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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

« Pharmalot Is No More | Main | New Chemistry »

January 6, 2009

Why Pfizer?

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Posted by Derek

I get occasional comments and e-mails asking why I’m so hard on Pfizer. It’s not that I have anything personal against the company – I’ve never worked there, and they’ve never turned me down for a job. And I have a lot of friends there as well - the company has a lot of good people working for it. No, it’s not Pfizer so much as the way that Pfizer exemplifies for me a lot of things that I think have gone wrong with the industry.

First, of course, is sheer size. As I’ve said numerous times, I think that many things scale as a drug company gets larger, but research productivity isn’t one of them. If anything, it may go in the other direction. Pfizer is an excellent example of just what I’m talking about. If there were any reliable correlation of size to internal research success, this is where you’d expect to see it. But Pfizer has been notoriously unproductive in its own labs. Some of that has been sheer bad luck, but you can’t use that explanation to cover the whole problem.

Put simply, I think that really huge drug companies are a bad thing. A collection of smaller ones carved out of the same resources would probably explore more therapeutic avenues, and in a more nimble and focused manner. I also like competition in this business, because it keeps us moving, and because it leads to a wider variety of approaches being tried out for each problem. Mergers and buyouts have, I feel sure, not been good for the ecology of the industry, and Pfizer is the absolute champion of that style. Large and productive research organizations have disappeared beneath the waves because they had the misfortune of discovering something that Pfizer wanted to buy.

And there’s also the triumph of marketing. That’s one area where Pfizer really excels, but the problem with being a marketing powerhouse is that you might end up thinking that you can sell almost anything. The company’s disastrous experience with Exubera (the inhaled insulin product that missed its sales targets by, what, 98 per cent?) is a sobering example. If you start believing your own press releases, you might convince yourself that you’re going to sell a billion dollars of Exubera, and at a huge company you’ve got the money and the resources to pursue that dream right over the cliff. Groupthink finds a bigger arena in which to work its magic.

So there it is. Other companies have similar problems, but when you go to Pfizer, you find them all together, in concentrated form. So when they announce that they’re going to go out and buy someone else to work their way out of their (massive) coming troubles, it makes me wince. It just seems like the opposite of what we need.

Comments (29) + TrackBacks (0) | Category: Business and Markets | Drug Industry History


COMMENTS

1. emjeff on January 6, 2009 9:20 AM writes...

Well said. It is obvious that the productivity of Big Pharma is at an all-time low, and if you're inside the beast, it's not hard to understand why. When every decision needs to be vetted by two committees and 25 people have input into your protocol, you are just not going to get anything accomplished quickly.

Case in point: I was involved in designing a study last year where we had to get buy-in from from two VP's and one SVP on how many doses to use in a Phase 2 A study. It took more than two MONTHS to sort out. This is absurd. Those decisions need to be made by the team. If you are not comfortable with the team making those decisions, then get another team.

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2. John Johnson on January 6, 2009 9:28 AM writes...

I think much of the issue is that a lot of people can effectively manage small research teams and still focus on the science. Pfizer seems to require lots of layers of management, many of which don't understand the science so much, just to coordinate these massive resources. And that's just the R&D side. To get these drugs manufactured, marketed, and distributed requires more huge divisions, and I think that is just getting too clumsy.

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3. Marc on January 6, 2009 9:39 AM writes...

No small company can afford the risk or the costs of bringing a drug to market in the US or Europe. The regulations have created big pharma.

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4. Fred on January 6, 2009 9:50 AM writes...

"Case in point: I was involved in designing a study last year where we had to get buy-in from from two VP's and one SVP on how many doses to use in a Phase 2 A study."

In general, with some info from the Phase 2, one should be able to make that decision in an hour or two.

"No small company can afford the risk or the costs of bringing a drug to market in the US or Europe. The regulations have created big pharma."

The FDA IS indeed a big part of the problem. They are slow-moving, filled with cronies, "CYA"-oriented and want all drugs to be safer than sugarless chewing gum.

And yet, the average, uninformed schmoe on the street would probably say they are "in bed" with Big Pharma and approve dangerous drugs... Such is where the industry stands, PR-wise

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5. Pfizerite on January 6, 2009 10:10 AM writes...

I work for Pfizer and I can tell you there is a disconnect between the business and science. Jeff Kindler's comments in the FT exemplify the magnitude of the problem.

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6. CMC Guy on January 6, 2009 11:06 AM writes...

Great Post Derek as Pfizer does seem to reflect where the Pharma industry has evolved to in where science is of fractional import and marketing dominates every action. Like many other companies it is sad to see the potential good resources in R&D not being correctly focused to provide beneficial new drugs and then even proven labs/groups demolished or sent in circles via Merger mania. R&D does have much to improve and also meld with other components, including business/marketing, however it usually gets overly cumbersome the bigger an organization gets.

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7. Ty on January 6, 2009 11:14 AM writes...

My personal view is, PFE has been powered by business rather than science and too successful from it, which trickled down and formed a culture that rendered the research unproductive. It doesn't seem to help that they are isolated in their own world in nowhere. There are good people, but, as a whole, I've seen a lot more 'proud' (borderline arrogant) and somewhat bureaucratic scientists from PFE than from anywhere else.

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8. milkshake on January 6, 2009 12:39 PM writes...

I used to work for Pfizer so I can share what is it like to be swallowed by the oblivious whale: It's dark and fishy. Sloshing there with all the other flotsam for a year, waiting how is the story going to end for you.

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9. Scott Granowski on January 6, 2009 1:20 PM writes...

The American Jobs Creation Act of 2004 caused Pfizer to repatriate $37 billion which must be reinvested at a time of shrinking companies. I think those requirements may be driving this discussion more than other issues.

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10. Dan on January 6, 2009 1:21 PM writes...

I think Pfizer's method of buying out smaller companies only to shut them down (remember Parke Davis?) is the main reason for their bad reputation. I have never worked there, so I could care less about their internal practices. Maybe their business model would be better received if they bought drug candidates instead of whole companies.

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11. jt on January 6, 2009 5:00 PM writes...

I never had the pleasure to work for PFE, but I did work for Pharmacia. I never thought when I was in Searle that if we were successful we'd be doomed, but we were.

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12. skyywise on January 6, 2009 5:51 PM writes...

But then what is the ideal business construct for the pharma industry? A plethora of smaller R&D shops where the scientists shoulder the costs of going 12 rounds with the FDA, albeit without disconnected MBAs managing over their shoulder? (It would just be the VC MBAs hovering over their shoulder.) Would that be complemented by the Big Pharma companies turning into mere marketing & manufacturing plants? Neither side would want the financial liability if the drug fails, or even worse, results in another Vioxx-type litigation. The contracts and licensing between two such sides would also be a nasty bit of business, which is probably why the companies aggregate into large corporations. It may just take one of these Big Pharmas to commit to screening off R&D units entirely from the normal business of being-accountable-to-shareholders (maybe as subsidiaries) and not screwing up who owns the IP in the long run.

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13. Pfizerite on January 6, 2009 7:44 PM writes...

As an ex-Warner-Lambert, ex Pfizer employee the R and D problems inherent in an merger are enormous. The critical factor, in my opinion is the lack of personal knowledge between the senior management of the acquiring company and the next level down of the acquired company. When Pfizer took over Warner-Lambert, the Warner research VPs were making promises to the Pfizer SVPs that could not be carried out but did result in the Warner VP keeping his job or being promoted post merger. After the merger, there would projects advanced to meet site goals, particularly at the end of the year so that site leaders could get there bonuses. Usually the compound would be killed and the back-up substituted for it but the cost in wasted toxicology and other resources was enormous. An additional problem at Pfizer was that development resources would be allocated on the basis of projected sales and projected sales would vary depending on the phase of the moon and who, PGS or PGRD was doing the projecting. I believe that a lot of Pfizer's R&D problems are brought on By Pfizer mismanagement of R&D with excessive meddling by upper management into development team decisions.

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14. Skeptic on January 7, 2009 12:36 AM writes...

Chorus Line:

1. The MBA's screwed everything up.
2. The FDA should operate like the SEC.
3. Biology is really hard

Those kind of arguments won't earn scientists much sympathy. Scientists need time to solve the riddles of biology, the so-called knowledge industry of the 21st century. However, aging investors want solid short term returns and reduced risk. Therefore, the current economic system is less than optimal for a knowledge industry like biology.

It serves no useful purpose for scientists to waste their energy in class wars.

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15. Chemjobber on January 7, 2009 2:40 AM writes...

"A collection of smaller ones carved out of the same resources would probably explore more therapeutic avenues, and in a more nimble and focused manner."

We're probably about to get a natural experiment with this, considering Pfizer's new Business Unit structure. There's also the distinct likelihood that the new BUs will have smaller (layoff induced) staffs.

Considering what I hear online about GSK's CEDDs, I'm not too positive. Then again, it *is* online, where the negative reigns.

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16. aa2 on January 7, 2009 3:57 AM writes...

There is an assumption that many are making on this blog. And that is that the basic pharmacuetical industry could go on and on if only it had the right leadership or structure.

But if I look at past great eras of progress in human health each one reaches its zenith then declines and eventually faces diminishing returns. For example look at vaccines, the incredible difference in human well being that vaccines made. But eventually the scientists had made vaccines for all or most of the big illnesses that were killing the most people. Yes there was still some opportunity left but not the vast amount at the start.

Same with pharmacueticals. I'm someone who takes three drugs and my life is immeasurably better with them. I take Paxil an anti-depressant, and without it I could barely feel any pleasure, I had nightmares every night, my hormones were out of wack..a miracle drug for me, it fixed all those problems and more, and made me feel better than I ever had before. But now the drug is generic. Over the lifetime before it went generic I probably paid 12-15 grand for the drug, a small price to pay for a miracle cure of all that ailed me. But now I'm using the generic(my insurance pays for the generic), and the company isn't getting revenue from me.

I think its time the pharma companies started going huge into areas like stem cells.. using their workers deep understanding of biology and chemistry. And their capital, and clinical contacts and regulatory expertise. And still funding pharma research, but maybe not as heavily.

To me stem cells are like going into brand new uncharted area where the low hanging fruit is still on the tree. Other areas are arguably like that too, like gene therapies, or talk of junk cleaners between and inside cells.

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17. Phil-Z on January 7, 2009 8:30 AM writes...

Pfizerite - The culture you describe existed in Groton when I came there in the late 1980's, so it's not a product of the mergers. We had pre meeting meetings to sort out what we were going to say to the next layer of management. This wasn't born from a desire to maintain an efficient flow of information, it was due to intense cut throat politics. John finally won the battle and purged a lot of good scientists. I lived through that but left a couple of years later when the mergers started and it was clear that things were not going to improve.
Best move of my life, by the way.

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18. AR on January 7, 2009 11:11 AM writes...

Although valid points have been made in these posts, one is suspiciously absent. The post-1980 pharma industry decided drug development was best approached from an engineering rather than a biological science – surely that must share equal blame with the marketing and business staff? ‘Science-fads’, especially the super fads such as combinatory chemistry, genomics target selection, high throughput screening and rational drug design predominated pharma research for well over a decade and paralleled the downtick in NDA’s. I believe there was more than co-incidence at work. Good target validation studies were lacking through this time period. IMP knockout mouse studies were not very useful, although better than gene-based target selections.

The biologists slipped up here – we bought into slick techno-toys as the final solution.

As for the regulatory agencies, Big Pharma marketing would sell you colored water as cancer treatment without them.

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19. Fred on January 7, 2009 2:33 PM writes...

"‘Science-fads’, especially the super fads such as combinatory chemistry, genomics target selection, high throughput screening and rational drug design predominated pharma research for well over a decade and paralleled the downtick in NDA’s."

The fad of the "00's" is India and China. Buy one chemist; get two free. But don't bet your first born on the identity or quality of the brown stuff in that vial that just came through Customs....

I disagree on rational drug design: it's a continuum-- the process can be "more" or "less" rational and computational methods DO help.

"As for the regulatory agencies, Big Pharma marketing would sell you colored water as cancer treatment without them. "

Yup. With "happy meal" toys for the kids. But the current process in Washington is GLACIAL.

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20. matovarm on January 7, 2009 6:34 PM writes...

"Once you've reached a certain size, there is no benefit for R&D productivity, and if it's about taking out scale, you should be doing that anyway"

David Brennan
CEO AstraZeneca

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21. pfizerite on January 7, 2009 9:40 PM writes...

Wait until Big Pharma learns that patent law is different in China and that they may be paying a Chinese inventor a royalty stream from a invention made with Big Pharma's money in China

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22. Unionize Now on January 8, 2009 12:42 AM writes...

Unionize and criminalize executive behavior that kills, yes literally kills the careers of tens of thousands of scientists. But Oh, the ACS tells every little school child that there is a great shortage of chemists.

And some strange bloggers tells us outsourcing is great for the US economy (guess who that is???).

The American Chemical Society and Pfizer : PARTNERS IN CRIME!!!

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23. You're Pfizered on January 8, 2009 12:12 PM writes...

Any word on the Pfizer up-coming layoffs?

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24. Hap on January 8, 2009 1:22 PM writes...

UN,

Unless you think that the people in India and China (and Thailand, Singapore, Vietnam, E. Europe, Russia, Brazil, etc.) are going to unionize (and I'm guessing that at least India and China are unlikely to allow that to happen in their countries), how do unionization help me? If my employer can't get what I make more easily somewhere else, I don't need a union, and if they can, unionization is likely to spur them to get what they can elsewhere. In neither case does it preserve my job.

Unionization only works if everyone buys in to it, and then it may either be OK or, if it makes people substantially less productive, it could be really bad. There's lots of reason to be frustrated and angry (although, like lots of emotions, they seem unhelpful in and of themselves), but I don't think unionization is a helpful response.

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25. hideki yukawa on January 8, 2009 1:28 PM writes...

when i read your post, i thought "irrational exubera". but google search shows 490 hits with that phrase.

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26. hideki yukawa on January 8, 2009 1:29 PM writes...

when i read your post, i thought pfizer suffered from "irrational exubera". but google search shows 490 hits with that phrase.

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27. MTK on January 8, 2009 2:15 PM writes...

Hap,

Are you crazy? Look at all that unionization has done for the US auto industry!

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28. Hap on January 8, 2009 2:22 PM writes...

I think they're a bad example - they're flush with all that government loan money now.

Party in Detroit! Woo-hoo!

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29. Rob on January 13, 2009 12:29 PM writes...

Add to that the toxic political culture at Pfizer. When considering a job there, I was warned off by a research scientist who had spent a few years there. I totally blew her off and did not want to hear it. I wish I had. It was the worst corporate experience I have ever had, the backstabbing, "middle managers" who were sociopaths and total lack of management direction. I suffered first and many after me did too until a particular psycho was removed. The attitude always seemed to be "we're Pfizer, *&c* you".

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