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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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March 2, 2012

A Response From Sanofi

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Posted by Derek

The large number of comments on yesterday's post on Sanofi CEO Chris Viehbacher's relentless candid interview included a response from someone at the company itself. At least, I have to assume that it is indeed Jack Cox, Senior Director of Public Affairs and Media Relations (as his LinkedIn profile has it), since the name and position match up, and the IP address of the comment resolves to Sanofi-US. I wanted to highlight his response - in the interest of fairness - and the responses to it, without having everything buried in the triple-digit comments thread to the previous post. Says Mr. Cox:

Anyone who has followed Chris in recent months will have heard some variation of these comments, but within the broader context that unfortunately didn't make it into the Q&A you reference.

Chris has consistently said that his vision for Sanofi's R&D organization is one of open collaboration, in which our own researchers increasingly partner with external teams. This is consistent with a comment you've included: "We're not going to get out of research. We believe we do things will in research but we want to work with more outside companies, startup biotechs, with universities."

In an interview with Luke Timmerman published by Xconomy in January Chris explained how this is working in practice:

"In Cambridge, you've got all those things. Being the No. 1 life sciences employer in Boston is great, but we didn't want to just do the same thing we did everywhere else, having everybody inside our walls. So we created this concept of a hub. There's a core, with a lot of competencies that a big organization can bring, but the idea of a hub is that we can manage the relationships we have with everybody from Dana-Farber Cancer Institute to Harvard to MIT to the Joslin Diabetes Center to some of the biotechs we work with. And we put our own oncology research team in Cambridge. There's a whole ecosystem in Boston, and we feel integrated and at the center of it."

Seeking external expertise, particularly when it concerns emerging technologies, contributes to the creativity and innovation we have within. The key to our approach, however, is that we don't want to simply be investors, but true partners. Again, consider the broader context as shared with Luke:

"The Warp Drive Bio project is interesting because it demonstrates where we want to go. It was very much on the basis of saying we want to work with (Harvard University chemical biologist) Greg Verdine. Someone like that isn't going to come work for Big Pharma, but we liked the science he was doing. We have a strong interest and expertise in natural products, and he had a genomics screening tool.

We will contribute expertise. I don't want to be a venture capitalist, or have a venture fund, like some other companies do. But I want to actually partner, where we bring some of what we know, and combine it with what Warp Drive has. The fact that we are trying to bring people from Sanofi into the collaboration, at such an early stage of research, is unusual. The single factor for success will be whether you can take a company like Warp Drive, with a handful of people, and make it work with an organization of 110,000 people without smothering it."

I believe your readers will agree that in this case the context really matters. Relying on one incomplete source doesn't do justice to the overall approach Chris has been describing.

If you want to truly understand the vision Chris has for Sanofi's research organization, I invite you to catch one of his public speaking engagements in the Boston area.

Kind Regards,

Jack Cox
Sanofi US

One has to wonder if the main difference between the two interviews was that Viehbacher spent more time considering his replies to Xconomy. I take it that since there's been no attempt to deny the earlier quotes in MedCityNews, that they're authentic. And the problem is, even some of his less popular statements in that interview are not false. It really is harder to innovate in a big company compared to a smaller one, for example. But while not false, they're also not the sort of thing one would expect the CEO of a major drug company to just blurt out, either, especially considering the likely effects of such statements on his own company's morale. I believe, in fact, that some current and (recently) ex-Sanofi employees have comments to make on that issue.

Comments (64) + TrackBacks (0) | Category: Business and Markets | Life in the Drug Labs


COMMENTS

1. Ex-Sanofi on March 2, 2012 3:04 PM writes...

I think what really enraged people was not the stated reality that it is more difficult to do research in a big company. That's sadly true. But saying this after you have been the CEO and done so much to prevent people from doing that research that you claim your company cannot do is presumptuous to say the least. It's one thing to say, "I tried, I failed and that's why I think this is the way to go", it's another to have actively worked against your employees' creativity and interests and then pretend to throw up your hands regarding your in-house capabilities.

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2. PharmaHeretic on March 2, 2012 3:11 PM writes...

Come on Derek..

Did you seriously expect him or his crony to give a damn about how the people who work in Sanofi feel? Guess what- in his megalomaniacal world they are just disposable cogs to help him swindle everybody else out of millions while talking in MBAese.

Unfortunately, his attitude is now the default setting for managers and CEOs- and had been so for almost two decades. This won't end till things literally go to hell

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3. Biotechtranslated on March 2, 2012 3:52 PM writes...

Am I the only one that read that and thought "huh?" The comments don't address any of the vitriol that Viehbacher's spewed about his own employees.

Let me translate this for everyone reading: "Stop paying attention to the bad things our CEO said and start paying attention to his new plan we have that will resurrect our company from the ashes!"

Mike

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4. DCRogers on March 2, 2012 4:02 PM writes...

I had a difficult time understanding what "broader context" Mr Cox thought we missed in our comments. Clear statements like "What Sanofi is doing is reducing its own internal research capacity" are not better understood after reading Mr Cox's supplied context.

As an aside, I find the modern presumption of using people's first names ("the vision Chris has...") dreadful. Professionals should be formal in reference, thank you very much.

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5. CMCguy on March 2, 2012 4:57 PM writes...

Derek thanks for citing Jack's (if I can call him that #4) position at Sanofi as I had surmised he was some type of PR Rep from reading the BS spewed. Simply confirms that looks like a lack of substance behind much of this as Sanofi clamors to link up with "names" to promote themselves (i.e. stockprice marketing via press releases) and still not sure what they will now bring to the table except "money" because direction from the top appears lost in a delusion.

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6. MTK on March 2, 2012 5:00 PM writes...

Jack needs to learn when to bluff and when to fold.

That hand he was dealt deserved to be silently tossed back to the middle.

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7. H2L on March 2, 2012 5:30 PM writes...

It is amazing that anyone would stay at Sanofi after BS like this from a CEO and more BS from an HR person who also must think everyone at Sanofi is an idiot. His comments did not do a thing to make the CEO comments sound any less rude and disrespectful to his research organization. Could this be part of the big plan? Is it cheaper for people to leave than to be fired with severance? Maybe Mr. Viehbacher is smarter than we all think.

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8. Curt F. on March 2, 2012 5:34 PM writes...

It really is harder to innovate in a big company compared to a smaller one, for example. But while not false, they're also not the sort of thing one would expect the CEO of a major drug company to just blurt out, either, especially considering the likely effects of such statements on his own company's morale.


Derek, do you think it is hurting your company's morale to have you admit that large companies aren't as innovative? If not, why not? Don't some of your colleagues read this blog? If it is hurting their morale (you think your own colleagues are less innovative than people at small companies!), shouldn't you have considered things more before you said it?

What other true facts about companies are unacceptable for a CEO to say, but acceptable for lower-level employees to say?

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9. H2L on March 2, 2012 5:50 PM writes...

Innovative does not equal success. Academics can be as innovative as they want and they are not going to develop real drugs. Drug discovery and development requires a balance of being innovative, rational, conservative, and smart. People need to get off the "let's all be innovative" kick.

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10. Hap on March 2, 2012 6:33 PM writes...

1) What drugs/ideas in pharma would be considered innovative? Where did they come from? Knowing that seems like a first step towards figuring out who is more innovative, why, and if innovation matters.

2) It shouldn't be wrong to say the truth as a CEO - if we can't accept the truth as employees or stockholders, then we're hosed. As #1 said, though, bemoaning a situation you helped in no small part to make unproductive and then saying you had no alternative but to take it apart and replace its pieces seems distant enough from either reality or responsibility as to be worthy of bile and contempt. As a lower level employee, I don't think Dr. Lowe's observation would be so bad - while it might be an uncomfortable truth (if so), he had little to do with it being a truth.

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11. anonymous on March 2, 2012 7:30 PM writes...

Seems to me that Jack Cox got the unenviable task of stuffing the shit back into the bull.

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12. Jac on March 2, 2012 7:41 PM writes...

#8: speaking from the trenches of Derek's company, no, his statements about big companies aren't hurting morale here. Most of us consider it to be a small company, and we still have a 'biotech feel'.

#11: what a brilliant expression. I hadn't heard that one before.

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13. Anonymous BMS Researcher on March 2, 2012 9:14 PM writes...

I too like that line, though in the Midwest where I grew up (what folks on the coasts call Flyover States) it would be "putting the hockey back in the horse."

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14. MACARONI on March 3, 2012 12:11 AM writes...

Before Mr Cox became a corporate shill for Sanofi he was shill for Elizabeth Dole responsible for media relations. Thank you Linked In. It's only fitting that he moved from anti-science RepubliKKKans to anti-scientist SSanofi. They must have loved his resume.

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15. Chrispy on March 3, 2012 12:26 AM writes...

I think a fundamental point is being missed: the industry shift away from basic research creates tremendous opportunities in the discovery sector. Innovation will now command top dollar because big pharma is not going to do it. The very interesting thing about Warp Drive's deal with Sanofi is that milestone-based purchase of the company is baked into the deal.

He's got a point even if it is impolitic to say it: innovation will happen outside pharma now. This is worrisome because some innovation requires more investment than we have mechanisms for outside of pharma.

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16. Marvin the Martian on March 3, 2012 12:33 AM writes...

We've heard this message repeatedly in many forums and I can tell you that we he speaks of are unanimously disheartened by Viebacher's comments. Very few of us feel there's much hope of a future for science at Sanofi. He should worry about losing talent but with little respect for us this probably wouldn't occur to him. Diminished motivation? check. Decreased employee engagement? check. Top talent looking for other opportunities? check. Nice job. He can keep a few trolls around who can't find alternatives to do validation work for him. Good luck.

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17. Anonymous on March 3, 2012 1:46 AM writes...

How does a CEO with an accounting degree have a "vision" for R&D? The guy's a CPA. I'm sure he knows next to nothing about science but it's "HIS VISION" according to the guy up above? There's a clear distinction between a vision and a fantasy. And shooting yourself in the foot before you start the race isn't exactly a brilliant plan. Call your old boss about how that Sirtris deal worked out.............

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18. Anonymous on March 3, 2012 2:28 AM writes...

I am a natural product scientist not working at sanofi (lucky I am!).

Did he say "We have a strong interest and expertise in natural products" in this other interview? Then I wonder if he had spend more time thinking on these answers.

Sanofi has decided to completely close down its Natural Product Chemistry group in Frankfurt. In the next weeks, all the ~25 scientists remaining in this group are either relocated to production, QC/QA or whatever, or set free.

If you have a strong interest and expertise in a field - then why are you eradicating the one group that followed this research?!

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19. Mahboob on March 3, 2012 3:25 AM writes...

Companies such as Sanofi have long run after experience when looking for good employees, instead of actually looking for ability to innovate and solve problems.

Innovators4Hire and Innocentive is where they need to look at if they plan to succeed in the future.

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20. DCRogers on March 3, 2012 10:24 AM writes...

Taking the strategy of outsourcing innovation at face value, I thought the following quote was revealing:

The reality over the last 10 years is, (a small biotech) wouldn’t get caught dead working with one of these big cumbersome pharma companies. Once you have a funding gap, suddenly there’s a much greater willingness of earlier-stage companies to work with Big Pharma.

The story on the biotech side is that funding has been very hard, indeed; but that when talking to Big Pharma, their "partners" barely look at the technology: all they want to see is the capital structure, so they can offer investors a chance to cash-out, no gain.

They have been talking up outsourcing R&D, at the same time, decimating investment in biotech by screwing past investors. It's been effective -- at curtailing new investment in biotech.

All this is far off of the research activities I care about, but I will note that an unhealthy financial ecology can only lead to more future die-offs. Having small firms who only want to "partner" due to desperation is not a good sign.

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21. MidniteCowboy4Pharma on March 3, 2012 10:27 AM writes...

Everything I need to know to survive in Pharma, I learned from Blaxploitation films.

I've worked in academic and biotech labs where the singular goal was attract a Sugar Daddy and get rich without doing the hard work. You know, prostitution. We're not talking DC Madam/David Vitter hooking, more like "don't worry honey, them's just razor bumps."

The research is exciting and full of potential, but usually there's nothing for sale in academia but big dreams that even the NIH wouldn't touch, or biotech smoke and mirrors. Sort of like Broadway or Hollywood Boulevard are to a Midwestern runaway.

One of the more alarming aspects of Pharma's "Easy Rider" approach is that it abandons the idea of iterative discovery completely. It's unlikely that there will be any patience for continued pursuit of near misses, even though they happen in the early stages of all successful drug programs. Instead, these much cheaper failures will quickly be dropped in favor of the next flavor-of-the-month target, with little or nothing learned from the experience. No such thing as a Rounder in the Pharma stable.

Sanofi is the first to openly advertise it, but Pharma's labs are now nothing more than Fleabag Hotels. The key to keeping your job will be to "stay on the case" as long as possible, then shoot for role of a Housemother or Cadet, 'cause the Mack Daddy can be one Cold Blooded dude.

I'd love to talk more game, but I got's tricks to turn. Catch you on the flip-flop, Outlaws...

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22. eugene on March 3, 2012 10:52 AM writes...

That CEO is an idiot and should be fired. Who is in charge of firing CEOs anyways? The should get on that. Reminds me of Dan Pink's TED talk on what really motivates people to innovate. Directly relevant to scientists in creative positions. At the end he mentions that CEOs are not immune from the same forces and its obvious that really high salaries are causing them to perform very sub-par. As is obviously the case with this Cowditch, sorry I mean Viehbacher, fellow.

hxxp://www.ted.com/talks/dan_pink_on_motivation.html

(replace the xx with tt)

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23. Anonymous on March 3, 2012 12:01 PM writes...

"So we created this concept of a hub": does anyone else get fed up with the endless mendacious bragging of poltroons like this?

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24. newnickname on March 3, 2012 12:45 PM writes...

I can't address each and every point in 100+ comments (both topics) that I'd like to, so I'll just wing it.

Industry USED to foster innovation (DuPont Central Research RIP; Bell Labs RIP; Merck (GEORGE Merck) RIP; GE RIP, Kodak RIP, Polaroid RIP, ...) but the new MBA business models killed all that.

When we (research scientists) propose ideas / experiments, maybe it costs $10k-$1MM and takes 0.5-5 man-years to test it out. If it fails, we are blamed or held accountable. When MBAs propose their EXPERIMENTS to restructure entire companies and ways of doing business that cost billions of dollars involving millions of man-years (large companies that used to have 100,000+ employees x 10 years) and their EXPERIMENTS fail, it's the fault of someone else, the non-innovative low-life employees, who get the heave-ho.

Big Pharma would rather put billions into a risky EXPERIMENTAL business plan than one million into the early test of a new idea to make a real drug.

Put [Greg Verdine] (insert any other "innovative" -- gagggghhh -- academic) in these current research climates and they're dead, treated like any other fungible resource-draining schlub hacker who will never make a drug or enhance the bottom line. It's money the MBAs see better spent on deluxe extra soft toilet paper to improve the "bottom" line in the executive washroom.

How many industry guys do I know who can claim (and in some cases prove with formally rejected written proposals) to have had PHENOMENAL ideas long before the "academic elite" came up with them? In some cases, I wouldn't be surprised if the flow of innovative ideas was industry-TO-academic via consultancies or former students talking with their former PIs (i.e., unacknowledged rip offs). In fact, one case comes to mind immediately.

Yes, the drug disco environment (FDA; double-blind trials didn't become the norm until the 1960s!!!; costs; etc.) aren't the same today as they were for Merck in 1955. But scientists weren't treated like chattel and there was more support for innovative ideas.

I've got more, but all of this is making me sick. Any Big Pharma have a pill for that?

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25. Anonymous on March 3, 2012 12:54 PM writes...

Come on, does anyone here really doubt that better science often gets done through collaboration? A big contributor to the industry's decades-long productivity decline has been the foolish adherence to the belief that compartmentalizing knowledge (through IP practices, corporate structures) would actually improve discovery. Perhaps despite himself and quite accidentally, Viehbacher's comments actually contain some ideas worth considering.

As for the arrogance of finance/marketing types emplaced in corner offices based on their claim that they have some magic formula for running R&D and the gullibility of those who support them, I concur with Anonymous #23: I AM fed up with the endless mendacious bragging of poltroons like this. That's the real, ongoing tragedy of all this.

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26. Rick Wobbe on March 3, 2012 1:16 PM writes...

@#24 newnickname,
You raise some points well worth considering. It has become fashionable to say that industrial R&D is not capable of being innovative, despite ample historical evidence to the contrary. Unfortunately, in order to secure funding, it has become a necessary part of the narrative to disregard or dismiss this. The idea that "old" approaches, like giving experienced researchers more authority, could help solve "new" problems is reflexively rejected by those with money (=power). Moreover, science-y sounding justifications for rendering past successes irrelevant - like "they were picking the low-hanging fruit in the those days" - and people with more powerful sounding names - like "thought leader" - constantly reinforce this tendency to reject serious, honest historical reflection as if it were just wistful thinking. We could use some "back to the future" thinking.

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27. Ed on March 3, 2012 1:17 PM writes...

Viebacher obviously hasn't been keeping up with his reading - the latest McKinsey Quarterly has the article "How Leaders Kill Meaning at Work".

....we argue that managers at all levels routinely—and unwittingly—undermine the meaningfulness of work for their direct subordinates through everyday words and actions. These include dismissing the importance of subordinates’ work or ideas, destroying a sense of ownership by switching people off project teams before work is finalized, shifting goals so frequently that people despair that their work will ever see the light of day, and neglecting to keep subordinates up to date on changing priorities for customers.

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28. Boss Hogg on March 3, 2012 2:04 PM writes...

Ahhhh, PR backpeddling. I am sure Chris is in some consultant Pygmalion program attempting to teach him how to be human.

Derek, I think an organized and crafted response by AZ is testament to your blog's influence. Rock on bro.

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29. Anonymous on March 3, 2012 7:29 PM writes...

So AZ is funding "Warp Drive Bio" in order to access its "genomic search engine" technology. The key to the deal was Warp Drive founder Greg Verdine, who previously founded Aileron to exploit his "stapled peptide" technology.

I wonder whether Aileron was a success. Do they have a drug in the clinic? Have stapled peptides in general led to anything of practical value?

The answers to these questions might provide some insight into the value of a "genomic search engine."

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30. Anon on March 3, 2012 9:21 PM writes...

#11

Seems to me that Jack Cox got the unenviable task of stuffing the shit back into the bull.

you have just given the world a wonderful phrase that's far more colorful than "spin control."

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31. Anon on March 3, 2012 9:23 PM writes...

#17

There's a clear distinction between a vision and a fantasy.

And a hallucination.

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32. HappierElsewhere on March 3, 2012 10:59 PM writes...

#15: @Crispy - Yes! This was my thought as a researcher at GSK and at another major pharma as they pulled out of research in favor of buying things: they're going into the market to buy things (programs, compounds, products) that don't exist on the scale that they need them. The only hope they have is "if we pay for it, they will come". It may take a more explicit approach than waving money to get something useful (Sirtris, cough, cough). It doesn't seem the marketeers have a good record of picking winner so far.

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33. HappierElsewhere on March 3, 2012 11:00 PM writes...

#15: @Crispy - Yes! This was my thought as GSK and other pulled out of research in favor of buying things: they're going into the market to buy things (programs, compounds, products) that don't exist on the scale that they need them. The only hope they have is "if we pay for it, they will come". It may take a more explicit approach than waving money to get something useful (Sirtris, cough, cough).

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34. LJStewartTweet on March 4, 2012 3:20 AM writes...

#18 makes an interesting point. Sanofi cutting its own natural products experts. So how is Sanofi going to be able to properly assess the external collaboration output in natural products? I guess they will retain a couple of experts .

All this change in Pharma can be explained by simple microeconomics. The cold hard truth is that big Pharma cost structure together with risks associated with drug dev means that the absolute advantage on the marginal cost of innovation belongs to smaller start ups. Pharma no longer can economically justify internal early R&D. At the same time, Pharma has to purchase these assets or they won't have products in the future.

Change is never easy, and it's maddening for a lot of displaced people. They want to lay blame. But it's not as simple as taking a sound bite from a CEO and using it to fuel the madness. Because of the economics involved, Pharma CEOs have no other options, they are just running the calculations in the physics of the universe and making obvious needed changes.

That said, it seems like the Pharma cos would be better to come out and just level with internal staff and avoid endless incremental repeated cuts. And also show a little more compassion.

Why doesn't Pharma foster internal innovation by offering to spin out any good seed idea? I bet there are a bunch of Verdines at Sanofi that would love the chance to start up a new biotech with help from the CEOs office.

Welcome change and use it to energize a new landscape for discovery. We all have to figure this out together to do what we all got into this for. To help the sick.

In the Pipeline is a major positive force in this regard. Thank you David for your blog.

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35. AlwaysOwnedIt on March 4, 2012 9:02 AM writes...

@#34. Your last line is the key to the puzzle. Since at least the mid-80's, when DTC Rx drug ads were allowed, drug development has not been about helping the sick. Instead it has been about helping the shareholder reap among the highest consistent returns of any industry that doesn't make killing machines. We, as shareholders, and Pharma exec's have instead been in search of large stock dividends and that next massive bonus. We have killed the Golden Egg layer. The patient is an afterthought.

Embracing change is no doubt the solution, but figuring out different ways to make Pharma a more successfulu Marketing/Finance machine isn't change in my book.

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36. Rick Wobbe on March 4, 2012 10:07 AM writes...

34 & 35,
Until someone finds a way to usefully incorporate patient well-being into the simple microeconomic analysis LJ refers to, the "cold, hard facts" will always place near-term shareholder monetary return above the patient, hoping that patient well-being will "trickle down", to use a favored macroeconomic theory.

For an interesting, macabre illustration of the limitations of microeconomic analysis, try the following: assume you're a Ph.D. pharma biologist in your 50s who was laid off a year ago and still hasn't found a permanent job, then run a risk-adjusted NPV analysis on yourself. If you don't conclude that suicide with a life insurance payout is the best course of action for your "shareholders", you made a mistake somewhere. Now, ask yourself exactly why that seems wrong with respect to your own well being, but something similar is de riguer in the case of the patient's well being.

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37. anonie on March 4, 2012 11:32 AM writes...

Here is a CEO who actually is trying to be more honest than many others as to his vision and intent. Isn't this something that has been a topic of this and other blogs in the past? And yet, Derek with many of the reponders, show clear hypocracy in attacking Viebacher when the same authors will routinely complain about management's lack of honesty and transpancy.

Yes, the industry continues to change, companies are trying different financial and investment approaches to R&D in looking for more effective strategies to new income sources (eg new profitable drugs), business consultants tout their latest or rehashed models for efficiency---none of which can ever capture the unknown, unpredictible nature of "creative innovation. The changes are disruptive to current R&D models, jobs, comforts. These are now "givens", so it's time to get used to it, and start trying to find solutions rather than simply being critical.

It's also going to turn-out that most of the current changes will not be any more successful, but maybe, just maybe, some will succeed. Isn't this what happens when markets come under increased pressure to change? And history has taught that some simply can't change enough to be what they were in the past....their glory years are past. It is my own contention that traditinoal Pharma is in an approximately two to three decade long decline...so get used to it.

It may be time for individual reality checks: take a good look in the mirror and see if there may be a large hypocritical elephant staring back at you.

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38. R.PAL on March 4, 2012 12:15 PM writes...

What SANOFI CEO SAID IS NOTHING NEW .

“Big and “innovation”are not two words we usually put together.‐Kevin Sharer CEO of Amgen

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39. Quo vadis, Sanofi-Aventis? on March 4, 2012 1:15 PM writes...

Let me revise my earlier statement:

Chris Viehbacher + Jack Cox = Tools Extraordinaire

Perhaps this apologist's rebuttal would be more convincing if he claims that English is not Viehbacher's first language, hence resulting in mistranslation of certain statements.

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40. Usaywot? on March 4, 2012 3:54 PM writes...

@34: "how is Sanofi going to be able to properly assess the external collaboration"? It doesn't need to. All external collaboration will be judged a complete success for as long as the people who kicked it off are still in their jobs.

"absolute advantage on the marginal cost of innovation belongs to smaller start ups". I don't think so. As yet I've heard nothing to suggest that this "innovation" will cut late-stage attrition which is the ONLY significant cost in R&D. In fact the evidence I've seen with my own eyes suggests that on average (obviously not in every case) they are going to make it worse.

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41. Anonymous on March 4, 2012 7:36 PM writes...

OK, yaaa, go ahead and outsource all your research to China. All you'll get back is crap!! Gaurenteed! This CEO seems to have an arrogant edge based on his comments. This should mark the demise of Sanofi-Aventis as we know it. Who in there right mind will want to go there after reading these comments....even anyone outside of science?? If he says these things about educated scientists then I wonder how he feels about the cafeteria folks, cleaning people, accountants, engineers, office staff etc...

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42. Cellbio on March 5, 2012 10:43 AM writes...

@#8

Here is the way I think it should work, but I know I am in the minority, so not going to say it is right.

A high level leader sets direction, motivates and defines goals, achievable goals, even if somewhat removed from reality in the extreme aspirations.

Technical staff then should engage the ideas in a manner that includes unflinching courage to call out pure folly. Importantly, one can't create a system where predicting failure without ever executing is rewarded, as occurred with fail fast strategies.

Finally, middle level managers should be the meeting point where strategy and execution intersect and enable clear decision making, where execution is rewarded, and it is safe to fail and career recognition is based on informing solid decisions, regardless of program advancement or termination. In my opinion, this is the place where higher level "leaders" who lack credibility or experience have gutted their organizations. Solid scientist managers willing to stand up and say, nice try but the idea failed, or how about, don't buy those assets for $750MM, are either silenced, or worse, shown the door after being labeled as non-team players, dead wood etc. In their place now we are more likely to have folks whose greatest attribute is managing their bosses perception of them rather than managing a productive execution of research strategy.

So, in proper forms, and informed by data, it is OK for scientists to say things that leaders should not, and important that the leaders thank them for the clarification of reality.

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43. Ed on March 5, 2012 10:54 AM writes...

Cellbio, totally agree. The article "Why bad projects are so hard to kill" by Isabelle Royer describes what you are outlining and how to avoid it. Should be compulsory reading for every mid-level R&D manager!

I almost laughed out loud at some points that described situations nearly identical to what I experienced in my previous job.

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44. matt on March 5, 2012 1:11 PM writes...

The comments are interesting. Just like to make few points. It is a free country and Sanofi scientists should just leave the company if they feel that they are mistreated. Everybody should already figure out that Sanofi and the big pharma have been in a hole for quite some time. The truth is that the leftover employees in any distressed company normally have less value.

The CEO just made a point. Sanofi need to rely more on the outside partners for early development and he just like to take Sanofi back to the focus of late development and marketing. Maybe he is correct after Sanofi RD did not produce enough after burning through billions of dollars.

What is wrong with those MBAs ? Maybe everybody with a PhD should go to take some business classes before speaking against the MBA.

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45. okemist on March 5, 2012 2:05 PM writes...

I think our industry is in serious trouble, and not just any one company. The industry as a whole, big and small companies are trying to turn after hitting the iceberg, and no one has the awnsers to make it float. I think the CEO is going to take a lot of abuse no mater what he says, he has to say something and none of it is going to fix anything. While I'm at it, I would just like to take a shot at acedemia, all the free thinking innovation in the world is not going to get a molecule through the ten or more years of discovery and development needed to reach approval of a new treatment. The huge labor intesive path to an approval can really only be done by a fairly large organization. I certainly don't have awnsers, but we all face many difficulties in our line of work that make it challenging and rewarding if we have any success.

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46. CMCguy on March 5, 2012 4:07 PM writes...

#44 Matt says "Maybe everybody with a PhD should go to take some business classes before speaking against the MBA." Knowing a number of PhDs who subsequently got MBAs it seems getting a "science lobotomy" is a prerequisite to granting the latter. While the case studies and models in MBA may have good principles and application for many types of businesses there does appear a substantial disconnect when it comes to Drug R&D. Several commentators have mentioned CEO should be Leaders and prime Culture setters but today seems only be mostly herd-followers which means next Q-profit boosters so is not compatible with much of what goes on in labs. Admittedly Scientists are in general not the easiest types to direct effectively however highest caliber "talent" for innovation and implementation used to be core to what Pharma was all about, with collaborations being sought motivated by mutual interests in potential to translate by joining strengths (and not just financials). Pharma is definitely hurting, largely by multiple self-inflicted wounds, but the Sanofi CEO approach smacks of shooting holes in his life-boat then hope some one in a raft comes by to toss a life-preserver to you.

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47. David Formerly Known as a Chemist on March 5, 2012 5:39 PM writes...

#46 CMCguy said "Knowing a number of PhDs who subsequently got MBAs it seems getting a "science lobotomy" is a prerequisite to granting the latter."

As a PhD who subsequently earned my MBA I can assure you a science lobotomy is not a prerequisite for the latter degree. I love how so many people on here take the position that a non-science professional is ill suited to run a research-driven organization, but have no problem believing they have all the skills required to run a business, and second-guess every management decision that gets made. I'm sure there's a smidge of truth to both, but both are gross generalizations, as was your statement.

Believe me, the best thing I ever did for myself was to get my MBA. Unlike my graduate school experience, business school exposed me to a very, very diverse group of people working in a very, very diverse set of industries using multiple approaches to frame and solve problems. It was a refreshingly different experience than my PhD training, in which I was surrounded by a hundred other chemistry PhD candidates all taking the same few classes, learning the same skills, memorizing the same reactions, practicing the same quantum mechanical calculations they'd never use again, etc. My combination of science and business training opened many career paths for me that never would have existed with just my PhD.

But back to Viehbacher's interview...pretty poor choice of words to say the least.

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48. Hap on March 5, 2012 7:13 PM writes...

44: Can you explain how focusing on late stage projects is a helpful strategy? It seems relatively easy to come up with ligands for an enzyme, and another thing entirely to make a drug that treats a disease. The latter, I think, is what people actually call developing a drug, and from all accounts, it is by far the most expensive and least predictable part of the process.

Sanofi's business model as stated gets initial drug leads and candidates from other places and develops them into drugs - it thus seems to take the cheapest part of the process and moves it elsewhere, and pays a chunk of the revenue generated if a successful drug is found, and takes in the part of development that generates the greatest costs. In addition, you lose the internal knowledge that might allow you to make better candidates and to lower your probability of failure (and thus to lower the effective development costs) and are not going to have the knowledge of potential candidates to decide which is most likely to succeed (because the outside source has obvious and large financial incentives to minimize exposure of negative data). That doesn't even count the loss of leverage in deals to get candidates (or the need to bet on many more candidate companies at an early stage to avoid bidding wars with other pharma companies).

It doesn't take an MBA to figure out that something doesn't compute here. What is it? On the surface, this appears to be the pharma version of "package a lot of risky loans correlated to the housing market together and they will become less risky". Why is Sanofi's plan better than that?

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49. Usaywot? on March 6, 2012 5:50 AM writes...

48: Well summarised. This is the whole flaw in the currently trendy big-pharma researcher-bashing buy-in-everything model. I only hope there's something left when the next big idea comes along.

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50. Anonymous on March 6, 2012 9:31 AM writes...

What I don't understand is that big pharma have for years offered the best salaries, benefits and state-of-the-art facilities in order to attract the best people for the job.

Yet now they're basicly saying that they could never attract anyone good and they all went into academia or the small companies not paying the best money.

I can certainly understand why not many smart people want to work for big pharma now, as they'd probably like to keep a job for more than 2 years but, but certainly not 10-15 years ago.

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51. Anonymous on March 6, 2012 9:35 AM writes...

@Hap, 44,
Maybe this is too arcane and too far off point, but your last paragraph raises an interesting idea. A major flaw in the bundling of mortgage backed securities was an assumption, hard wired by the quants into their financial models, that individual mortgage failures would be statistically independent events, which led them to grossly underestimate the risk of systemic failure. Many economists believe that that one bad assumption was the single most significant contributor (other than greed) to decisions that led to the crash of '08.

I wonder if Pharma strategists aren't making a similar error, thinking they are de-risking research by "diversifying their portfolio" - in this case essentially throwing a big chunk of their discovery research into the yeasty frothy ferment of academics and start-ups - when in fact they're going all-in on a large number of highly related risks. Although the short term money invested at the research stage is relatively small, thus making the financial risk seem small, the longer term cost of misdirected time and money would be huge. One example of this might be the disappointing performance, thus far at least, of discovery programs based on genomic target validation.

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52. maxanon on March 6, 2012 10:43 AM writes...

I think that until someone is able to solve the issue of declining revenues for innovator pharmaceutical companies, this type of desperation is going to dominate. Discover the solution and the number of consultations will drop.

What is the solution to the lack of true blockbusters? Are there any real remaining mega (in terms of revenue) targets that don't already suffer from competition (from generics or current products) and pricing policies and large trials, etc.? Do large pharma employees suffer from entitlement? Are they hungry?

My understanding is that there is expected to be a serious contraction in the number of large pharma companies (more than we currently see) over the next 5 years and everyone is desperately trying to survive the slaughter to emerge stronger.

With all our scientific acumen (or brute force knowledge attack), the low hanging fruit were plucked quite well. Now, is it the agile start-ups or the resource-rich large pharmas that can reach the upper branches?

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53. Hap on March 6, 2012 1:52 PM writes...

I don't know if they're related or not, but they could be.

Academics are likely to have common training and (perhaps) character traits that may make their projects susceptible to similar flaws. Another potentially correlated risk might be external funding - if scientific funding is cut (to reduce the deficit or to spend on SSI, professors may not be able to achieve the same results with the funding they get from companies (grants are supposed to be segregated, but...), and since most depend on NIH, NSF, or other gov't funding, lots of research groups would be susceptible to it. A third risk would be that people get discouraged by the length and decreased employability of scientific training and decide to do other things, which would either raise the cost of research or reduce the productivity of research groups. All of those risks would be common to most academic groups and might affect the rates of generation of results or useful startups.

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54. matt on March 6, 2012 2:12 PM writes...

48. if we only talk about one compound in early discovery, the cost for early phase discovery/development is certainly lower than that of one late stage trial. But the research has demonstrated that approximately 50% of the R&D cost in large-pharma are spent on the early phase research. The point is that Sanofi is testing the water just as every other big pharma does.

51. good point about the risk. Biotech VC routinely takes this path of investing though. As long as the projects are isolated and carefully vested, the risk should be manageable. We are not talking about those derivatives yet (maybe we should invent a financial instrument like a derivative on clinical trials :)).

The CEO's choices of words might be questionable though.

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55. Hap on March 6, 2012 3:54 PM writes...

Do you have a reference for the "50% of research costs are in early-phase research"? That would change things some - if that much of drug spending is in the early phases, you'd like to figure out where all the money is going and how to cut costs without impinging on your ability to generate good drug candidates.

The problem, of course, is that you lose information on the quality of your candidates, and that seems like the kind of information you need to develop drugs. Also, there will probably be fewer people to do the work of finding the drugs in the first place (just as I'd figure there'd be fewer pilots willing to work for $40K and a harsh schedule than at $80K and an easier one).

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56. DrSnowboard on March 7, 2012 11:33 AM writes...

I remember being in the audience at GSK Stevenage when we were being told the future of all small molecule research was diversity / combichem to give single bead screening. Mike Hann stood up and wondered that "if you're looking for a needle in a haystack, the solution would be to use a magnet, not build a bigger haystack...?" This comment seems to me to apply to the rush to buddy up with academic labs for their target expertise. There is still no certainty Big Pharma (or anyone) has a suitable magnet to work out if they are going to be clinical successes...

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57. Rick Wobbe on March 7, 2012 12:51 PM writes...

@Hap #55,
I know your question was directed at Matt, but I'll stick my nose in anyway. According to PhRMA's latest industry profile (http://www.phrma.org/sites/default/files/159/phrma_profile_2011_final.pdf), 25% of R&D spending by it's member companies was allocated to Prehuman/preclinical R&D. If you add in Phase I (basically everything prior to PoC), the percentage is 33%. Bear in mind that this includes ALL R&D, not just the R&D that went into a successful drug, so most of the early outlay went to "failures". It's less than 50%, but still a large number. Perhaps Matt was including additional sources that PhRMA didn't include.

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58. Hap on March 7, 2012 1:50 PM writes...

No, that's cool. At those rates, it's not the slam dunk I thought - you'd have to gather enough data to decide whether getting candidates from outside would cost you more in late-stage costs than the money you would save by getting them externally over developing them internally. I would still figure you'd have a better shot developing them inside unless your process is really bad (or information is heavily stovepiped - by divisions in competition for money and power) or your external knowledge is good.

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59. Anonymous on March 7, 2012 9:05 PM writes...

@57 - interesting stats.

I wonder if 'preclinical R&D' includes consumer market research to determine the diseases to investigate (or unfortunately what disease areas to exit). In consumer products, it seems that a lot of 'R&D' investment goes to activities that most scientists would classify as a marketing investment. What are your consumers' preferences? What do they want? If half that money went to real scientific research they might have something that would not require such large expeditures on marketing.

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60. LRLalum on March 8, 2012 8:22 AM writes...

In 1990, Mel Perelman stood up in front of an LRL town hall and proclaimed that Lilly was planning on phasing out insulin sales by Y2K. There would be no need for proteins at all! I believe the exact quote was "There's nothing that's done by a protein that can't be done by a small molecule."

His advice to me as a newly minted biochemist? (Paraphrasing) "Run as fast as you can from antibody drugs, they're a dead end."

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61. LRLalum on March 8, 2012 8:49 AM writes...

@RW #57
You mention that "25% of R&D spending by it's member companies was allocated to Prehuman/preclinical R&D." First, I didn't see that value in the linked document, but it's early and the caffeine hasn't taken yet.

Second, IMO, the quoted number is a bit biased in that it only includes PhRMA members, whose organizations likely have higher overhead resulting from factors that are independent of research expenditures per se.

Lastly, in the current "exploit the taxpayer/academia" risk management strategy, in-licensed compounds and targets will likely primarily be pre-clinical, and will come with the fixed costs of mandated, regulatory-compliant ADME and Toxicology studies. Given that, is gutting target discovery and validation really going to save that much money, or is this all just a ruse to dispense of Western Pharma R&D altogether in favor of (currently) cheaper foreign labor?

It would be helpful if someone had been tracking the number of failed biotech start-ups of academic origins over the same time period.

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62. Rick Wobbe on March 8, 2012 9:17 AM writes...

@LRLalum, #61,
The numbers are in a table in the appendix.

I'm glad you seized on the "member companies" bit; I pointedly included that qualifier. I will see you and raise you on your point about that: There's no way to verify those numbers because they're based on self-reports from the members, which PhRMA takes at face value despite their coming from widely varying accounting systems. Moreover, there's no way anyone can see the raw data because publicly available data (detailed accounting books) are not available. But this is the best I've been able to find.

Enjoy your coffee!

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64. Adrian on January 12, 2014 7:46 AM writes...

Knowing someone who has been at this "Company" through all it's changes and each time been on the chopping block yet needed for his ability not only due to PHD. as a Researcher yet never really able to do is job but rather sent out as the
token American to get Grants so this company can continue to cut out the America and continue with $$$ ..

I Have watched this person go from ambitious and young , writing papers published in journals , coming up with techniques on how to inject rats to a lackey of sorts and his ability to lead his teams chipped away ..

Now the word is again this issue of NWO , a new world order with no regard for research but to contain all people in one place .. Boston ??

They see people lose jobs , they hear no word of what is coming and this is how you treat a Head of a Department ??

As an outsider I think it is a crime that the French used him and now the Germans .. What is this called ?? These people went to school and poured their lifeblood into this so that can help PEOPLE ..

Bottom line is always the dollar .. Sad ..

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