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Derek Lowe The 2002 Model

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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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« Pfizer Part Two: Cuts at Groton | Main | Merck's Strategy vs. Pfizer's »

February 3, 2011

Pfizer's CEO Speaks

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Posted by Derek

If you'd like to hear Pfizer's CEO, Ian Read, try to explain what's going on a the company, Matthew Herper has his recent Q-and-A with the press here. As you might imagine, he's got a story to tell you about how cutting the company's R&D again is going to make it even more innovative.

But I particularly was struck by this part:

One of the main goals of the changes is to try and prevent any repeat of Pfizer’s disastrous investment in Exubera, the inhaled insulin, which the company spent years developing before it hit the market and bombed. Without accountability, Read says, projects were handed off from one team to the next without demands that they actually be ready.

Now, I'm someone looking in from outside, but accountability doesn't seem to me to be the biggest problem that the Exubera project had. I took at crack at the subject myself, and I still think the biggest problems were groupthink, self-deception, and a feeling that the penalties for speaking up against the trend were too great. Ian Read's press conference, on the other hand, has a tone of "Now we're really going to come down on anyone who screws up like this, and you know what? That isn't going to help with any of those factors. It might even make them worse.

But hey, at least it's not costing Pfizer as much to aim people out onto the sidewalk as it used to. The standard severance package was cut just a few months ago. . .

Comments (28) + TrackBacks (0) | Category: Business and Markets


1. Anonymous on February 3, 2011 2:46 PM writes...

You are either on board or you are out of here.

This is a problem with Top or higher management within R&D not the lowly bench grunt. If anything the outsourcing/acquisition model is going to muddle decision making because it gives you less control on what you develop.

What a spineless CEO, I would have been much more impressed to hear this...

" We took a chance, we took a risk, and we failed. We tried to revolutionize how diabetes was treated, but taking that chance is how why we are a great company."

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2. Hap on February 3, 2011 2:49 PM writes...

I'm sure it'll prevent more Exuberas. After all, committing suicide is a really good way to avoid being murdered. Right?

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3. Hap on February 3, 2011 2:58 PM writes...

How does setting up synthesis and discovery for outsourcing help increase accountability? Based on second-hand experience, outsourcers have no incentive not to plug through bad candidates unless the whole process (and a significant amount of the profits) are delegated to them, because they make money from candidates, not drugs. Instead, you save yourself the expensive end of the process (clinical trials) while outsourcing the cheap end and losing control over the choices of candidates.

Eventually, of course, you'll train your successors, but I guess that could never happen.

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4. milkshake on February 3, 2011 3:00 PM writes...

Wishful thinking and groupthink: Feynman appendix F about the Challenger disaster is particularly illuminating. When the top management has incentives to grossly over-hype the future capability of their organization, communications from bottom up that disagrees with the hype are not encouraged.

By the way do you know why Pfizer is doing share buyback, instead of a dividend? (a hint: when the top management is lavishly compensated with stock options it becomes mercenary of the current stock price)

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5. lynn on February 3, 2011 3:07 PM writes...

Yep, Hap, it's Bad Candidates. And why are there bad candidates - whether from internal or out-sources? Because of unrealisticc deadlines. Picking the best thing you have by...September. In the good old days, we used to work at something until we either had a candidate or didn't. Didn't pass things off to the next step. Things were kept at pretty basic levels [pre-clinical] until a real optimum was reached. I know that in many areas, it's hard to make final assessments of efficacy until the clinic [unlike with anti-infectives], but at least the goals could be set to meet real criteria for pharmaclogy, tox, resistance, etc. It's the short term problem... And, as Derek says, the fear of speaking up. Grrr.

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6. MoMo on February 3, 2011 3:53 PM writes...

Group think is right on! They should get rid of everyone at Pfizer and start from scratch. Arrogance and cowardice are two words that come to mind when I think of Pfizer collaborators, especially from the chemistry side, in the past.

Oh, I forgot lackluster and obsequious.

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7. Hap on February 3, 2011 3:54 PM writes...

And the people making the goals are still there, making goals and excuses and money, and somehow expecting different results.

Don't they have drugs for that?

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8. Anon on February 3, 2011 4:13 PM writes...

"Read said the aim was not quite to make researchers feel they’re working at a small biotechnology company like Exelixis..."

Did he really say that? Did he really use Exelexis as an example? He's a complete boob if he did. It sounds like working at Pfizer would feel exactly like working at Exelexis; management is incompetent and most of the research staff is being laid off.

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9. GreedyCynicalSelfInterested on February 3, 2011 4:50 PM writes...

After management destroys this company, most of them will be old enough to retire, so who cares? The company should take long enough to run into the ground that I can retire with my golden parachute.

Here's a good example of groupthink at another former great American industry--the auto industry.

From the Economist, December 11, 2010, pages 83-85 (the first paragraph of the article is very telling).

Soon after Alan Mulally arrived as Ford's chief executive in September 2006 he organized a weekly meeting of his senior managers and asked them how things were going. Fine, fine, fine came the answers from around the table.

"We are forecasting a $17 billion loss and no one has any problems!" an incredulous Mr Mulally exclaimed. When he asked the same question next week, Mark Fields, head of Ford's operations in the Americas, raised his hand and-in what once would have been career suicide-admitted that a defective part threatened to delay the launch of an important new car. The room fell silent, until Mr. Mulally began to clap his hands. "Great visibility" the new boss added.

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10. ex-GSK on February 3, 2011 4:51 PM writes...

nothing like cutting off 3,500 heads to encourage people to take accountability and speak truth to power.....

accountability in CEO speak means, 'who can I blame/fire'

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11. Hap on February 3, 2011 5:01 PM writes...

More "making their numbers" noises. I guess I can repeat my whine number #3 (I need to just start numbering my complaints to save spaces, electrons, and other people's time) that when places tout accountability, everyone's accountable except the people that run the show (at least when they lose - when they win, no one's accountable except the people who run the show).

It'll work this time. Really.

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12. drug_hunter on February 3, 2011 7:05 PM writes...

Maybe this is why Martin Mackay chose (?) to leave ... but did Dolsten know this was coming when he took the job?? That was only ~7 months ago...

BTW, with a market cap of ~$150B, and few blockbusters in the pipeline, Pfizer stock still has a long way to fall. So this is not the end of the problems for their R&D staff, unfortunately.

Speaking as someone with a lot of gray hair, my advice to the Pfizer scientists is live frugally and save a lot of money.

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13. Anonymous BMS Researcher on February 3, 2011 7:55 PM writes...

I'm sure Pfizer is just as addicted to PowerPoint as every other company.

When Lou Gerstner took over IBM, which looked like a dying company at the time, meetings were done with transparencies on an overhead projector -- the precursor to the current laptop-with-LCD-projector standard. His first day on the job in a meeting with his senior execs he pulled out the plug on the projector and asked them to just talk with him about the business.

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14. fred on February 3, 2011 8:20 PM writes...

No chemist would have recommended a turd like Exubera going forward. Yet, who bears the brunt of R&D cuts? Accountability, indeed.

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15. pete on February 3, 2011 11:30 PM writes...

@1 Anon

right on.

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16. entropyGain on February 4, 2011 12:46 AM writes...

Dinosaurs had small brains too--- where's an asteroid when you need one?

Maybe I'll make some money buying long-term puts on PFE...

As my kids would say..."what a douche!"

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17. partial agonist on February 4, 2011 8:27 AM writes...

Sooner or later you would think that big pharma would get the concept that 3 year or 5 year business plans are of limted use in an industry with longer discovery and product cycle times.

Every big shot wants his/her 3-5 year stint in which he/she does lots of spin to make the performance look better (especially in cutting jobs / costs), and then rides the golden parachute at the end. Then the plan is to hook on with another company.

Lather, rinse, repeat.

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18. any on February 4, 2011 9:06 AM writes...

Exubera was licensed in, not discovered in house. Most of the cuts are happening in discovery thus far. The decision to license in something is done by high managers who are likely keeping their jobs. Just sayin'

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19. CR on February 4, 2011 12:49 PM writes...

Don't forget, not only was Exubera a collosal failure - Pfizer paid Sanofi $1B for the sole rights to the thing. May be the only smart thing Sanofi's done of the past 10 years.

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20. A Chemist somewhere on February 4, 2011 1:12 PM writes...

The problem with most who work in the big pharma is for the most part they are idealess. They want a nice 9-5 jobs which are safe. Not that safe is it? When I did custom synthesis for these guys I use to laugh. How to turn a 6 step synthesis in 18. Give it to a medchem lab. You see for a productive research team you need diversity of thought. This means people that think in different ways. The problem is you can get into quite heated arguments. Sometimes a few punches can be thrown. The upside is non-starters are shutdown quick. Non performers are fired. Peoples feelings are irrelevant performance is everything. There is no place to hide. Big pharma wants 'team players' which is code for shut up and do as your told. It doesn't matter if what you're asked to do makes no sense. 10 years ago I spoke to the head of UK recruitment of one of the big pharma companies. I told him you need people like me, but I won't make it past the first interview. Apparently I'm not a team player. You see I like to finish the project I'm on. I call it like I see it. I've walked out on companies if they become pfizer-like. I don't tolerate stupidity or poor managers just facts and data. Research is like football, put the right players in the right positions, remove egos and have frank communication. Success is just a matter of time. The best chemist I have known never even had a PhD. Yet he distilled caesium in his basement as a teenager. Yes that's 670-ishC! His favourite comment was you can distill most things if your vacuum is good enough. Made pocket money in the then USSR by electroplating car bumpers. Made Grubbs gen II better than Grubbs based on TON studies performed by a big pharma company. Yet many with PhDs looked down on him. Big mistake! I have a PhD but after 5 mins chatting to this guy I concluded he was better than me! He was no cowboy he just knew the dangers and counter them. Every synthesis was run like a military operation. Failure was not tolerated neither was stupidity. I learned more working with this guy for 1 year then my entire education to that point. I'm not shocked that Pfizer is closing R&D sites, they're not performing. I saw this back when I was a custom syn chemist. Too many unwarrented egos. No delivery an and mutually assured back patting. When you walk into a pharma lab and see DCM bottles with flammable hazard stickers on you know you're in trouble! You could say the writing was on the DCM bottle.

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21. Marcus on February 4, 2011 1:50 PM writes...

@21..Amen to that, brother!

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22. Anonymous on February 4, 2011 1:51 PM writes...

@20.. Amen to that, brother!

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23. idiotraptor on February 4, 2011 2:17 PM writes...

A digression or sorts: I recall at a time past seeing a picture of Pfizer's envisaged insulin delivery device for Exubera. As an insulin-dependent diabetic, I was incredulous that anyone at Pfizer actually believed diabetics would carry around a large bulky device that resembled and was the size of a bowling pin or sex toy and stick it in their mouth to bolus before a meal.

Imagine a company meeting with someone explaining how patients would administer Exubera.

Woof, woof, woof, that's a great idea.

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24. Mock you too on February 4, 2011 2:39 PM writes...

@20 said "The problem with most who work in the big pharma is for the most part they are idealess. They want a nice 9-5 jobs which are safe.... you can get into quite heated arguments. Sometimes a few punches can be thrown."

I think I can see why that might be...

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25. Hap on February 4, 2011 4:50 PM writes...

Couldn't they have just plated the Exubera delivery device in steel or titanium and advertised it as a multi-self-defense tool for diabetics? They could even have modified it to deliver pepper spray - as long as you hit the right switch before dinner, no problems (and if you don't, dinner's probably a loss, so no problems there).

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26. anon on February 5, 2011 7:50 PM writes...

When you hear "I call it like I see it" from anyone, run. You are in the presence of a supreme a-hole. There will be zero discussion, collaboration or reasoning with the person.

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27. CR on February 8, 2011 3:44 PM writes...

@26, anon:

Couldn't agree more.

#20, A Chemist Somewhere, could be renamed a flaming #@$hole somewhere. What a crock of sh#t. Of course, those in the pharma industry are "idealess", medicinal chemists will take 3X the amount of steps needed, the best chemists distilled stuff in their basements as teenagers, they've walked out of jobs because they are just that damn good, blah, blah, blah. Mr. Know-it-all (#20) has spoken people, please listen.

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28. sinkinand smellroses on February 24, 2011 6:18 PM writes...

Pfizer and waste and brown nose staff. The real cost of YES men and follow the loudest voice is not just failed drugs but amazing loss of monies that are not even talked about. For years Pfizer merged companies and integrated th systems and then Hank came from the mountain and said we will have only one accounting system..... ORACLE... 7 years later and the disasters grew and grew..... another two years and BANG over 2billion dollars invested and now we are going to use SAP. Unfortunately all teh additional costs have also vanished. Marginal savings never happened and in fact using India for accounting and IT cost twice as much and then you add all the fnes because the accounts are screwed. Ten years later and billions of dollars later Ian Read states he is going to make people and units responsible for their existence. They will decide everything for themsleves and make money massive profits will drip from every pore.

Only problem is that they have to buy their accounting services, admin services logistics and IT and PR and advertising all from central sources and finally their products are all purchased at transfer prices set by New York. SUCH GREAT AND FANTASTIC RESPONSIBILITIES AND BUSINESS UNITS. Ian should be congratulated for taking Pfizer into a new age.

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