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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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April 25, 2012

Drug Company Culture: It's Not Helping

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Posted by Derek

I wanted to call attention to a piece by Bruce Booth over at Forbes. He starts off from the Scannell paper in Nature Reviews Drug Discovery that we were discussing here recently, but he goes on to another factor. And it's a big one: culture.

Fundamentally, I think the bulk of the last decade’s productivity decline is attributable to a culture problem. The Big Pharma culture has been homogenized, purified, sterilized, whipped, stirred, filtered, etc and lost its ability to ferment the good stuff required to innovate. This isn’t covered in most reviews of the productivity challenge facing our industry, because its nearly impossible to quantify, but it’s well known and a huge issue.

You really should read the whole thing, but I'll mention some of his main points. One of those is "The Tyranny of the Committee". You know, nothing good can ever be decided unless there are a lot of people in the room - right? And then that decision has to move to another room full of people who give it a different working-over, with lots more PowerPoint - right? And then that decision moves up to a group of higher-level people, who look at the slides again - or summaries of them - and make a collective decision. That's how it's supposed to work - uh, right?

Another is "Stagnation Through Risk Avoidance". Projects go on longer, and keep everyone busy, if the nasty issues aren't faced too quickly. And everyone has room to deflect blame when things go wrong, if plenty of work has been poured into the project, from several different areas, before the bad news hits. Most of the time, you know, some sort of bad news is waiting out there, so you want to have yourself (and your career) prepared beforehand - right? After all, several high-level committees signed off on this project. . .

And then there's "Organizational Entropy", which we've discussed around here, too. When the New, Latest, Really-Going-to-Work reorganization hits, as it does every three years or so, things slow down. They have to. And a nice big merger doesn't just slow things down, it brings everything to a juddering halt. The cumulative effect of these things can be deadly.

As Booth says, there are other factors as well. I'd add a couple to the list, myself: the tendency to think that If This Was Any Good, Someone Else Would Be Doing It (which is another way of being able to run for cover if things don't work out), and the general human sunk-cost fallacy of We've Come This Far; We Have to Get Something Out of This. But his main point stands, and has stood for many years. The research culture in many big drug companies stands in the way of getting things done. More posts on this to follow.

Comments (36) + TrackBacks (0) | Category: Drug Industry History | Life in the Drug Labs | Who Discovers and Why


COMMENTS

1. DJ DrZ on April 25, 2012 8:10 AM writes...

I think his column is brilliant, spot-on, and nothing that people in pharmaceuticals haven't been saying to each other for years. Plus ca change...
The only way to change the culture is to pasteurize and re-inoculate. Everyone knows once you are ExecDir or above you always stay that level or above, no matter your level of incompetence. To paraphrase the Bard: First kill all the executives.

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2. Somite on April 25, 2012 8:24 AM writes...

Isn't it obvious that the problem started when economists and business people took over the industry. Things would be different if scientifically capable people made the decisions and the goal wasn't the next bonus round.

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3. Publius The Lesser on April 25, 2012 8:31 AM writes...

To paraphrase the Bard: First kill all the executives.

And then what? While emotionally satisfying, the sentiment behind "kill all the executives" isn't particularly helpful. Like it or not, someone has to run the show, including all the unsexy things like advertising, sales, market research, HR, accounting and the rest you need to actually run a business. The problems described in the article aren't just peculiar to pharma. They infect every large organization and are the result of the limits of human knowledge and communication. If you're so certain that dispensing with "the executives" is the key to success, then raise some capital and start a company run by its researchers. I can assure you that if it gets larger, it will start suffering from the same pathologies as every other big company.

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4. Calvin on April 25, 2012 8:39 AM writes...

I may not always agree with Dr Booth but I think the article is indeed pretty accurate. There's no amazing insight over what has been discussed here on many occasions, but it's nicely articulated and in a publication where it might get some attention outside of the regular sphere. I do have a few points though. The "Stagnation through risk avoidance" issue isn't as well stated as it might be. Sometime, it does take an age to generate that killer bit of data or to get that candidate and it's not easy to tell the difference between a turkey of a project or one that just needs extra brew time. I've been on both. More frequently I'd say the problem is where decisions to do nothing get made; the non-decision approach. It's the the, "if I do nothing, make no decision of any sort then I won't fail" culture that is really damaging. Both in terms of cost and wasted effort. In my previous organisation where we had the pain of dealing with a large pharma owner we observed not just arse covering but armour-plating of said massive arse. The thing is, absolutely everybody knows that there's a culture problem, but nobody is doing anything about it. Painful

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5. Barry on April 25, 2012 8:52 AM writes...

"Projects go on longer, and keep everyone busy, if the nasty issues aren't faced too quickly"....
Facing the nasty issues is where "falsifying the hypothesis" meets the road. If we're not doing this, we're not doing science. The opportunity cost of not killing a loser early has pushed the cost of new drugs over a $billion. That in turn means that only blockbusters are worth even trying.

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6. RB Woodweird on April 25, 2012 9:04 AM writes...

I can't link to it today because the corporate overlords have again blocked YouTube, but search out the short animations about Trustus Pharmaceuticals. There is one about the panic they go into when one of their products is actually going to market.

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7. Anon on April 25, 2012 9:31 AM writes...

Does anyone believe this has to do with what a researcher is valued at? If people were valued more (which isn't going to happen anytime soon based on the unending layoffs), maybe their insights would be valued more. Maybe they could speak up without fear of being next on the chopping block?

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8. smurf on April 25, 2012 9:33 AM writes...

Instead of culture in general I would focus on decision making – many of the decisions I have had the pleasure to implement were the results of a suboptimal, often bonus driven decision making process. Google (or Bing) the Art of Critical Decision Making from Michael A. Roberto for a nice introduction into the topic of decision making processes.

I also believe that we, the scientists, should be far more open minded towards the implementation of what I would call modern management. Solid project management makes sense, even in research, and yes, I also believe in Lean methods.

I do not know Booth personally, but I suspect he was involved in the once popular metrification of research – GSK, Wyeth, Pfizer, the metrics was pretty much the same everywhere. Metrics can be useful indeed, but there is a difference between a strategic goal, driven by metrics, and a well thought through, evidence based strategy.

Consultants think they understand the difference, but ultimately they don’t.

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9. smurf on April 25, 2012 9:37 AM writes...

Instead of culture in general I would focus on decision making. Many of the decisions I have had the pleasure to implement were the results of a suboptimal, often bonus driven decision making process. Google (or Bing) the Art of Critical Decision Making from Michael A. Roberto for a nice introduction into the topic of decision making processes.

I also believe that we, the scientists, should be far more open minded towards the implementation of what I would call modern management. Solid project management makes sense, even in research, and yes, I also believe in Lean methods.

I do not know Booth personally, but I suspect he was involved in the once popular metrification of research. GSK, Wyeth, Pfizer, the metrics was pretty much the same everywhere. Metrics can be useful indeed, but there is a difference between a strategic goal, driven by metrics, and a well thought through, evidence based strategy.

Consultants think they understand the difference, but ultimately they do not.

Permalink to Comment

10. John on April 25, 2012 9:39 AM writes...

I doubt it's really much worse than it's ever been. The day pharma moved away from dosing hapless animals (including chemists) and with anything soluble and closely monitoring the results was the day productivity went down, and all the target-driven in silico six sigma processes in the world won't fix it until we actually understand biology. And no one wants to wait for that.

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11. John on April 25, 2012 9:40 AM writes...

I doubt it's really much worse than it's ever been. The day pharma moved away from dosing hapless animals (including chemists) with anything soluble and closely monitoring the results was the day productivity went down, and all the target-driven in silico six sigma processes in the world won't fix it until we actually understand biology. And no one wants to wait for that.

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12. petros on April 25, 2012 9:46 AM writes...

Not surprising given the progression of big pharma into bureaucratic organisations.

Such structures are inimical to innovation according to Henry Mintzberg

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13. johnnyboy on April 25, 2012 9:53 AM writes...

Booth's article is a pretty good articulation of many things said here over the years. Derek didn't expand on his solutions, which are interesting and which I summarize here with some editing:

"Enable the full empowerment of drug hunters and their groups to do what they do and hold them accountable.
-get layers of Matrixed management out of the way
-Create autonomous teams that don’t report into the organization, but instead report to the top.
- give these groups a five-year budget and then largely ignore them. Allow for governance at the project team level without suffocating committees."

I think most people here would agree that these would create a work environment one could dream of.

One thing that Booth doesn't address is the Why of this culture problem. I think #3 hit the nail on the head as to why this is: it's basically a direct and unavoidable consequence of the huge size of big pharmas. I think the companies that will survive the tough current conditions are those that are in the sweet spot in terms of size; not too small (eg. one-product biotechs) or too huge like the current pharma, but the medium size where there are enough resources to pursue different programs and spread the risk, without getting so large where job definitions get fuzzy and you start developing middle-management dead wood. And such a company can only survive long term if their top management's first and main priority is to actually create drugs, not create shareholder value. Hey, one can dream...

Permalink to Comment

14. johnnyboy on April 25, 2012 9:53 AM writes...

Booth's article is a pretty good articulation of many things said here over the years. Derek didn't expand on his solutions, which are interesting and which I summarize here with some editing:

"Enable the full empowerment of drug hunters and their groups to do what they do and hold them accountable.
-get layers of Matrixed management out of the way
-Create autonomous teams that don’t report into the organization, but instead report to the top.
- give these groups a five-year budget and then largely ignore them. Allow for governance at the project team level without suffocating committees."

I think most people here would agree that these would create a work environment one could dream of.

One thing that Booth doesn't address is the Why of this culture problem. I think #3 hit the nail on the head as to why this is: it's basically a direct and unavoidable consequence of the huge size of big pharmas. I think the companies that will survive the tough current conditions are those that are in the sweet spot in terms of size; not too small (eg. one-product biotechs) or too huge like the current pharma, but the medium size where there are enough resources to pursue different programs and spread the risk, without getting so large where job definitions get fuzzy and you start developing middle-management dead wood. And such a company can only survive long term if their top management's first and main priority is to actually create drugs, not create shareholder value. Hey, one can dream...

Permalink to Comment

15. Hap on April 25, 2012 10:09 AM writes...

I think the "kill the management" idea comes from the perception that the incentives of upper management are different than those of the company, its employees, or its stockholders, and that their level of responsibility for achieving their assigned goals is far less than that of any of the other responsible groups.

We know that from low levels (team management) to high levels (market assessment, sales, legal, accounting), management needs to exist for people to have jobs and to achieve their goals (make useful drugs and money). When people are being fired for being expensive (knowledgeable) - essentially, for doing what was asked of them - while the people who make the strategic direction of the company appear to be rewarded for it (even though the only direction that seems to be is down), this disjunction is irking.

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16. bbooooooya on April 25, 2012 10:23 AM writes...

I think the notion that the culture of a big company stifles innovation is correct, and for many of the reasons stated above. I also think (from personal experience) that there are many small companies that suffer the same stifling, but don't last as many years so no one notices.

I wonder if the transition away from innovation is based on size of company or on time since inception?

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17. MIMD on April 25, 2012 10:27 AM writes...

This isn't covered in most reviews of the productivity challenge facing our industry

Because those reviews and reviewers are deliberately blind. They ignore the alternate media, for one thing, such as the very blog you are reading.

They ignore sites like PharmaGossip, Pharmalot, PharmaGiles, Marilyn Mann, Healthcare Renewal, to name just a few.

They ignore pregnant memes about the toxic "culture" on sites like Cafepharma.

Even academic sites.

One must also ask a meta-question: how is such a culture "tolerated?"

Likely answer? Stupidity.

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18. Ed on April 25, 2012 11:37 AM writes...

But Petros (#12) - Mintzberg teaches MBAs, therefore he is EVIL, and should be ignored!

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19. NJBiologist on April 25, 2012 11:58 AM writes...

@15 Hap: "I think the "kill the management" idea comes from the perception that the incentives of upper management are different than those of the company, its employees, or its stockholders, and that their level of responsibility for achieving their assigned goals is far less than that of any of the other responsible groups."

They are. The following performance reviews come from the 2012 Johnson & Johnson proxy statement:

"The Board believes that Mr. Weldon performed well in 2011 to advance our mission as a global leader in health care."

"Mr. Caruso performed well during 2011, contributing to the company’s performance as a member of the Executive Committee."

"Mr. Deyo performed very well during 2011, contributing to the company’s performance as a member of the Executive Committee."

"Mr. Gorsky performed very well during 2011, contributing to the company’s performance as a member of the Executive Committee."

"Ms. McCoy performed very well during 2011, contributing to the company’s performance as a member of the Executive Committee."

It is the judgment of the JNJ board of directors that each and every named executive officer performed well or very well during FY2011. The only way that I, as a shareholder, can reconcile that with what I've read in the news is to believe that the sole basis for NEO performance review is short term stock performance.

Permalink to Comment

20. MTK on April 25, 2012 12:04 PM writes...

@3, Plubius the Lesser,

Hear, hear.

I honestly don't think that any of the culture problems mentioned is unique to pharma but rather endemic to any large organization. It's called bureaucracy.

Now one may argue "Yes, but it's more antitithecal to pharma's pursuits then other industries." Perhaps. I don't personally think so, but it's possible.

Permalink to Comment

21. Legacy Merck Guy on April 25, 2012 12:16 PM writes...

Personally, I don't want to kill the management, I only want to see them held accountable and perhaps kill the exec. compensation packages. IMO, I think that is one of the largest reasons for the state of things. The other points here are extremely valid but if you think about it, aren't many of these crazy cultural problems caused by a senior manager having a really bad idea then it is either not allowed to fail (as in the case of many projects or reorgs) or if it does, they get a nice bonus and commence the layoffs.

Permalink to Comment

22. Student on April 25, 2012 12:24 PM writes...

@19
It will be interesting if these guys will be using a pump and dump scheme over the next few years. No pipeline (upset investors)>so they buy lots of biotechs (content investors)> bonus> Exec leaves company> said biotech investment not realized> pawn it off as something out of the new executive's control

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23. DJ DrZ on April 25, 2012 12:57 PM writes...

@Publius I am not advocating no management, I am trying (albeit poorly) entirely new management with entirely new thought processes.

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24. andrewD on April 25, 2012 1:58 PM writes...

Pournelle's Iron Law of Bureaucracy applies to companies as well as governments
...in any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work for the organization itself. Examples in education would be teachers who work and sacrifice to teach children, vs. union representatives who work to protect any teacher including the most incompetent. The Iron Law states that in all cases, the second type of person will always gain control of the organization, and will always write the rules under which the organization functions

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25. FatTony on April 25, 2012 2:23 PM writes...

'No' is easy. 'Yes' is hard. 'Yes' ruins careers. 'No' provides the fodder for advancement. 'Yes' is testable, 'No' isn't. I will know if my 'Yes' fails in the clinic or in the marketplace. But no one will ever know if my 'No' would have been a blockbuster. With rare exception, my 'No' will disappear quietly, and consequently I will have secured my job and perhaps even a promotion for my bold decision making.

Permalink to Comment

26. Josh on April 25, 2012 2:54 PM writes...

All true, but maybe not the reason.
HIV, HCV, hi blood pressure, hi cholesterol, asthma. 1990s-2000s


Cancer, Alzheimer's, Parkinson's, MS
Now.


Which of the two groups is harder to tackle? The top group has well defined targets that are amenable to standard medchem solutions. The bottom group--much more complicated. More difficult.

All research is not created equal.

Permalink to Comment

27. CMCguy on April 25, 2012 3:04 PM writes...

While I would hardily agree that Culture elements have been a major reason Pharma decline I would tend to focus more on the short term-quick profits approach verses patient/disease centered long haul emphasis. Unfortunately for bean counters and "investors" this is much actually more simple to quantify as all that matters are Quarterly earnings statements and not Pipelines, Patents, Publications and collaborations that likely speak to vibrancy of R&D.

In the end sometimes a better "culture" may still not win in the drug development game as lack of overall great Biotech successes has shown. The endeavor to generate new drugs entails Multicultural exchanges at all stages and what is really required is Leaders who can bring the diverse cultures together to utilize and maximize progress. This is no easy tasks to be sure, however I wonder if the Pharma Business Cultures in the past few decades has been so over cloning people there is a big void in both the who could and how to lead appropriately plus in many cases "outsiders" do more harm than good.

Permalink to Comment

28. Anonymous BMS Researcher on April 25, 2012 8:30 PM writes...

Google Dilbert Powerpoint Poisoning. Then Google Powerpoint Gettysburg Address.

Permalink to Comment

29. John on April 26, 2012 1:09 AM writes...

This topic has been being discussed for a while and will be discussed more in the future. What really goes wrong with pharma's productivity? There are many reasons. First and foremost, many blockbusters are losing their patent protection. It is a patent cliff period. When a $ billion drug goes off patent, it will lose its market exclusivity. In other words, the generic and cheap drugs will come to the market to take over the share. In order to make up the loss, the company will launch a new drug with the same amount of sales. Only in this case, the pharma will maintain its sales revenues. It has never been easy to replace the lost blockbuster. Unlike many years ago, there are so many generic drugs there to cover so many diseases. If there is already a cheap and safe drug for a certain diease, then the business for this diease is pretty much finished. No one wants to spend time and money to improve a generic drugs which were blockbusters before. In order to get the newly launched drugs to become blockbuster, there are not many areas left. A decade ago, many drugs were launched and there are very successful. Now they are all off patent. The golden age for launching multiple drugs are gone forever. There are only certain diseases still waiting for really innovative drugs which include cancer, parkinson disease, alzheimer disease etc. All these are facing impossible and difficult science challenge. Many companies are still working on the same mechanism again and again. One compd fails in clinical trial, they will choose another compd with similar mechanism to clinic. Without fully understanding the underlying mechanism of these diseases, it is almost impossible to achieve a breakthrough. Like cancer, multiple kinase drugs were approved over the last 10 years. There achievement were claimed as big scientific accomplishment. But do the kinase drugs really solve the real issue. Of coure not. These drugs only extend the patients life for a few months. Let alone that side effects are severe and the life quality of the patient are not really improved that much. The skyrocketing price is another issue. The key point is these progresses are only mediocre. Of coure, science is moving forward step by step. One one expects that all the disease can be sure overnight. My key point is we are working against science sometimes. The 2nd factor affecting pharma's productivity is the bureacracy. When the company is big, the politics not science speaks loud. No one konws what other people are thinking in their mind. You think you are making great contribution for your organization. Your boss might think you are worthless. You might think you have a great idea. Your boss thinks you are stupid and not knowing what you are doing. You think many research shouldn't be done. Your boss might think these are important accomplishment for his own career gain. In such kind of environment, how could the good science happen?
The last point is that big pharmas are not the best place to do innovative things. They are just a gigantic machine without brain. They couldn't find any important targets for those unmet medical needs. They could only read the papers and gether some 2nd information, then duplicate the results in their own lab. They have the tools such as big collection of compound library, but this won't work without a really promising target emerging. I have said enough. In nutshell, there is no real solution to this issue. Nearly all the pharmas have to rely on merge or acquisition to sustain their revenue growth. There is no single exception. What more evidence needed to demonstrate that the productivity is declining instead of increasing. How to improve the productivity? I don't know.

Permalink to Comment

30. hopeless on April 26, 2012 6:32 AM writes...

"The Big Pharma culture has been homogenized, purified, sterilized, whipped, stirred, filtered, etc and lost its ability to ferment the good stuff required to innovate."

homogenized=do whatever boss says, Inam
only a team player;
purified=i stay quiet, HR educated me to be perfect;
sterilized=i shut up, i am not me;
whipped=i shouldn never complain, i should suggest nothing;
stirred=hey boss, what does that mean?
filtered=only boss talks, i should always say nice things.


Permalink to Comment

31. Claire on April 26, 2012 6:50 AM writes...

'And then there's "Organizational Entropy", which we've discussed around here, too. When the New, Latest, Really-Going-to-Work reorganization hits, as it does every three years or so, things slow down.'

We're doing them yearly now, which not only slows things down, but is really really demotivating.

The best part is that there are posters all over site asking why only 5 % of UK schoolchildren choose science as a first career choice...

Permalink to Comment

32. nooptins2speakof on April 26, 2012 8:13 AM writes...

Investors clamor,
Fallow labs, plump upper crust
patients still waiting

-a pharma haiku

Permalink to Comment

33. David on April 26, 2012 2:03 PM writes...

It's fascinating that Biotech is held out as an example of research productivity. In 2004, a study by Ernst & Young found that the cumulative profit & losses of publicly traded biotech companies made it the most money losing industry in the history of the US economy, with a cumulative loss of $41 bil. They found that the industry was funded by "boundless" investor optimism.

Also, the reality was actually worse because they only looked at biotechs successful enough to become publicly traded. All those that folded while burning thru venture capital weren't included.

I'd love to see an update to their assessment. In the most recent year of their study, 2003, the cumulative profit/loss was minus $3.2 billion and there was no trend towards profitability. Only 12 of 50 large biotechs turned a profit that year. Maybe big pharma can follow the biotech model and lose 100s if billions instead of just 10s of billions. (we just need to find investors with "boundless optimism".)

Permalink to Comment

34. Anonymous on April 26, 2012 3:31 PM writes...

It seems that there is only one important metric: how often does a pharma launch. There is an inverse relationship to how many internal metrics a pharma company collects in relation to the launch number. (A corollary to Eroom's Law?) My company counts how many pieces of toilet tissue we each use...clearly we are doomed.

Occasionally I run unauthorized experiments. And thanks to the transparent joys of the electronic notebook, my boss can look at whatever I have in there. A number or times I have been asked why I am doing experiments that he has not sanctioned. Its like factory work now - no thinking allowed. No opinions either. Civil discourse about a project can ruin one's career and livelihood.

Middle management micromanages downward, and manages up to advance their careers, too often at the expense of the projects. And upper management is clueless as to what is going on in the labs. Or not going on in the labs.

Repression, discouragement of curiosity, middle management apparatchiks, unfair labor practices, lack of decision making. All the dysfunctions of a collapsing communist society, yes?

Permalink to Comment

35. r.pal on April 27, 2012 10:03 PM writes...

The reason may have nothing to do with the culture of the pharma workplace. It is the fallacy of our reductionist model where we thought one defect, one effect and one drug molecule to rectify it.

Biological systems like man are redundant. This redundancy makes the same signal to be used in multiple places in the body to achieve many things economically with varied behavioral functions.

That is why nature has just given us 25,000 genes. One gene could look after so many functions.

In addition, we have trillions of genes acquired from a multitude of germs that have become a part of us over millions of years and they live a symbiotic existence, the so called human meta-genome. When we disturb the germs inside us, we fall sick!

Permalink to Comment

36. concerned chemist on May 6, 2012 11:41 PM writes...

Speaking of metrics, all the Six Sigma-ing going on in the R&D ranks doesn't help matters. This ia a program developed for production, not research. And yet every major company has invested in it to "improve" their R&D effort. Some things are fine--how many columns to stock on the shelves for instance, but others are just crazy.

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