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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

« Scientist Shortage? The Media Starts to Catch On. | Main | Employee Surveillance at the FDA »

July 16, 2012

AstraZeneca Admits It Spent Too Much Money

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Posted by Derek

Looks like AstraZeneca's internal numbers agree with Matthew Herper's. The company was talking about its current R&D late last week, and this comment stands out:

Discovery head Mene Pangalos told reporters on Thursday that mistakes had been in the past by encouraging quantity over quality in early drug selection.

"If you looked at our output in terms of numbers of candidates entering the clinic, we were one of the most productive companies in the world, dollar for dollar. If you rated us by how many drugs we launched, we were one of the least successful," he said.

Yep, sending compounds to the clinic is easy - you just declare them to be Clinical Candidates, and the job is done. Getting them through the clinic, now, that's harder, because at that point you're encountering things that can't be rah-rah-ed. Viruses and bacteria, neurons and receptors and tumor cells, they don't care so much about your goals statement and your Corporate Commitment to Excellence. In the end, that's one of the things I like most about research: the real world has the last laugh.

The news aggregator Biospace has a particularly misleading headline on all this: "AstraZeneca Claims Neuroscience Shake-Up is Paying Off ; May Advance at Least 8 Drugs to Final Tests by 2015". I can't find anyone from AZ putting it in quite those terms, fortunately. That would be like saying that my decision, back in Boston, to cut costs by not filling my gas tank is paying off as I approach Philadelphia.

Comments (27) + TrackBacks (0) | Category: Business and Markets | Clinical Trials | Drug Development


COMMENTS

1. WCA on July 16, 2012 10:36 AM writes...

Bet a lot of bonuses were paid for all of those compounds hitting their pre-clinical and early development milestones, however.

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2. mass_speccer on July 16, 2012 10:48 AM writes...

I guess the important thing now is to make sure they don't knee-jerk too far in the opposite direction (i.e. stop letting anything into the clinic)

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3. petros on July 16, 2012 11:16 AM writes...

Delivering drugs is no saving grace. Sanofi is wielding the axe on several sites including the site that delivered Plavix!

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4. luigi on July 16, 2012 12:38 PM writes...

Mene Pangalos - the 21st century's Max Headroom

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5. Anonymous on July 16, 2012 12:39 PM writes...

"Bet a lot of bonuses were paid for all of those compounds hitting their pre-clinical and early development milestones, however."

Probably none of them to the scientists who actually synthesized everything.

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6. Anonymous on July 16, 2012 12:52 PM writes...

Well at least the ex-CEO is getting suitably punished:

http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandchemicals/9403021/AstraZeneca-chief-David-Brennan-leaves-with-up-to-19m.html

Oh. Err. Maybe not

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8. OwnIt on July 16, 2012 4:19 PM writes...

In a few years Pfizer will be saying the same thing about their cuts in Research investments as they approach Philly with nearly an empty tank. By the time they actually run out of gas, Read and co would have retired with McKinnellized pensions.

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9. ExWyeth on July 16, 2012 5:23 PM writes...

Same old.
When bonuses at Wyeth were tied to hitting metrics (def: goals that mean absolutely nothing) we got incredibly "productive" in December, and just by coincidence happened to scrounge up enough losers to shut up the idiot in charge (I won't name names, but it sounded an awful lot like another name for bison). Most were one step above t-butyllithium. As if everyone in the organization didn't know what was really going on.

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10. Anon on July 16, 2012 5:58 PM writes...

I wonder who they will blame for this and how this realization might affect their recruitment/lay-offs for the researchers. If they blame it on the researchers [again] then they will want to bring in "better" talent. Which could mean layoffs for those in the company and job listings with even more specific qualifications.

It really is a shame that no one has been able to find all of the posts, articles, blogs, etc. written by researchers 5 years ago, YELLING that this method/mentality would not bring in better drugs, and forwarded it to execs/board members. It's too bad you can't speak up at meetings these days.

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11. Anonymous on July 16, 2012 7:42 PM writes...

Such a candide comment from Pangalos.

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12. ExMrk on July 16, 2012 7:55 PM writes...

#9 ExWyeth

When bonuses at Wyeth were tied to hitting metrics (def: goals that mean absolutely nothing) we got incredibly "productive"

We had our share of "measurebators" too. Metrics were worse than meaningless. They actually in some cases proved harmful when they were used to drop the axe on various tools.

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13. A nonny mouse on July 16, 2012 9:14 PM writes...

#6: 3.5M pounds out of 19M sounds like a roundoff error. Is that right? If so, why isn't someone from the board resigning? Pretty stupid to have made this golden parachute happen.

Secondly, when Steve Jobs took over Apple the second time, it was in dire straits. He took a salary of $1 and the rest as options. And forced similar conditions on top management. Is the new dude in charge of AZ similarly incentivized?

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14. Ed on July 17, 2012 4:32 AM writes...

#11 - indeed. You could say a bit of a Volt-face.

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15. Validated Target on July 17, 2012 4:52 AM writes...

@4: Surely you could say that this is the beast of all possible worlds.

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16. Heretic on July 17, 2012 7:33 AM writes...

at one place the chief metric was number of reactions, only the desk sitters were immune but they did the counting. remember when Merck took a single entity into Ph2 for multiple indications, then picked the best indication for Ph3. Hmmmm...what was the success rate for drugs on market then?

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17. SwedenCalling on July 17, 2012 8:50 AM writes...

What a revelation. It takes big brains to realize that quality is superior to quantity. One can wonder why things that seem so obvious to us doing the actual work are not for management. A not to bold prediction is that in a few years Pangalos successor will admit that AZ 'outsource everything' strategy was not a big success, nor was the hardcore top-down decision strategy the best way to lead the company...if the company still exists.

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18. Anonymous on July 17, 2012 8:58 AM writes...

"Viruses and bacteria, neurons and receptors and tumor cells, they don't care so much about your goals statement and your Corporate Commitment to Excellence. In the end, that's one of the things I like most about research: the real world has the last laugh."

Brilliant.

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19. anchor on July 17, 2012 9:08 AM writes...

I am simply flabbergasted by the fact that in these times of more net working and internets, the so called leaders of pharmaceutical World, still think that they can sell the investors with statement such as... they have this many # of drugs in the pipeline, P3, P2 and such. I mean, in what World or age they are living in? And, for the investors to keep their mouth tight shut and not challenging them is even more deceitful. When will they learn?

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20. watcher on July 17, 2012 9:21 AM writes...

This certainly is not new news or unique to AZ. GSK had its phase of increasing "shots on goal" with the CEDDS followed by declared success and subsequent, ongoning reorganizations, bleeding in staff reductions, and now fewer projects being funded clinically to help pay for government imposed penalties and new aquisitions.

At least the AZ announcement was an interesting diclosure in honesty.

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21. drug_hunter on July 17, 2012 11:05 AM writes...

11, 14, 15 - nicely done, guys. Not often you see Voltaire puns on a chemistry blog.

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22. DrSnowboard on July 17, 2012 2:19 PM writes...

@20 Having worked for both, I can say I always felt AZ were / are 10 years behind GSK in the timing of their patent cliff, their reorgs, their consultant speak, their bad in-licensing deals / acquisitions. GSK seem to have found a CEO who can lead. AZ look like a carcrash in comparison.
The AZ exhibits Pangelos' mastery of the disassociate from 'past ' mistakes whilst promising that a 'new' initiative is bearing fruit. (Conveniently masking that the compounds were discovered under the old regime, are too 'me-too' to be safe bets and in a therapeutic area they either can't afford to fund or have no faith in.) They have no cash, they have no pipeline, what do you expect them to be honest about?

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23. smurf on July 17, 2012 2:45 PM writes...

The metrification was pushed by McKinsey + Company and screwed up GSK, Wyeth and Pfizer – same shit, same quadrants everywhere.

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24. Dr. Manhattan on July 17, 2012 3:10 PM writes...

"he metrification was pushed by McKinsey + Company and screwed up GSK, Wyeth and Pfizer – same shit, same quadrants everywhere."

Yet, the advice is readily bought and eagerly followed by CEOs and senior management. Once upon a time (when I was much younger) Pharma companies were run by senior management, many of whom had actually PUT DRUGS ON THE MARKET!

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25. anonymous on July 17, 2012 8:11 PM writes...

""Viruses and bacteria, neurons and receptors and tumor cells, they don't care so much about your goals statement and your Corporate Commitment to Excellence. In the end, that's one of the things I like most about research: the real world has the last laugh."

Methinks Derek is savvy to know this is true ONLY if you're persistent / lucky (?) enough to get a chance for the "real world" to opine (i.e., Mgmt doesn't get in the way of actually doing the experiment)

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26. watcher on July 17, 2012 9:11 PM writes...

22. DrSnowboaard:

So, are you saying that GSK demonstrates better leadership by undertaking unsuccessful strategies and then not admitting the mistakes publically when the cuts are made compared to AZ who has had similar problems in launching new drugs (and, please, tell me a major drug company that has not been having this problem) but at least with current leadership demonstrating enough integrity to at least admit the lack of success?

Sorry, but you missed the point.

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27. DrSnowboard on July 19, 2012 12:19 PM writes...

@26 No you missed the point, GSK did exactly the same, 10 years ago. Then the Age of Witty began and at least they all started to row together, AZ are still piling their individual lifeboats high with provisions.
Perhaps it would have read better if my original post said 'GSK now seem to have found a CEO who can lead..."
AZ and integrity in the same sentence, cute.

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