to market, perhaps the most important factor to secure is strong upper R&D management that can carry the long-term visions of the science being produced...and let the lawyers/MBAs take the heat from the shifting economy, investors and public opinion etc.

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9. Thomas McEntee on January 4, 2008 8:34 AM writes...

There's an official Lilly corporate bio for Dr. Lechleiter at the Eli Lilly website in the about/management/ folder. It indicates that he joined Lilly in 1979 as a Sr. Research Chemist in the Process R&D Department. He became that department's head in 1982 and progressed rapidly upwards.

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10. Petros on January 4, 2008 9:41 AM writes...

Derek

Don't forget your former WDF employers. While the conglomerate structure of the business complicated issues in geeting to the top, Horst Meyer went from lab head and Wuppertal, and iventor on many of BAyer's DHP patents, to Head of Chemsitry, Head of R& D an dfinally head of the Pharma Business Group.

I'd guess both Bayer and Hoechst probably had several rsearch scientists climb very high on the corporate ladder over the years.

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11. Noumenon on January 5, 2008 1:16 AM writes...

I just don't think scientists come from the same social class that supplies our leaders and managers.

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12. Rich Rostrom on January 6, 2008 6:07 AM writes...

It just might also be that corporate management and science are different skill sets. Would a superb carpenter or mason be a good architect? Top level management of a very large organization requires very specialized skills, and probably unusual talents. It isn't enough to understand any one area: sales, production, finance, personnel, law, marketing, product development, all are essential. A research scientist is a specialist in one area. A CEO has to be a generalist who understands all of them. A lot of star athletes were failures as coaches; a lot of combat heroes made lousy generals.

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13. processchemist on January 8, 2008 12:46 PM writes...

Dr. Lechleiter comes from process chemistry and has his name on three Lilly patents of the early eighties. For sure process chemist are professionally more involved with money than other scientists in this industry...

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