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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: Twitter: Dereklowe

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December 18, 2012

Lilly's Two-Drugs-a-Year Prediction

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Posted by Derek

Drug research consultant Bernard Munos popped in the comments here the other day and mentioned this story from 2010 in the Indiana Business Journal. That's where we can find Eli Lilly's prediction that they were going to start producing two new drugs per year, starting in 2013. Since that year is nearly upon us, how's that looking?

Not too well. Back in 2010, Lilly's CEO (John Lechleiter) was talking up the company's plans to weather its big patent expirations, including that two-a-year forecast. Since then, the company has had a brutal string of late-stage clinical failures. In addition to the ones in that article, Lilly's had to withdraw Xigris, and results for edivoxetine are mixed. No wonder we're hearing so much about the not-too-impressive Alzheimer's drugs from them.

But, as I said here, what would I have done differently, were I to have had to misfortune of having to run Eli Lilly? I might not have placed such a big bet on Alzheimer's, but I probably would have found equally unprofitable ways to spend the money. (And in the end, the company deserves credit for taking on such an intractable disease - just no one tell Marcia Angell; she doesn't think anyone in the drug industry does any such thing).

About the only thing I'm sure of is that I wouldn't have gone around telling people that we were going to start launching two drugs a year. No one's ever been able to keep to that pace, not even in the best of times, and these sure aren't the best of times. It's tempting to think about telling the investors and the analysts that we're going to work as hard as we can, using our brains as much as we can, and we're going to launch what we're going to launch, when it's darn well ready to be launched. And past that, no predictions, OK? The only problem is, the stock market wouldn't stand for it. Ken Frazier at Merck tried something a bit like this, and it sure didn't seem to last long. Is happy talk what everyone would rather hear?

Comments (14) + TrackBacks (0) | Category: Business and Markets | Drug Development


1. Wile E. Coyote, Genius on December 18, 2012 10:16 AM writes...

I don't think it was just "happy talk". I think that they believed it. I left Lilly in 2005, and they were laying out this 2 launches a year rationale and strategy back then to the employees and talking about the things that would be implemented to achieve it. They seemed to be convinced; I was less so.

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2. opsomath on December 18, 2012 11:06 AM writes...

With this, and the preceding story about insider trading, it's hard to avoid the conclusion that for-profit R&D by publicly traded companies is a failed model for producing new medicines.

It may be a naive perspective, but this chemist from outside pharma is thinking the whole time, "What the Hell does all this stock-price nonsense have to do with making drugs?"

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3. pgwu on December 18, 2012 11:09 AM writes...

If the success rate is X and they have Y number of projects, they would have 2 lauches per year by adjuting a set of X's and Y's in their robust enterprise software, with less emphasis on some input factors.

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4. Hap on December 18, 2012 11:31 AM writes...

Problem is, companies need money to find drugs, and the stock market is a (good) way for them to get it. In addition, CEOs, etc. get paid in part with options so that they have an interest in the stock price.

I don't know if the stock market works for funding pharma, either. If your stockholders don't share your mission, but decide you should be doing something else to make them money, you're stuck with their wishes, even if they are self-defeating (how do you get drugs without R+D, or investments in things to make R+D cheaper?). The long-term stockholders in theory should believe in your mission as a way to make money, but they may be getting overruled by short-term investors, and they do eventually want to get paid in any case. In the stock market, if being useful and being profitable are mutually exclusive, money wins.

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5. Anonymous on December 18, 2012 12:01 PM writes...

Yes, "happy talk" is the only way to talk when you are no longer doing real science. How else is anyone going to pay for a share of LLY stock at 13x its earnings. For a science guy (or anyone), this should be a nutty idea.

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6. petros on December 18, 2012 12:09 PM writes...

The 2 NCEs per year is pretty much in accord with Jurgen Drews' Innovation Deficit model.

Pfizer's need would have been for several more than 2 per year on the same basis

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7. watcher on December 18, 2012 12:26 PM writes...

Lots a luck......

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8. Esteban on December 18, 2012 2:20 PM writes...

Look at the "current state of the pipeline" material in any big pharma's investor relations deck and you'll find lots of happy talk. Lilly's optimism doesn't seem that out of step with the rest of the industry.

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9. exGlaxoid on December 18, 2012 3:52 PM writes...

Glaxo Wellcome planned on 3 new drugs a year, back in the 2000's era. I remember the pipeline as a chart showing three new drugs marching through every year, based on 20 new leads going into development, which was based on having 50 projects in early discovery, which were forecast to generate 20 leads per year on a 2 year time per lead.

So projects created leads that were lousy after 2 years so they could declare success, and lead Op. programs created clinical candidates after so long, which then usually failed early in development. That lead to the GSK merger, where the numbers dropped to about zero drugs per year. (negative number if you count product withdraws.)

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10. Bernard Munos on December 18, 2012 5:33 PM writes...

Re-post without the weird characters (I hope) that somehow inserted themselves in the original one.

I think Chris Viehbacher at Sanofi summarizes the situation well when he says: "I'm not betting the future of the company on whether a molecule comes out tomorrow or comes out a year later or two years later... This whole need of 'I need so many blockbusters to launch this year, and that means I need so many in Phase 3, and so many in Phase 2, and so many in Phase 1, and so many candidates. After a while, that becomes an industrial process, and that's where people have started to make compromised decisions, because they need those numbers."

And Moncef Slaoui at GSK is right on when he comments that "about 70 per cent of the people in research and development have PhDs... The industrialized (R&D) process really takes away their intelligence."

To be fair, this "industrial process" is not unique to Lilly. It did not even originate with scientists. It was something forced onto them by chief executives who thought they knew better. One can wonder whether turning highly educated and creative people into operators qualifies as enlightened leadership. To their credit, several big pharma CEOs (Viehbacher, Witty, Vasella/Jimenez) have rejected that model, and are doing their best to reverse its costly consequences. One hopes they will soon be joined by the rest of the industry.

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11. newnickname on December 19, 2012 10:22 AM writes...

@10: (Is this the real Bernard Munos or a pseudo-Munos?) Slaoui says, "... The industrialized (R&D) process really takes away their intelligence."

ABSOLUTELY! Although it wasn't always that way, by the time I got there, it was too late. Only a "chosen few" are allowed to be "thought leaders" or "the smart guys". Everyone else is a mindless cog in a big wheel ... or else. I'd better not continue my rant.

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12. Doug Steinman on December 19, 2012 2:04 PM writes...

Maybe they should hire Marcia Angell as their CEO. That would really help since she knows all about how to get new drugs on the market.

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13. 5-HT on December 19, 2012 7:24 PM writes...

I don't think they'll hit their goal in 2013, but the have eight or Ph3 molecules with decent proof of concept that could launch in 2014-2018:

dulaglutide, empagliflozin, biosimilar lantus, ramucirumab, novel basal insulin, tabalumab, ixekizumab, baricitinib

and then they have some long shots...

edivoxetine, solanezumab, necitumumab, evacetrapib

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14. Bernard Munos on December 20, 2012 3:45 AM writes...

To newnickname:

Yes, this is my true name. Don't give up on your good ideas, though. Folks who try to change things always have more foes than friends. It keeps life interesting. But ultimately, things do change, and good ideas prevail. Be ready.

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