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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

« Selective Scaffolds | Main | Munos On Big Companies and Small Ones »

December 10, 2009

Pfizer's R&D Productivity

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Posted by Derek

Courtesy of Bernard Munos, author of the Nature Reviews article that I began blogging about yesterday, comes this note about Pfizer's track record with new molecules. His list of Pfizer NMEs since 2000 is Geodon (ziprasidone, 2001), Vfend (voriconazole, 2002, from Vicuron - whoops, not so, this one's Pfizer's), Relpax (eletriptan, 2002), Somavert (pegvisomant, 2003, from Pharmacia & Upjohn), Lyrica (pregabalin, 2004, from Warner Lambert), Sutent (sunitinib, 2006, from Sugen/Pharmacia), Chantix (varenicline, 2006), Selzentry (maraviroc, 2007), and Toviaz (fesoterodine, 2008, from Schwarz Pharma). There are some good drugs on that list, but considering that even just five years ago, the company was claiming that it had 101 NMEs in development, and was going to file 20 NDAs by now, it might seem a bit thin.
Pfizer%20graph%20fixed.jpg

It might especially seem that way when you look over this graph, also provided by Munos (but not used in his recent article). You can see that Pfizer's R&D spending has nearly tripled since the year 2000, but that cumulative NME line doesn't seem to be bending much. And, as Munos points out, two (and now three) productive research organizations have been taken out along the way to produce these results. It is not, as they say, a pretty picture.

Comments (49) + TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History


COMMENTS

1. Nick on December 10, 2009 1:37 PM writes...

How long would one expect the lag between capital investment and NME to be? Would one expect to already be reaping the rewards of research investment?

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2. John on December 10, 2009 1:44 PM writes...

It would be interesting to see the y-axis make logarithmic, so that the percentage increases can be more easily understood. The NME would be tapering off, while the R & D line would be almost flat at the end.

I'm not as sure about having a time-offset, but there certainly there is a lag between when spending starts and when an NME is declared, but this is looking at an aggregate situation, so that is more difficult to clarify.

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3. Anonymous on December 10, 2009 1:44 PM writes...

So shouldn't M&A costs be included as well? Perhaps including both graphs for NMEs vs. R&D and total NMEs vs. R&D plus M&A would give us a more complete picture of what is going on. I'm not an expert on M&A, though. Is there any other reason a pharmaceutical company buys another besides acquiring the company's pipeline?

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4. wei on December 10, 2009 1:54 PM writes...

9000 $bn?
it seems a big number even for a cumulative one

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5. Anonymous on December 10, 2009 1:57 PM writes...

Wei,

The scale is $million, not $billion. There is a typo.

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6. Mutatis Mutandis on December 10, 2009 2:17 PM writes...

I love Munos' quote from Jean-Pierre Garnier in Harvard Business Review, 2008:

"The leaders of major corporations including pharmaceuticals have incorrectly assumed that R&D was scalable, could be industrialized and could be driven by detailed metrics and automation. The grand result: a loss of personal accountability, transparency and the passion of scientists in discovery and development."

There's Pfizer for you... And in Fig.2b of Munos' paper, you can see which other companies are making that error as well.

But here is a puzzle... The approvingly quoted Jean-Pierre Garnier is exc-CEO of GSK. His HBR article is a good read and contains other words of wisdom. But it also contains the extraordinary claim that "our productivity is now two or three times as high as the average of our competitors". Of course any CEO claiming to have achieved miracles makes me very suspicious. (Although being three times better than average might not mean much if the distribution reflects a power law.)

But interestingly, Munos' paper doesn't include GSK among the most productive companies. In fact it doesn't mention GSK, reckoned to be the second largest pharmaceutical in the world, at all. It only includes in its graphs Smith Kline & French, who used to be called that 27 years and several mergers ago, somewhere in the tail of less productive companies.

Why? Is GSK's record so good that it would make Munos' own employer look comparatively bad, is it so poor that it falls of the graph, or are there too little data about it?

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7. Derek Lowe on December 10, 2009 2:24 PM writes...

Just fixed the scale on the chart - sorry about that! Pfizer's not spending 9 trillion on R&D. Yet.

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8. Peter on December 10, 2009 2:24 PM writes...

Vfend was a late-stage drug that came with the acquisition of Vicuron. So that seems to leave only Geodon, Relpax (a me-too triptan), Chantix and Selzentry from their own labs on this list.

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9. Ben A on December 10, 2009 3:13 PM writes...

I do not believe voriconazole was originally a Vicuron product. Perhaps people are confusing it with the echinocandin antifungal anidulafungin, which was in late stage development at the time of acquisition...

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10. peter on December 10, 2009 3:41 PM writes...

My apologies - Ben A is correct, and I was indeed confusing Vfend with anidulafungin.

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11. CMCguy on December 10, 2009 4:01 PM writes...

Derek I am not clear on how NME is being applied in the Chart. Is this just compounds that have been accepted for Development or does it represent those that make to PIII or NDA? Data I recall a couple years ago suggested Pfizer had on the order of 70-80 drugs programs in PI-PIII so would think they do have more now after acquisition of Wyeth.

Of course based on past Mergers in Pharma there will likely be trimming of many projects, some are duplicative but most because reorganizationitis where key personnel or advocates for particular projects did not survive the transition. That is probably another reason why the curves do not correlate well with every "addition" event being countered by the negative consequence of integration lags and eliminations of people that killed potential or active NMEs.

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12. Anonymous on December 10, 2009 4:20 PM writes...

To CMCguy: NMEs are counted when they are approved by FDA. That's the metric used by the author to measure innovation.

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13. Hap on December 10, 2009 4:23 PM writes...

If merging and research productivity are related as 1+1 = 1 (as the graph seems to imply), then what would the point of doing it be (other than to enrich some of the upper management and some short-term stockholders, though probably not longer-term ones)? (If the effects of a merger are absorbed by its costs to the company, why is it in the company's interest to merge at all?)

I thought that the point of merging was to control the output of two companies and gain extra revenue above what the merger cost (since people aren't selling commodities, I assume that reducing competition isn't as much of a factor, and that seems like the main situation where merging and getting no direct productivity would still be helpful.) Or have the positive effects of the mergers simply not shown up yet?

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14. Don B. on December 10, 2009 6:01 PM writes...

Is there a graph on MBAs employed vs NMEs?

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15. PFEGuy on December 10, 2009 7:13 PM writes...

Pfizer has been great at acquiring other companies and firing their productive people. The lousy managers that killed their productivity were only able to save their own behinds by killing off their new colleagues who were better scientists but not as politically savvy.

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16. Mark on December 10, 2009 8:57 PM writes...

I remember Pfizer's slogan back in 2003 or so: "20 by 2010".

That is, 20 NMEs by 2010. I think it took about one year before 25% of the candidates on the chart were dropped and the signs quickly removed.

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17. Mark on December 10, 2009 9:02 PM writes...

I think big pharma's problems can be summed up by the quote of a former co-worker, which I think a lot of the top management needs to understand:

Whenever his wife wondered why he didn't always come home by 5pm, his reply was "We're not making f^&kin' ham sandwiches here."

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18. ex-Pfizerite on December 10, 2009 9:06 PM writes...

I think the Pfizer model changed after the Pharmacia merger and failure of LaMattina's goal to have 7 NMEs approved in 2004 and a further 5-7 NMEs approved every year there after. The result of this failure is that Pfizer's new corporate plan is to buy pipeline/products and then shrink the companies headcount to fit the revenue stream of the combined company. As products go off patent the headcount is reduced so that the profit margin remains constant.
The problem with this approach is that it devastates research as scientists and other technical personnel become disengaged and start looking for other opportunities and it becomes more difficult to recruit employees. This directly impacts productivity in terms of NMEs because of lack of people and additionally leads to careerism in the remaining research and development people as they subvert standards to meet arbitrary goals ie throwing a CAN over the transept in December to meet year end goals.

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19. alig on December 10, 2009 10:06 PM writes...

Pfizer's R&D spending seems to corelate with global temperatures. Maybe Pfizer is causing global warming. I think we should shut them down, to save the world.

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20. CMCguy on December 10, 2009 10:11 PM writes...

#12 Anon thanks as presumed was focused on successful NME and guess was confused by the statement preceding the chart with 101 NMEs/20 NDAs. Problems with any such analysis occur as can really account for the differences in costs/requirements working in various therapeutic areas, types/complexity of compound involved ("easy vs hard" SM, Biologic), Clinical studies demands and then increasingly tougher Regulatory hurdles.

To me this reflects more on what Pfizer has "internally selected" to innovative as there were probably a number of projects that could have lead to approved products if had not been halted because did not fit marketing/financial ROI metrics. Will never know how many more Products that could have been approved if used other criteria. That's what makes it a tough business as no one has unlimited time and resources, even Pfizer, so end up making decisions with incomplete data on both science and business aspects that years later do not turn out as expected.

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21. srp on December 10, 2009 11:44 PM writes...

I've tried to address this before without seeming to make much of an impression, but what the heck. Once again with feeling:

IF these mergers make sense it is because of consolidation in the marketing/distribution parts of the companies. There are considerable economies to having more relevant drugs/salesperson and more stops per unit area per salesperson and so on. There may also be some economies of scale and learning in managing trials and dealing with the FDA, handling legal and PR issues, etc.

You guys sometimes talk about the importance of having large chemical libraries and other things that a really small research outfit might not have, so there may be SOME scale economies at the research level. But I would bet that these are exhausted a lot more quickly (i.e. at a lower scale) than the economies in marketing and distribution.

We probably, therefore, should have a smaller number of marketing, sales, and distribution pipelines than we do research pipelines. One can imagine a structure where a multitude of research firms sells or licenses drug candidates, at various stages of completion, to a small number of huge marketing/sales/distribution outfits, thereby right-sizing everything.

Unfortunately, there are all kinds of contracting hazards that make arms-length relationships among research, regulatory-approval, and marketing & distribution problematic. So we end up with the devour-and-destroy merger tactics of Pfizer as a second-best (or third-best) strategy to achieve these distribution economies, because vertical integration is the only way people know how to safely manage the vertical links.

So, IF the vertical relationships among the research, regulatory approval, and marketing and distribution stages could be handled through contractual means instead of in a vertically integrated structure, THEN the efficient industry structure would be a host of little biotechs, maybe a score or so traditional pharma research units, an unknown number of trials managers/FDA interfacers, and three to six marketing & distribution firms. Financing arrangements could be all over the place (see movie production for an environment with zillions of different ways to pay for projects).

When you have a bunch of greedy people following similar courses of action over a long period of time, simple stupidity is a poor explanation of their behavior. My MBA students aren't always brilliant but at worst they know how to react to financial pain and pleasure as transmitted by their company spreadsheets and income statements. It is unlikely that the merger wave is completely unmotivated by realistic considerations (and I say that as a big skeptic about most large mergers).

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22. Anonymous on December 11, 2009 12:41 AM writes...


#21 srp, you are making the classic MBA colossal blooper of treating drugs as commodities.
If you had been awake, you would have noticed that Hap has already intelligently pointed out (#13) that ethical pharmaceuticals are NOT COMMODITIES.
When I was a new med chem researcher some 30 years ago, I made a rash prediction, to no-one in particular, in my ignorance, that drugs would become like chocolate biscuits and cola - only distinguished by the *wrapper*.
To my chagrin, this stupid prediction now appears to be becoming a reality.
Pharma execs will not get it right until they understand that drugs are different, because they come with the awesome ethical responsibility of giving and taking human life. Most people think they have no business going about trying to sell prescription pharmaceuticals like commodities.
I assume that you (srp) are a business school teacher, and can think only in one dimension, like your MBA graduates - i.e. that one model fits all businesses. Your self-righteous ego-trip is responsible for producing the self-serving idiots who are destroying pharma RIGHT NOW.
The best person to have as CEO of a pharma company these days is a MD. Nobody else has been trained to maintain their moral authority in the face of other pressures. Anyone for a pharma company based on an ethical model?

BTW #19 LOL!

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23. Jose on December 11, 2009 12:46 AM writes...

Just to reinforce anon #22, **pharmaceuticals are not normal consumer products** and any business analysis that ignores this fact is an exercise in stupidity/futility.

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24. srp on December 11, 2009 1:59 AM writes...

Nothing #21 or #22 has said has any relevance to my argument. Unless they are trying to argue that pharmaceuticals do not need to be marketed, sold, and distributed because drugs "aren't commodities." In which case there are two profound errors they are making.

1) Very few products are "commodities." A commodity is a product that is completely undifferentiated in the eyes of the buyer, like a particular grade of oil or wheat. Usually such standardization actually requires some institutional innovations, as the commodity exchanges in Chicago and elsewhere did long ago.

Chocolate biscuits and cola are not commodities. They have differing taste characteristics, differing aesthetic qualities, differing degrees of availability on the shelves of the local store, etc.

2) Drugs need to be marketed and sold because the attention and knowledge of doctors and patients is limited. They need to be distributed because pharmacies and dispensaries don't magically have drugs appear on their shelves.

If you have a new drug that has a slightly better side-effect profile for some subclass of patients do you really think that physicians will spontaneously figure that out? Dream on. (Of course in the many countries where drugs are paid for mostly through tax revenue, you have to convince some committee to put your drug on the list--sales effort again, though of a different kind.)

How the heck do you guys think drugs get into physicians' offices and onto their prescription pads? Through a Platonic search of research papers in medical journals? The marketing guys who convinced ERs to use streptokinase or tPA, oncologists to use Herceptin on Her+ breast cancer patients, ad infinitum, played an important role in improving medical practice. Not to mention the artificial-hip salesman who demonstrated proper technique to the orthopedic surgeons.

The blinkered, narrow-minded, and ignorant views of people about the fundamental workings of their industry are shocking. "Build a better mousetrap and the world will beat a path to your door" isn't even true of mousetraps, much less drugs.

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25. Anonymous on December 11, 2009 3:31 AM writes...

Actually the single biggest failure in all of these analyses is a clack of consideration of the timescales - about 10 years from start to finish for each discovery programme. Almost all of the current batch of CEOs are taking the pain or glory due to their successor (Hank are you there ?). They also have very little incentive to do anything right in their own reigns of terror as they'll be gone before everything hits the fan. Feels a bit like banking ! So we get lurches in direction every few years and inconsistent R&D environments. Now while I think it's bad in the big pharma world, I always choke when an MBA suggests that the biotech model is so much better. Frankly, there's more c**p done in those environments than in any big pharma by people without a clue who are happy to take VC money.

So at the moment I see no solution anywhere for the industry.

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26. cliffintokyo on December 11, 2009 3:34 AM writes...

#24
srp, you still don't understand.
Prescription drugs are intended to affect peoples bodies and health; some have dramatic effects. That's why they are tightly regulated, unlike chocolate biscuits.
With this unique distinguishing characteristic comes a whole load of ethical responsibilities.
No other type of product is remotely similar.
Drugs are not "get it out the door and forget about it" products.
This is the insoluble (in my opinion) ethical dilemma between *doing good* and *doing business*
A pharma researcher should basically only have to think about the *doing good* equation, because otherwise, what is his motivation?
Until you understand this, further discussion is pointless.
Hair-splitting about the definition of commodity (alright, consumer product then) is irrelevant to the *big picture* we are discussing, and just how important is the difference in taste between coke and pepsi at this level anyway?

BTW, did not intend comment #22 to be anon.

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27. cliffintokyo on December 11, 2009 4:07 AM writes...

#25
Good point (although the "clacking" in the recent comments appears to be considerable!) Once you put your drug out there, you are responsible for it forever, not that the golden parachutists would ever care about that.
BTW
If you look carefully at the figure in Derek's post, the R&D spend seems to be levelling out.
Is Pfizer the first mega pharma to discover the plateau of absolute unproductivity in research?

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28. Evorich on December 11, 2009 7:18 AM writes...

I don't think it's so much the treatment of drugs themselves as commodities but the treatment of the R&D as a commodity. R&D is science, and I think intrinsically it doesn't scale well. I think the recent posts about micro-pharma and the above quote by Jean-Pierre Garnier says everything you need to know. But srp still makes some good points in that there may be parts of the pharma business that do have economies of scale. The point is that the whole business is changing and we're no-where near equilibrium (a satisfactory business model) yet and won't be for many years to come.

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29. Petros on December 11, 2009 8:17 AM writes...

The other pertinent factor is the commercial succcess of those (few) NMEs
2008 sales ($ million)


2573 Lyrica (pregabalin, 2004,
1007 Geodon (ziprasidone, 2001)
847 Sutent (sunitinib, 2006)
846 Chantix (varenicline, 2006)
743 Vfend (voriconazole, 2002)
321 Relpax (eletriptan, 2002)

not reported
Somavert (pegvisomant, 2003)
Selzentry (maraviroc, 2007)
Toviaz (fesoterodine, 2008)

Not a great reurn on investment

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30. alig on December 11, 2009 9:40 AM writes...

Why do companies merge? Because CEO pay is correlated with size of the company.

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31. Cellbio on December 11, 2009 10:30 AM writes...

Agree with srp's model of the future for our industry. Lot's of smaller shops doing the research, bigger shops licensing, doing the big trials and selling.

Also agree with the critics, especially the timescale argument. Where is today's business leader that says, in the face of earnings rolling over to a slower growth, "can't cut my research, for it is the engine of our growth". No, indeed srp, the MBAs you school yelp with pain when they see numbers for recent trends, then turn and inflict the pain on researchers, and most importantly, devastate the culture of a high failure environment which needs to be "safe" for long periods of time.

But back to the best part of the future proposed by srp, imagine a research company with no HR, no McKinsey, no MBAs, no arbitrary metrics related to a complex bonus formula. Just a group, a team, working to do something useful. Not so bad. Just need to find the money.

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32. MedChem on December 11, 2009 11:01 AM writes...

"Agree with srp's model of the future for our industry. Lot's of smaller shops doing the research, bigger shops licensing, doing the big trials and selling."

So is this truly the future model for our industry---spend one's entire life before 30 in school including going through hell in graduate school only to find oneself having to switch jobs every two years (if fortunate enough to find one)in unaffordable places like SF and Boston?

I wonder why I tell all my friends to dissuade their kids from doing chemistry. And don't even bother to tell me about you "love" for science!

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33. Hap on December 11, 2009 11:03 AM writes...

#24: No, but if you have no mousetraps, then unless your target audience is brain-dead, no one's going to be beating a path to your door, no matter how many marketing and development folks keep pushing.

The actions of management (and their pay) appear to be disconnected from the long-term consequences of their decisions for their companies - unless there is some other reason for them to act in their companies' interests, they are unlikely to do so. Simple cutting of an organization's research when it isn't developing enough drugs for the money seems not to be a long-term survival strategy. Doing that makes sense in the short-term but probably not the long-term. Outsourcing lowers personnel costs but runs the risk of generating lower-cost competitors and doesn't deal with the ability to manage and choose research that was likely the cause of the original problem.

Most things aren't commodities, but people will alter their taste based on cost (if Coke is a dollar per 2L cheaper than Pepsi, an awful lot of people will switch even though the two are not precisely exchangeable). With drugs, that is mostly not possible - some "me-toos" have similar biological profiles, but even most of them do not (and hence they're not really me-toos). Since the criteria determining whether people use one drug in a class over another are mostly fixed (biological attributes, doctor, insurance), it doesn't seem like marketing organizations are the key determinants in drug success. (This is parially contradicted, though, by the effectiveness of DTC ads.) Business behaviors that take that as their starting point (mergeritis) are likely to lead to bad things.

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34. MedChem on December 11, 2009 11:19 AM writes...

My rant was not directed at you Cellbio.

I'm getting more and more sick to my stomach of this typical european-american corporate culture of "business is business" heartlessness and complete lack of loyalty.

This culture leads to a separation of employees and employers, much like the unions and their employers. I remember being shocked to hear my Coke neighbor referring to his company as if it were a COMPLETELY different entity that had nothing to do with him. I was utterly shocked.

I wonder what'd happen to corporate morale and PRODUCTIVITY if both sides treat each other like a marriage and say "we thrive or die together". But we all know that'll never happen in America, in marriages let alone corporations.

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35. MAD on December 11, 2009 12:54 PM writes...

Plotting per-year dollars spent vs cumulative NME is very misleading this should be repotted to reflect the change in NME or at the very least cumulative dollars vs cumulative NMEs. However the bigger problem is that dollars spent per year are not likely to effect the NME output until years down the road since NME is defined as FDA approved drugs which while discovered today with our big budget wont show up no the NME list for years to come. Therefore today’s NMEs might be better plotted against budgets from years past with the exception of drugs with unusually short development times or against dollars spent on research since the discovery of the NME.

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36. pc on December 11, 2009 1:39 PM writes...

#31. Cellbio "... Just a group, a team, working to do something useful. Not so bad. Just need to find the money."

Isn't that what non-profits do?

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37. weirdo on December 11, 2009 1:41 PM writes...

[typical european-american corporate culture of "business is business"]

As opposed to what, pray tell? Have you visited a laboratoy in a Chinese, Indian, or Eastern European CRO?

Talk about treating employees like cattle . . .

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38. srp on December 11, 2009 4:15 PM writes...

I agree with all the folks here that research, as a creative process involving both serendipity and bad surprises, cannot be managed as a routine process. (Neither can other creative processes, such as storytelling, which makes Pixar's recent track record all the more impressive.) But you guys should hear yourselves--you sound like the people who come on here and say we don't need companies, universities can do all the research, profit is evil, etc.

My point was that ideally a productive research group of the size that turns out to be optimal is likely to be smaller than the optimal size of the marketing and distribution segments of the vertical chain. In addition, as Cellbio points out and this thread suggests in spades, there would be big cultural advantages to separating the R&D operations into separate companies from the MBA-dominated marketing and distribution operations. As far as MedChem's comment goes, I don't see why a stable career in something like a current pharma lab would be ruled out by this model--just imagine the traditional research operations as separate companies contracting with distributors for new drugs.

The problem is that no one seems to be able to come up with a contractual model that would allow say, the putative research-rump-of-Merck, the putative research-rump-of-Pfizer, and other similar operations running as independent companies to work at arms length with the mega-merged distribution operations that would ultimately sell the products. For example, the fixed overheads of these research operations (in contrast to tiny one-project biotechs) are hard to
get customer payment for on the steady basis necessary to sustain the organization. Here is where some creative business thinking is called for. Whoever figures it out stands a good chance of transforming the industry in a positive way.

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39. CMCguy on December 11, 2009 4:45 PM writes...

srp I actually think you make very relevant points. Mergers do often make sense for certain parts of organizations and not others. Since mostly R&D types here what they have seen is little benefit and much loss to potential productivity of those efforts.

Further while I do again know vast cultural differences inherent and concur no ones seems to have truly mastered effective and continuing collaborations or partnerships across such disparate organizations I feel both sides will suffer if do not interact throughout the process. There are many critical transition or decision points were combination of focus/drive and experience are required (which is why I think academic discovery model would be doomed). Although internal struggles/politics can be detrimental it can be easier to work out issues and make progress if are in a single organization. Much like in (most) families, sibling rivalries can be intense however will unite when the pressure is on.

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40. Cellbio on December 11, 2009 6:35 PM writes...

Medchem, no problem, passion is good. I used to work in a bigco, stable for almost 20 years. I left, with great fear of the impending instability, but found that now, though having done several different things, I am happier than ever, and seem to be much more happy than those left at bigco.

PC, I don't think non-profits do this well, but ironically, I am currently employed by a non-profit, trying to take "self-incubated" technology out into a newco, so I sure hope this model works. My experience tells me the appetite for capital risk at non-profits makes this a tough task. I'll let you know how it goes.

Also working on just the model srp proposes by trying to find funding for a discovery effort that would deliver well executed (industry scientist lead) product candidates to development organizations (pharma). The key business contract question indeed is how to come up with the equivalent of a cap table when the "lab" will work on a portfolio of assets with different inventors, with the expected Pousson distribution for success (hey I learned something). I think the key, srp, is to set realistic expectations, not the prior VC model, for up-fronts and milestones, and set the goals for real demonstration of value, not the perceived value of stage of development. This will help keep costs down. Hopefully, that leaves enough room in the deal for milestone and royalties as the reward for innovation. If we get funded, I'll post here asking for entrepreneurs to step forth!

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41. sanjiva86 on December 12, 2009 1:49 AM writes...

Another thing to consider is that a lot of R&D spending doesn't go towards developing NMEs, but a sizeable chunk goes towards expanding the market for these NMEs through new indications.

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42. Sumontro on December 12, 2009 11:21 PM writes...

Research and development spending is vital for a company's continued success. However, from that graph, clearly the money that's being pumped into R&D is not yielding results. And, yes short term CEO's can wreck development efforts with extremely short sighted moves. However, I think the solution to bring both sides to a mutually beneficial agreement would be if the research effort could be accelerated, thus leading to shorter time lines. This would lead to higher numbers of drugs to come out the pipeline. Thus, the MBA types could get more possible blockbusters to make their profits go up, and have clear short term economic reasons to keep the R&D staffs.

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43. Tok on December 13, 2009 3:17 PM writes...

"However, I think the solution to bring both sides to a mutually beneficial agreement would be if the research effort could be accelerated, thus leading to shorter time lines."

Translation: Sometimes the MBA's mess up, but if you research guys just worked harder, they'd get a bigger bonus!

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44. Sumontro on December 13, 2009 7:24 PM writes...

No, I did not mean to imply that researchers do not already work as hard possible. I meant if new technology or environments could augment the researchers efforts. That way researchers could get more accurate answers faster, and not be at odds with MBA types. I came across some unorthodox methods (that involve researchers working at present work loads) of accelerating research efforts. From what I read here (www.horizons-s414.blogspot.com ) it definitely merits a closer look.

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45. Anonymous on December 14, 2009 10:52 PM writes...

#44

Well I can think of a few CEOs that should be shot into space but I'm not sure that crystallography in space is the answer to all (or any) of our prayers.

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46. Mike G on December 15, 2009 10:29 AM writes...

#38 srp --- Actually a contractual model for pharma R&D is sort of in place already. CROs both domestic and ex-US are executing a large and growing share of the biological, chemical, and clinical work that pharma used to do. The most forward looking firms are taking an equity position or outright acquiring some of the compounds coming through their operations. I could imagine a system in which certain universities or super-specialized small firms hand off basic research to CROs. BioCentury ran a lead article back in Sept called "Life in the New EcoSystem" in which they described a disaggregated industry model consisting of funding specialists, translational specialists, POC specialists, sales/marketing specialists, etc. It's conceptually similar to Steven Paul's FIPnet model (FIP = fully integrated pharma network). CSOs (contract sales organizations) already provide contractual sales support to pharma companies, so there's a precedent for integrating a sales/distribution element into a networked model.

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47. Anonymous on December 16, 2009 11:37 AM writes...

Does anyone know the main reasons drug research costs so much?

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48. Anonymous on December 18, 2009 3:45 PM writes...

Research doesn't cost a lot, development does. I always remember a meeting in the US that I had to go to in the US. The scientists flew economy, the managers business, and the clinical trials director chartered his own helicopter.......

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49. Anonymous on December 21, 2009 5:01 PM writes...

Then how much does development cost?

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