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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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« Going After the Big Cyclic Ones | Main | The American Chemical Society's Lawsuit Problem »

September 18, 2012

Boehringer Ingelheim Closing Laval Site

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Posted by Derek

I've heard from more than one person with knowledge of the situation that BI has announced that they'll be closing their Laval site next March. Montreal's drug R&D culture has been taking some major hits the last few years, and this just piles on some more.

Update: the story is now out on the wires, and it looks like this is part of the company getting completely out of antivirals. 170 employees to be affected at Laval.

Comments (18) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Chou on September 18, 2012 12:01 PM writes...

Ouch. Another sad day.
PS. Typo: IngELheim, not IngLEheim.

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2. John Wayne on September 18, 2012 12:02 PM writes...

It is not (or it shouldn't be) a huge surprise that pharma companies are pulling assets from countries (Britain, Canada, the EU, etc.) that are giving them pushback on pricing.

If public opinion has its way the US will eventually do something similar. At that point those of us still in the business will have the choice between relocating to participate in research, or becoming part of the choking bureaucracy that will eventually topple our way of life.

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3. Hap on September 18, 2012 12:16 PM writes...

I already thought that there already was a choking bureaucracy working to topple our way of life - they just get paid more to do so. They've been doing a really good job of destroying pharma in the home of the free market, so much so that it is becoming a question of 1) whether government could actually do it less badly, and 2) whether pricing constraints could do more damage than they have.

Also, the "we'll take research jobs from your country unless you give us the money we want for our products" only works if your researchers in the countries you ship your research to can actually make drugs (before their countries usurp your business, either by force or simply by duplication and underpricing). This seems like an open question at the moment, not having produced any yet.

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4. Anonymous on September 18, 2012 1:25 PM writes...

Are there any pharma companies that employ chemists left in Montreal or Canada?
I heard vertex had started labs?

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5. Anonymous on September 18, 2012 1:44 PM writes...

John Wayne, if you think this is some sort of punitive closure due to price controls, you're on the wrong track. Tell that to the hundreds (thousands?) of US pharmaceutical chemists left unemployed, underemployed or (for the lucky ones) having to uproot their families to take a new job elsewhere over the last decade.

This is just another chapter in the continuing story of epic mismanagement of a once healthy industry by a cabal of MBAs. After every ill-timed merger or drug recall, the standard solution is to shut down R&D facilities and lay-off scientists. This is hardly surprising when the business types calling the shots view these scientists as fungible commodities, easily substituted with freshly minted graduates, or even better, teams in Asia willing to work for half the salary or less. The institutional memory of the experienced people cast aside is assigned no value at all.

As for the capital loss from closing sites that often contain state-of-the-art facilities, I'm sure there are some positive tax implications. So it's all good, and with luck the stock price goes up. (FYI, though, BI is a privately held company, so this is more of a "we're getting out of antivirals, and since we made you concentrate exclusively on antivirals 10 or 15 years ago, I guess we'll shut you down.") Anyway, please welcome a few score experienced pharmaceutical researchers (many of them medicinal chemists) to the dwindling job market.

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6. An antiviral guy on September 18, 2012 1:57 PM writes...

What a shame. Those who work on HCV will know that it was this group that made BILN2061: this both showed that HCV could be treated with direct antivirals, and opened up the protease field to the very nice non-covalent inhibitors that will be coming along soon.

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7. David Formerly Known as a Chemist on September 18, 2012 2:44 PM writes...

@5 Anonymous; another in a long series of ad hominem attacks on MBAs, as if that degree single-handedly led to the demise of the pharma industry. The industry is going downhill because of increased complexity of the biological pathways being targeted, the enhanced rigors of the approval process, increased demands from payers for companies to justify the high prices of branded drugs, and the diminished productivity of the R&D teams. All these factors led us to where we are, not the presence of a few people with business degrees. Don't you want people with business training running the business side of the company? What, you want a chemist to be designing the marketing strategies? Give me a break. The industry milked the low hanging fruit (GPCRs, soluble enzymes), now it can't figure out what to do next. Do you think the MBAs are selecting the targets and development strategies that keep failing in the clinic with a 90% failure rate? The situation isn't nearly that simple. Sure, it sucks when these sites get shut down and more scientists hit the unemployment roles, but the reasons are much more complex than a few people with business degrees making bad decisions.

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8. biornottobi on September 18, 2012 3:09 PM writes...

just four years ago, BI's management seemed to have a different opinion on Laval's future and its role within the company:
http://www.newswire.ca/en/story/284091/boehringer-ingelheim-completes-36-million-investment-in-laval-for-state-of-the-art-research-centre

Permalink to Comment

9. Anonymous #5 on September 18, 2012 5:28 PM writes...

Hey David, I take your point (especially re: low-hanging fruit), but I think you are letting the business people off too easily. The high clinical failure rate can be tied to the fixation on multibillion dollar blockbusters starting 20 or more years ago. That decision was not made by scientists, it was made by financial people who decided that a drug that brings in a "mere" $500M is not worth the investment. If you always swing for home runs, your batting average suffers. Moreover, it drove some particularly destructive acquisitions. The continuing consolidation of the pharma industry is not a good thing, either for chemists seeking careers, or for patients hoping for the development of innovative therapeutics.

Also, I don't think that North American chemists have driven the move to outsource significant swaths of med chem research to Asia. That comes straight out of the MBA playbook. That's not ad hominem, it's just the truth.

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10. johnnyboy on September 18, 2012 6:58 PM writes...

@4: Vertex hasn't started a lab but acquired one when it bought Virochem, a small company that was the last remnant of Biochem Pharma. So far the lab is still there, though I don't know how active, and for how long. Very few options left for early discovery work in Montreal.

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11. Anonymous on September 18, 2012 10:02 PM writes...

@4 and 10

Vertex definitely has a site in Laval and they are doing research there.

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12. Tom Womack on September 19, 2012 4:04 AM writes...

Reading between the lines of the PharmaLive article, BI is saying that they don't want to produce the me-four anti-HCV agent.

Maybe the current work in anti-HCV will be sufficient to provide a usable cocktail - a lot of companies have got phase-2 polymerase inhibitors and maybe one of those will get to the clinic and be adequate for treatment in a cocktail with telaprevir.

Permalink to Comment

13. John Wayne on September 19, 2012 8:40 AM writes...

@5: I did not intend to imply that Pharma is pulling back in countries with price controls solely due to those policies; pharma is downsizing regardless of the political and regulatory situation in specific countries. It is easier to make a business case to close research sites in Canada, Britian and the EU based on the combination of cost, perceived productivity, and the policies of those governments towards the pharmaceutical industry.

My advice to other countries is the same as my advice to people who still work in big pharma: do not say a damn thing that could be perceived as questioning of management until such a time as you don't need the job(s).

Permalink to Comment

14. buyandbye on September 20, 2012 9:31 AM writes...

We can take some comfort in the fact that for BI this is not a cost-saving to EPS decision.

But overall any enterprise that reacts to "hard times" by eating the seed corn is doomed. And we scientists are the seed corn in this industry.

Permalink to Comment

15. Hap on September 20, 2012 9:45 AM writes...

14: But you still need to make drugs, right? Without discovering drugs, you don't have any revenue, not even that obtained from fighting with governments and insurers over. The problem with shifting pharma research away from countries with gov't-managed health care is 1) the countries that don't have it (mostly - the US)don't have the market size to sustain pharma and 2) haven't many people with experience in making drugs.

In addition, shifting research to countries starting up in pharma while cutting your business in your (current) major markets seems like a great way to train your competition while rapidly cutting your product line - unless you're counting on "beginner's luck", the research in other countries isn't likely to produce even as much as in your current ones, while you don't have the research apparatus in your developed markets to generate new drugs. By the time your lower-cost research begins to bear fruit, your people will probably be leaving (with or without government help) to start your competition, taking advantage of the same knowledge and cost structure that you used. It doesn't seem like a good idea to me.

Permalink to Comment

16. buyandbye on September 20, 2012 10:40 AM writes...

15: no disagreement, we still need to make drugs. The issue is that somehow the "art" of discovery was thought to be industrializable...not. They are not cutting business in the major markets, just cutting the cost of business. Curious view you have: "moving out of countries with govt health care"...

Regarding outsourcing/off-shoring, there is a great lesson to be learned from the telecon industry. Companies like motorola hired little (at the time) CMOs like HTC to manufacture their cell/smart phone designs... now most all of the designs come from HTC and the like. Eventually, the originators of the market were marginalized in that market (except maybe Apple). The pharma industry is charging off the same cliff the western telecon industry did. Shameful.

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17. Yancey Ward on September 20, 2012 1:21 PM writes...

Not unexpected, but it is a sad day. I knew many of the chemists that worked there at one time

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18. Hap on September 21, 2012 11:47 AM writes...

16: Sorry, I wrote the wrong number.

The problem with moving research is that the host country has no reason not to squeeze you - they have costs paying for the drugs but no counterweight in jobs to limit how hard they squeeze. Also, as companies cease finding drugs, their business in established countries goes away because of patent expirations and resultant generic competition. The lag time in starting productive research elsewhere also means that their current products will be generic before new products come on line. (On the other hand, they will have longer to wait because they will spend less in waiting for their lower-cost research to bear fruit.) Finally, at least part of the problem with drug development is financial and task management - given that those people haven't changed, many of the factors that made drug development unproductive here are likely to make it unproductive elsewhere as well.

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