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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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November 6, 2009

Thoughts on What Used to Be Schering-Plough

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Posted by Derek

So what are we up to now, Day Three of Greater Merck? The merger with Schering-Plough went through earlier this week, and you won't get any more numbers by searching the stock tickers for SGP.

I find that weird, since I started my career there in the late 1980s/early 1990s. But while I was there, it seemed like there were mergers and rumors of mergers every few weeks. That's no doubt a hindsight-enhanced picture I have, but it's safe to say that I heard about S-P merging (or being purchased by) every single major player in the business during my years there. And it didn't happen (not then, at any rate).

My favorite moment came in about 1992 when a colleague came to my office one afternoon saying "It's us and Upjohn. Announced after the close of business on Friday. All of CNS is going to Kalamazoo". I hardly even looked up, uttering a one-word reply that compared this news flash to bovine waste.

"Why do you say that?", he replied. "You don't think it could happen?" "Of course I thing it could happen", I said. "But I'll bet against any specific prediction of when and who. Got any money on you?" "Why don't you think this is the real thing?" he asked again, to which I replied "Because I don't think that any deal this size, set to be announced on Friday, could be so screwed up that you and I would know about it on Tuesday afternoon".

"Well, I kind of see your point there. . .", he began. And of course that particular deal never happened. But I'm sure that there were others that nearly did. That's one of the things that goes on in the background of this industry - there are a lot of tentative discussions and what-if ideas that get looked at briefly (or sometimes not so briefly) which people outside of upper management never hear about. This stuff generally starts to leak (if it does) once it gets closer to really happening, and for every one that happens, there are several that get thought about but never quite work.

Of course, I'm using "work" in the sense of "get completed", not in the sense of "works out in the long run to the benefit of everyone involved". I'm not convinced that many drug company mergers fall into that latter category at all, and that goes for the Merck/Schering-Plough one, too. There don't seem to be any dramatic announcements coming out of the deal so far, and that probably means that the changes (which are, and have to be, coming) will just be delayed while the company takes stock of what it now has, and what it now is.

But, as someone from another company was saying to me last night, the bigger you are, the harder it is to do that. It takes longer before you feel that there's enough information to make a good decision, which is probably why Pfizer's current rearrangements are taking so agonizingly long to make themselves clear. That same decision-making extends, I think, to drug discovery and development issues, which is one reason I don't like the whole mega-company idea to start with.

There's also the groupthink problem. Pfizer, for example, was able to convince itself that inhaled insulin was going to be a big winner, even as people outside the company wondered if that could be quite right. (And not only was it not a big seller, it was an unprecedented disaster). I don't believe that people get any smarter in large groups. Quite the contrary. All that "wisdom of crowds" stuff, as I understand it, is about consulting large numbers of individual thinkers, not getting them all into one room and having them agree on something. Especially if some of the people in the room can decide the salaries and promotions of the rest of the crowd.

I wish both the Merck people and the Schering-Plough people well, and the combined company good fortune, and that's not just because I find myself a stockholder of it. But I wish it hadn't come to this, and I wish it wouldn't keep coming to this, either.

Comments (20) + TrackBacks (0) | Category: Business and Markets | Drug Industry History


1. anchor on November 6, 2009 10:46 AM writes...

this is just to let you know that after the merger the people are let go during "Thanks Giving" or "Christmas" break.

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2. stuff on November 6, 2009 11:04 AM writes...

Did you see this "Larger Merck says merger will actually increase R&D efficiency" (

I laughed.

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3. smurf on November 6, 2009 1:48 PM writes...

Inhaled insulin is NOT a bad idea. Having an inhaler the size of a bong is, though!

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4. Hap on November 6, 2009 2:17 PM writes...

Inhaled insulin that costs three or four times as much as the injected version, with a likelihood of lung damage and a small (maybe very small) chance of lung cancer? If a lot of things were different, than inhaled insulin could have been a good idea, but,, no.

Having an inhaler the size of a bong was the least of Merck's worries - heck, if they had reinforced the inhaler, you might have had an effective self-defense weapon.

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5. RTW on November 6, 2009 6:09 PM writes...

Having an inhaler the size of a bong was the least of Merck's worries??

Try reading it again? It was Pfizer. The general idea was a good one, gain higher compliance by people that hate needles. The "Bong" I beleive what really was the issue. Older folks didn't want to carry that thing around. The possibility of lung damage/cancer was probably too much of a risk for Pfizer, with so little return.

I have read that the other players have a much more convenient inhaler. I personally never believed this to fit in the blockbuster drug model of Pfizer. Too Much wishful thinking and then when it didn't live up to expectations turned into a bust.

Type I Diabetes is much better regulated with injections and proper monitoring. Insulin pumps and monitoring have been a life saver for many. Wish these were available 40+ years ago. Might have made a really big difference in my uncles life. Born with type I he didn't have many options. All he could do was watch his diet and use injectable insulin on a schedule. Was not easy to monitor blood sugar back when he was a child. He ended up dying from complications of the condition in his later 40's in the end. The damage was done.

So - although this was a bust in the Pfizer scheme of things - it may still have its place as a niche product. Emergency inhaler easy to carry, when you need it and are away from your "kit" perhaps? Less stigma assocated with using inhalers (as apposed to "Bongs"!) than with the need to use needles in public. Look at ashma sufferers.

Just something to think about. Not all inovations have to be $16B sellers!

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6. Hap on November 6, 2009 7:50 PM writes...

I don't think the cost or lung risks made inhaled insulin workable - it didn't fail as in "was not a blockbuster", it failed as in "cost multiple billions to market and develop and made $12M (m, not b)". A smaller inhaler would help compliance but wouldn't remedy the cost issues, and with other effective methods for diabetes control, insurance wouldn't want to front either the extra cost or the coverage for potential lung damage. The cancer rumors were just gravy on the Titanic.

It might work as a niche product, but the development required to make it an effective niche product and the cost the development would impose on end users is probably a showstopper.

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7. Anonymous on November 6, 2009 8:50 PM writes...

The "New Merck" had a lot of hoopla going on this week, all about synergies and how great we (ie legacy Merck) are and how great the pipeline is. But the interviewing of SP people starts next week. And some have already been shown the door. Who needs legacy SP folks when the Merck folks are all knowing and all powerful? Just ask them - they will tell you how important they are.

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8. Anonymous on November 6, 2009 10:43 PM writes...

The funny thing is, we have a bunch of ex-Merck people here at the institute - and apparently they continue to be tremendously important and they take themselves very seriously even after they have left Merck.

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9. petros on November 7, 2009 4:50 AM writes...

But Pfizer was touting Exubera as a >$2 billion/year product,

One smaller company (Mannkind) is stil plugging away with inhaled insulin but the biggere ones bailed out post-Exubera, although not at such cost

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10. Anonymous on November 8, 2009 7:29 PM writes...

#9 What has this have to do with Schering-Plough/Merck

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11. Anonymous on November 8, 2009 8:07 PM writes...

#8 what is your point?

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12. anonymous on November 8, 2009 11:28 PM writes...

Reading the buissness section of the Sunday Star-Ledger (8th Nov. 2009) on how Daria Hazuda discovered isentress (HIV integrase inhibitor), I have to wonder how credible this is? From what I believe this compound was developed from the ex-Merck IRMB site in Rome, Italy (Based on discussions from Merck colleagues). Can other colleagues verify or dispute this?

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13. petros on November 9, 2009 3:30 AM writes...

WO-03035077 is the product patent for raltegravir, assigned to IRMB. The large team of inventors does not includeDaria Hazuda, but Goggling her finds sites with statments such as
"Her laboratory was the first to identify integrase inhibitors to establish their biochemical mechanism of action and to demonstrate efficacy in an in vivo model of lentiviral infection using rhesus macaques."

"Often, the work was tedious. Over several months in 1999, Hazuda and two assistants screened 250,000 compounds by hand because the robots that usually did the work were incompatible with her methods. Hazuda knew Merck colleagues in Rome were working on similar drugs against hepatitis C, and they collaborated to see whether any of those molecules would work against HIV. One did, and it eventually became Isentress."

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14. Jose on November 9, 2009 4:04 AM writes...

250k compounds by hand in

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15. Jonadab the Unsightly One on November 9, 2009 6:43 AM writes...

> I don't believe that people
> get any smarter in large groups.

If the group is just a big amorphous blob, people generally do the opposite of getting smarter as the size of the group increases. Crazier is more like it.

One teenager at an amusement park usually stands quietly in the line to ride the roller coaster. (Or gets tired of standing in line and goes to play the arcade, whatever.) Two or three teenagers at an amusement park, in most cases, just talk while they stand in line for the coaster. They may boast a bit and try to impress girls, but usually it's just talk. But if you let a group of six or so teenagers go to an amusement park together, horseplay invariably ensues. A group of thirty, without adult supervision, will either get kicked out or get someone hurt. A competent supervising adult, however, changes the structure of the group; it's no longer an amorphous blob at that point, and you don't see the same levels of stupidity. Although, for thirty teenagers you might want two or three competent supervising adults, and then they either have to split the group or one of them has to be recognized by the others as being in charge, or else you've got trouble again.

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16. Jonadab the Unsightly One on November 9, 2009 6:52 AM writes...

I just realized that what I wrote could be misinterpreted. I'm *not* saying that scientists are teenagers and have to be kept in line by adults. What I'm saying is that the structure of a group matters, and it matters more as the size of a the group increases. I don't know what the right structure is for scientific research, but I do know that if you get the structure wrong the results will be bad.

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17. FDA Matters on November 9, 2009 10:29 AM writes...

Groups are always smarter than individuals, but only if the meeting is organized around a specified agenda and goal....and is well-managed by a facilitator (internal or external). Under circumstances less supportive than this, it is impossible to predict whether the outcome of a meeting will be better than what individuals can produce alone. The alternative, interviewing many individuals can produce excellent results, but lacks the interactive benefit of a well-organized meeting. Unfortunately, a very large percentage of group meetings are inefficient and don't produce better decisions.

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18. Vader on November 9, 2009 11:06 AM writes...

Insulin resistance is futile. You will be assimilated.

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19. milkshake on November 9, 2009 1:21 PM writes...

petros - I am afraid thats because of the patent lawyers crap. They don't want biologists on "composition of matter" patents (or anyone else) unless the inventor did some work that directly produced the structures claimed in the patent. According to them, screening the compounds does not count as inventive enough. On the other hand, if you were a department boss and discussed the chemistry once on a meeting and approved the project direction and your people then made the stuff you are in. We both know its a baloney but patent co-inventorship criterion differs from co-authorship on a paper

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20. Dave L on November 10, 2009 4:10 PM writes...

It's been scientifically proven that a group has an I.Q. and it can be easily calculated....take the lowest I.Q. of the individual members and divide by the number of members.

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