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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline

« How Do Drugs Get Into Cells? A Vicious Debate. | Main | India's First Drug Isn't India's First Drug »

April 30, 2012

AstraZeneca Shuffles the Top Cards

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Posted by Derek

So AstraZeneca's CEO is leaving. This wasn't necessary a voluntary move, but if it was, I don't blame him. I would have some serious thoughts about sticking around, too. (If reports of David Brennan's severance package have any truth in them, though, he'll have some time to figure out what to do next.)The company has major problems in its drug pipeline, has had major problems for a long time now, and no obvious fixes come to mind that won't take years of sustained effort.

Time for a reprise of this chart:
patent%20cliff.jpg


That's the revenue coming in from existing drugs, and there's not much that bids to replace it, either. Note, again, that Eli Lilly appears to be in a very similar fix. I would not expect things there to go smoothly over the next few years, either.

Comments (19) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Innovorich on April 30, 2012 7:35 AM writes...

Despite his brilliant performance, he's getting $65 million to leave! Awesome! At some pharma/biotech that a good amount of money that would be better re-invested into R&D, but at AZ, where drug development costs $12 billion per new drug, it's pretty much just pocket change!

Permalink to Comment

3. RaddJA on April 30, 2012 8:15 AM writes...

So Lilly is tanking due to patent expirations and a weak pipeline and although the seeds for this were sown years ago under the previous CEO and president of LRL, hiring the former head of AZ R&D does not bode well.

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4. Fred on April 30, 2012 10:02 AM writes...

Agree with Innovorich: give ME 65 Million and I'll have a handful of drug candidates in Phase 1 in 4-5 years. Or, just piss it away on FAILED CEO's, like AZ........

Permalink to Comment

5. Student on April 30, 2012 11:18 AM writes...

Whats done is done, but why don't they tie severance of the next guy to be a percentage (not to exceed a given amount) of profits from drugs whose phase I trials were initiated under their reign?

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6. TJMC on April 30, 2012 11:22 AM writes...

While the relative degree of crisis is probably true, and Lilly and AZ need to act more 'dramatically', forecasting the future with numbers can be misleading. A better "judge" of current R&D leadership might be seen through the other chart on the Bernstein analysis Derek cited last June:

http://www.cbsnews.com/8301-505123_162-42848778/patent-cliff-losses-mean-eli-lilly-must-acquire-or-be-acquired/?tag=bnetdomain

That shows how much each firm will replenish the patent cliff fallout with things now being developed by those R&D leaders.

Problem is, those projections can vary. Only GSK, NVS, LLY and AZN fall out of +/- 10% of breakeven. And when estimates (of filing/approval) build upon estimates (of sales, competition), the confidence intervals build up fast. I bet they might even include breakeven for ALL of the cohort, when reaching eight years forward.

Besides better innovation and leadership, it might be helpful to have a retrospective of how well analyst/pundits performed with past predictions. Of course, eight years out any guess +/- 30% might be claimed as "confirmed".

Permalink to Comment

7. AZ will rise again on April 30, 2012 11:29 AM writes...

Trading season is open. Happy days. Things can only go up, right?! While we're at it - anyone out there willing to put an offer on M MacCay and MiniMe(?) Pangalos?

Permalink to Comment

8. AC on April 30, 2012 7:59 PM writes...

I disagree with the chart.

By 2020, Lilly will have a higher benchmark value than AZ.

AZ has the thinnest Phase 3 pipeline in pharma relative to size and the worst track record in the industry.

At least Lilly has a bevy of Phase 2 and 3 me-too specialty care mAbs targeting EGFR, VEGF, BAFF, IL-17, c-Met, sclerostin and TGF-beta + diabetes injectable medicines next-gen insulin and GLP-1 - each which should have a decent likelihood of success and do something rather than nothing.

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9. Varadh on May 1, 2012 3:57 AM writes...

10 years is a long period. But unfortunately not in Pharma world and especially with drug pipe-line and uncertainties surrounding them. But still, if they go bottom-up 10 years is a good time to think of a lot of dramatic stuff. Need of the hour is to think out-of-the-box(not in marketing terms but in R&D terms) and shed a lot of legacy.

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10. nilocexAZ on May 1, 2012 5:00 AM writes...

Fantastic package for being the main player in the destruction of the company. Paid $15 billion for Medimmune, for which he had to destroy internal R&D, and brought in MacKay form Pfizer as head of R&D - what a joke.

Permalink to Comment

11. MediGuy on May 1, 2012 7:44 AM writes...

nilocexAZ: can you elaborate on the destruction of internal Medimmune R&D?

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13. nilocexAZ on May 1, 2012 10:25 AM writes...

MediGuy: I mean that he destroyed the internal AZ R&D to pay for the Medimmune aquisition

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14. Anonymous on May 1, 2012 8:45 PM writes...

CEOs: they succeed, they get a bonus. They fail: they get a bonus. Yet, they destroy hundreds of lives, and the lives related to those (kids, wife). How can these bastards sleep well at night?????? Someone tell me!!

Permalink to Comment

15. Anonymous on May 1, 2012 8:50 PM writes...

...and how many scientists can you pay with 65 million dollars??? A little less than 650 right? That's a lot of people to do real work instead of sitting in an office trying to figure out how to restructure a sinking boat!!!

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16. Sisyphus on May 1, 2012 9:43 PM writes...

Silly chart!!! The whole industry will be nationalized within the next 4 yrs so none of this matters.

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17. Anonymous on May 3, 2012 1:10 PM writes...

Quote: "CEOs: they succeed, they get a bonus. They fail: they get a bonus. Yet, they destroy hundreds of lives, and the lives related to those (kids, wife). How can these bastards sleep well at night?????? Someone tell me!!"

Why this is American and you too can/should be aspiring to be one of those CEOs..............It's the american way.

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18. Anonymous on May 5, 2012 7:22 PM writes...

Lilly is going down. They will have to merge or do something big in the next yr. or so. Layoffs perhaps? Oh, sorry the just did that... and now they are rehiring chemists via albany molecular. Hummm..."insourcing"? What gives. These are all the signs of a struggling company. My friends...take the time to update your CV and get it out there. It will take ca. 1 yr. to get back into the game after a layoff (trust me I know...been there recently). Don't give up though...in the end everything works out for the best!!!!

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19. Undecided on May 12, 2012 2:03 AM writes...

I need suggestions and comments... If you were given the chance to be a Medical Representative between AstraZeneca and Boehringer Ingelheim which Pharmaceutical Company will you choose? It is a fact that AZ is a bigger company than BI, but if you will consider the problems rising with AZ you don't know what will happen in the next few years. In your own opinion which company between the two is the best option for a long term (10-20years) career ???

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