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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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« One. . .Million. . .Pounds (For a New Antibiotic?) | Main | Aggravating Aggregators »

June 14, 2013

Making Changes Inside Merck's R&D

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Posted by Derek

I've heard from more than one source that Roger Perlmutter has been shaking things up this week at Merck. Since he only took over R&D in March, that's a pretty short lag time - if these reports are accurate, he clearly has some strong opinions and is ready to act on them. From what I've been hearing, bench-level people aren't being affected. It's all in the managerial levels. Anyone with more knowledge and a willingness to share it is welcome to do so in the comments. . .

Comments (115) + TrackBacks (0) | Category: Current Events


COMMENTS

1. PharmaHeretic on June 14, 2013 9:24 AM writes...

So the new CEO is rearranging deck chairs on the Titanic, or maybe the Hindenburg. The real question is.. Does any of this matter at this rather late stage?

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2. anon 8 on June 14, 2013 9:36 AM writes...

"..From what I've been hearing, bench-level people aren't being affected." Are we sure about that? I mean is there any more bench chemists left? I thought all those were slowly and steadily were shipped to China with stealth! The bench level people are not affect and that is because there is none.

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3. Anonymous on June 14, 2013 10:11 AM writes...

Research Leadership Team (RLT)

Rupert Vessey will lead Discovery and Early Development.

Rich Tillyer will have responsibility for Preclinical Development, including process chemistry.
Linda Schaffer will lead Project Management group, and will have responsibility for all performance metrics.
Barry Gertz will head the Clinical Development organization, including clinical operations, the clinical therapeutic areas, and the Japan development organization,
Dennis Erb will be responsible for our Regulatory Affairs and Safety organization, which will be expanded to include our emerging market activities,
Rich Murray will lead research in Biologics and Vaccines, including process development activities necessary to provide materials for clinical trials and the transfer of commercially viable manufacturing processes to MMD,

Licensing organization will report directly to Roger Perlmutter. An external search for a new head of licensing is underway Roger Pomerantz is gone.

All senior management roles associated explicitly with franchise governance (Franchise Heads and Franchise Worldwide Discovery Heads) have been eliminated, and the people have been let go.

All site heads have been let go.

Blood bath at the managerial levels of MRL.

Rumor has it that Roger said that the dysfunction was beyond belief, and not the fault of the scientists.

Permalink to Comment

4. anon on June 14, 2013 10:31 AM writes...

The culture of self preservation has deprived the scientific community at Merck over the last 15 years.

When PK took over from Roger, we heard the same BS. there was rearrangement and re-alignment based on who kissed PKs ass the best.

Now Roger takes over from PK and the race to self-preservation is on. Given the stiff competition to Kiss rogers ass - I am not surprised it took him time to bring about changes.

same old shit will continue. I lament our fate as drug discovery scientists.

Permalink to Comment

5. Chrispy on June 14, 2013 12:11 PM writes...

Better through subtraction -- this is becoming a common theme in this industry. Imagine the amount of talent and experience that was just shown the door... Really, in the balance it is hard to imagine that this is a path to being less dysfunctional.

Permalink to Comment

6. Nathaniel on June 14, 2013 12:21 PM writes...

Cosmetic changes. Franchise heads had redundant role anyway.


Permalink to Comment

7. Nathaniel on June 14, 2013 12:22 PM writes...

Cosmetic changes. Franchise heads had redundant role anyway.


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8. Anonymous on June 14, 2013 12:32 PM writes...

What's absolutely fascinating is that while they claim they want to focus energy on vaccine development they have let go of a couple of senior people who were arguably the strongest part of the vaccine team - Jeffrey Silber (who was Therapeutic Area head for Vaccine Clinical Research, and an ID specialist by training)has been replaced by Jeff Chodakewitz - whose upper level sr. vp position was eliminated - returning him to a role he held 8-10 years ago. And Keith Chirgwin, VP, Vaccines pipeline and project leader, has been removed, and replaced by someone with far less vaccine experience.

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9. Anonymous on June 14, 2013 12:50 PM writes...

What about Alise leading oncology - apparently she finally cracked at her most recent deposition, when her duplicity was clearly exposed.

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10. Bernard Munos on June 14, 2013 1:00 PM writes...

"Roger said that the dysfunction was beyond belief, and not the fault of the scientists"... Sounds like Lilly.

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11. tweety bird on June 14, 2013 1:29 PM writes...

perlmutter should come to abbvie. same dysfunction here. managers and department heads especially in oncology are morons and don't even know what cancer means. scientists work their ass off, and get sidelined cause no one listens to them. fire the mgmt here too and give the scientists a break - geez they have to do what they're told. mgmt has all the brains..lol

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12. tweety bird on June 14, 2013 1:31 PM writes...

perlmutter should come to abbvie. same dysfunction here. managers and department heads especially in oncology are morons and don't even know what cancer means. scientists work their ass off, and get sidelined cause no one listens to them. fire the mgmt here too and give the scientists a break - geez they have to do what they're told. mgmt has all crap for brains

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13. tweety bird on June 14, 2013 1:33 PM writes...

perlmutter should come to abbvie. same dysfunction here. managers and department heads especially in oncology are morons and don't even know what cancer means. scientists work their ass off, and get sidelined cause no one listens to them. fire the mgmt here too and give the scientists a break - geez they have to do what they're told. mgmt has all crap for brains. bonuses given based on how much money you spent cause it was on your goals. whether it made sense or not, who cares as long as upper mgmt makes bonus.

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14. Anonymous on June 14, 2013 2:07 PM writes...

#8 Yes, vaccines is going to wither and die. Bringing Jeff C. back into vaccines is insane. Letting Keith C. go is also insane- he has more regulatory and institutional knowledge about vaccines than almost anyone on the planet. Rich Murray knows NOTHING about vaccines, a bit more about mAbs, and nothing about good process development. It remains to be seen which of the THREE PD1 mAbs makes it to market. Certainly not the ones with a sloppy process....

The good news for Merck is that John Shiver is going to Sanofi as CSO. That should bog down their vaccine efforts.

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15. anon on June 14, 2013 2:10 PM writes...

From someone who has been at Merck for 15 years. 6 years of layoffs, er excuse me, re-organizations has really put the hurt on those remaining scientists. No one believes that there won't be another round of lay offs, er... re-organizations. I am surprised that anything gets done day to day with this kind of stuff hanging over peoples heads.

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16. Roger Rabbit on June 14, 2013 2:54 PM writes...

This kind of surgery was inevitable, Merck's madness had been steadily getting worse making it impossible for discovery to be effective. Question is how long before the next reshuffle after this one? Such a waste of time, $$ and talent.

Those consultants that convinced us of a franchise structure using Exxon as an example, what a bunch of bozo's.

Permalink to Comment

17. Anonymous on June 14, 2013 3:12 PM writes...

The huge irony here is that Merck has been degenerating for years with the Vioxx debacle being the turning point and Roger was intimately involved in the deranged reasoning post VIGOR that led to the humiliating catastrophe. He actually hired the architect of the entire mess at Amgen - Beth Seidenberg - and subsequently fired her.

At Amgen, Roger surfed the wave of revenue from Amgen's old products without providing any evidence of actual proficiency. He is articulate, smart and wealthy but devoid of noteworthy concrete accomplishments.

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18. Anonymous on June 14, 2013 3:13 PM writes...

It looks like Merck is serious this time.

Subject: FW: Merck in the News
MERCK TO CUT WORKFORCE 120 PERCENT

NEW YORK, N.Y. (AP.com) - Merck will reduce its workforce by an
unprecedented 120 percent by the end of 2013, believed to be the first
time a major corporation has laid off more employees than it actually
has.
Merck stock soared more than 12 points on the news.

The reduction decision, announced Wednesday, came after a year-long
internal review of cost-cutting procedures. The initial report concluded
the company would save $1.2 billion by eliminating 20 percent of its
85,000 employees.

From there, said a spokesperson, "it didn't take a genius to figure out
that if we cut 40 percent of our workforce, we'd save $2.4 billion, and
if we cut 100 percent of our workforce, we'd save $6 billion. But then
we thought, why stop there? Let's cut another 20 percent and save $7
billion.

"We believe in increasing shareholder value, and we believe that by
decreasing expenditures, we enhance our competitive cost position and
our bottom line," he added.

Merck plans to achieve the 100 percent internal reduction through
layoffs, attrition and early retirement packages. To achieve the 20
percent in external reductions, the company plans to involuntarily
downsize 17,000 non-Merck employees who presently work for other
companies.

"We pretty much picked them out of a hat,".

Among firms Merck has picked as "External Reduction Targets," or ERTs,
are Quaker Oats, AMR Corporation, parent of American Airlines, Lockheed,
Boeing, and Charles Schwab & Co. Merck's plan presents a "win-win" for
the company and ERTs, said the Merck spokesperson, as any savings by ERTs would be passed on to Merck, while the ERTs themselves would benefit by the increase in
stock price that usually accompanies personnel cutback announcements.

"We're also hoping that since, over the years, we've been really helpful
to a lot of companies, they'll do this for us kind of as a favor,".

Legally, pink slips sent out by Merck would have no standing at ERTs
unless those companies agreed. While executives at ERTs declined to
comment, employees at those companies said they were not inclined to
cooperate.

"This is ridiculous. I don't work for Merck. They can't fire me," said
Kaili Blackburn, a flight attendant with American Airlines.

Reactions like that, replied the Merck spokesperson "are not very
sporting."

Inspiration for Merck's plan came from previous cutback initiatives,
said company officials. In January of 2005, for instance, the company
announced it would trim 15,000 jobs over two years. However, just a year
later, Merck said it had already reached its quota. "We were quite
surprised at the number of employees willing to leave Merck in such a
hurry, and we decided to build on that,".

Analysts credited the short-term vision, noting that the announcement
had the desired effect of immediately increasing Merck's share value.
However, the long-term ramifications could be detrimental, said Morgan Stanley analyst Beldon McInty.

"It's a little early to tell, but by eliminating all its employees,
Merck may jeopardize its market position and could, at least
theoretically, cease to exist," said McInty.

The spokesperson, however, urged patience: "To my knowledge, this hasn't
been done before, so let's just wait and see what happens."

Permalink to Comment

19. Anonymous24 on June 14, 2013 3:14 PM writes...

It looks like Merck is serious this time.

Subject: FW: Merck in the News
MERCK TO CUT WORKFORCE 120 PERCENT

NEW YORK, N.Y. (AP.com) - Merck will reduce its workforce by an
unprecedented 120 percent by the end of 2013, believed to be the first
time a major corporation has laid off more employees than it actually
has.
Merck stock soared more than 12 points on the news.

The reduction decision, announced Wednesday, came after a year-long
internal review of cost-cutting procedures. The initial report concluded
the company would save $1.2 billion by eliminating 20 percent of its
85,000 employees.

From there, said a spokesperson, "it didn't take a genius to figure out
that if we cut 40 percent of our workforce, we'd save $2.4 billion, and
if we cut 100 percent of our workforce, we'd save $6 billion. But then
we thought, why stop there? Let's cut another 20 percent and save $7
billion.

"We believe in increasing shareholder value, and we believe that by
decreasing expenditures, we enhance our competitive cost position and
our bottom line," he added.

Merck plans to achieve the 100 percent internal reduction through
layoffs, attrition and early retirement packages. To achieve the 20
percent in external reductions, the company plans to involuntarily
downsize 17,000 non-Merck employees who presently work for other
companies.

"We pretty much picked them out of a hat,".

Among firms Merck has picked as "External Reduction Targets," or ERTs,
are Quaker Oats, AMR Corporation, parent of American Airlines, Lockheed,
Boeing, and Charles Schwab & Co. Merck's plan presents a "win-win" for
the company and ERTs, said the Merck spokesperson, as any savings by ERTs would be passed on to Merck, while the ERTs themselves would benefit by the increase in
stock price that usually accompanies personnel cutback announcements.

"We're also hoping that since, over the years, we've been really helpful
to a lot of companies, they'll do this for us kind of as a favor,".

Legally, pink slips sent out by Merck would have no standing at ERTs
unless those companies agreed. While executives at ERTs declined to
comment, employees at those companies said they were not inclined to
cooperate.

"This is ridiculous. I don't work for Merck. They can't fire me," said
Kaili Blackburn, a flight attendant with American Airlines.

Reactions like that, replied the Merck spokesperson "are not very
sporting."

Inspiration for Merck's plan came from previous cutback initiatives,
said company officials. In January of 2005, for instance, the company
announced it would trim 15,000 jobs over two years. However, just a year
later, Merck said it had already reached its quota. "We were quite
surprised at the number of employees willing to leave Merck in such a
hurry, and we decided to build on that,".

Analysts credited the short-term vision, noting that the announcement
had the desired effect of immediately increasing Merck's share value.
However, the long-term ramifications could be detrimental, said Morgan Stanley analyst Beldon McInty.

"It's a little early to tell, but by eliminating all its employees,
Merck may jeopardize its market position and could, at least
theoretically, cease to exist," said McInty.

The spokesperson, however, urged patience: "To my knowledge, this hasn't
been done before, so let's just wait and see what happens."

Permalink to Comment

20. Teddy Z on June 14, 2013 3:50 PM writes...

#18 (and I guess #19) I am glad I wasn't drinking when I read that. Genius. As a former Merck employee, I was not impressed with Rich Murray when I reported to him. I am less impressed with him now that I don't report to him.

Permalink to Comment

21. Anonymous on June 14, 2013 4:09 PM writes...

@17_ I was there at Amgen when he brought in Beth, brought in Sean, Joe, Paul and others to lead critical functions. While he is those things you say, especially the wealthy part, clearly he has no aptitude for recognizing who is fit to lead an organization. Though I do not know how bad it was at Merck, and perhaps he made some good choices, what I saw was an absolute disaster in fixing bad organizations coupled with an ability to destroy good ones fueled by the worst judge of character imaginable. Good luck at Merck!

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22. gazette on June 14, 2013 4:33 PM writes...

#3

"All site heads have been let go". Who is steering the ship at Rahway?

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23. Esteban on June 14, 2013 4:36 PM writes...

@10: Ha! Spoken like an ex-Lillyputian which I know you to be...but then so am I and I happen to agree! :)

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24. Anonymous on June 14, 2013 4:38 PM writes...

@21 - like most senior executives Roger likes and promotes those who worship him.

He had no insight whatsoever into the clusterf**k that Beth engineered and her decisive ineptitude as illustrated below! Amgen HR compelled him to fire her subsequently.

From the classic announcement of Beth's hire at Amgen in 2002 as an illustration of flawed judgement:-

"We are extremely pleased that Beth Seidenberg, a globally recognized expert in immunology and inflammation, has decided to join the Amgen team. Beth has demonstrated her talent in moving drug candidates with speed and care through the development process, both at Merck and Bristol-Myers Squibb. She is a real leader in clinical research," said Dr. Perlmutter. Dr. Seidenberg's career milestones the development and approval of VIOXX(R) for pain management. She is credited with decisive, effective leadership in bringing both these products to successful approval.

Permalink to Comment

25. Chemjobber on June 14, 2013 4:40 PM writes...

18/19: I bow to your superior skills.

Permalink to Comment

26. srp on June 14, 2013 8:08 PM writes...

An experiment I'd like to see: A drug company led by managers elected by the research staff. Judging from the commenters on posts like these, something high-variance and informative should happen.

Permalink to Comment

27. anonymous on June 14, 2013 9:04 PM writes...

(Ad hominem comment redacted - DBL)

Permalink to Comment

28. anonymous on June 14, 2013 9:05 PM writes...

(Ad hominem post redacted - DBL)

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29. Charles Darwin on June 14, 2013 9:17 PM writes...

The leadership selection filter is for political self promoters rather than for those skilled in decision making.

Insecure incompetents promote their like - their insecurity explains the fetish for outside consultants.

Clueless - lets hire BCG or McKinsey!

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30. Anonymous on June 14, 2013 9:56 PM writes...

19 (20). time to change job and become a journalist. It is much easier to make up news than compounds.

Permalink to Comment

31. Zippy on June 14, 2013 10:21 PM writes...

This cannot be surprising to anyone at Merck before PK arrived that knows the current state.

Permalink to Comment

32. Biff on June 14, 2013 10:24 PM writes...

@18 + @19 -- This was funny the first time I saw it, with American Airlines as the company.

Permalink to Comment

33. Anonymous on June 14, 2013 11:41 PM writes...

@18 & 19: I thought you were going to say the extra 20% was coming from Merck KGaA because the people at the top did know the difference.

Permalink to Comment

34. Anonymous on June 14, 2013 11:45 PM writes...

@18 & 19: I thought you were going to say the extra 20% was coming from Merck KGaA because the people at the top didn't know the difference. Ooops!

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35. Anonymous on June 15, 2013 5:39 AM writes...

Rupert V is slime. He had to leave Merck Clin Pharm in Blue Bell eleven years ago for sleeping with the married help. He dumped his wife and dashed out the door with his helper before HR could eject him and her...anyone remember that fine leadership example ?

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36. anonymous on June 15, 2013 7:18 AM writes...

Some former site heads like Erion and Hunter reassigned, not let go.. New silos created, and MRL culture will persist. Nobody publicly admiting how much of a debacle the reverse merger was. They bought an oversold pipeline and staff.

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37. Anonymous on June 15, 2013 7:19 AM writes...

Roger may be new to the current job, but he is now new to the company. He probably watched afar all these years at MRL and clowns like Peter Kim and Kathleen Metters, and knew what was going wrong. One thing he is doing right is to get rid of the franchises, which do nothing other than creating silos. As for the individuals he retained or promoted, the major criteria is not different from Peter Kim. The big ass kissers who did not have past issues with him wins, whereas those who were get rid of were done for revenge, most likely.

Permalink to Comment

38. Anonymous on June 15, 2013 8:51 AM writes...

#37 - precisely.

Most beguiling ass kisser - Alise.

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39. Frossted on June 15, 2013 9:49 AM writes...

So what's up with the Boston site? No site head, no Oncology lead. Is Perlmutter going to take down the Scolnick Shrine as a final act of revenge?

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40. Anonymous on June 15, 2013 10:13 AM writes...

Revenge - what a motivator - one rarely sees such an unvarnished example.

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41. Anonymous on June 15, 2013 10:25 AM writes...

Revenge - what a motivator - one rarely sees such an unvarnished example.

For macabre hilarity, surprising that Roger didn't replace Gertz with Beth Seidenberg!

When Reynold Spector resigned in June 1999, Gertz edged Beth to succeed him as head of Clinical Sciences. Beth was going to stay around long enough to get the accolades for a successful GI outcomes study (VIGOR) for VIOXX. However, the questions from the DSMB alerted her to the problematic VIGOR outcome, so she abruptly quit in Feb 2000 prior to the end of the study leaving her protege Alise to rise to stardom with her unlikely, but commercially convenient, explanations that were later proven to be wrong.

Quite a story!


Permalink to Comment

42. anonymous on June 15, 2013 10:29 AM writes...

Rumor has it that ~15--20% additional headcount reductions before all is said and done, including MRL "bench level" scientists. Can anyone confirm or deny?

Permalink to Comment

43. Anonymous on June 15, 2013 11:49 AM writes...

The next CEO may bring Peter Kim back because he is much younger than Roger even though he had to retire first, and did such a good job spending Merck's money on things like SIRNA and Lycera.

Permalink to Comment

44. anchor on June 15, 2013 1:53 PM writes...

@ 43 What will become of the grandiose plan that Merck floated with Lycera? The bitch KM screwed up Merck sites at both Montreal and Rahway along with her British mates and as if that was not enough she became CEO @ Lycera and got Merck to sign the accord! Inflammation is an interesting area that Merck got burned many times over. Do you think Roger will pull the plug on her (he never liked her!) and Lycers?

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45. Anonymous on June 15, 2013 2:23 PM writes...

KM was the protege of Tony FH. That guy has so much to answer for!

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46. anon2 on June 15, 2013 2:45 PM writes...

Merck has certainly made some bad deals, but GSK beats by a large distance. And management still insists that external scientists & academics know more than those inside the company. At the rate they people are "leaving for personal reasons" or "to pursue other insterests", GSK management is making their personal feeling of poor valuation of internal staff coming to fruition.

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47. Anonymous on June 15, 2013 3:48 PM writes...

@44- or what about Calibr with SHultz in California? This was another one of Peter Kim's pet project, will be interesting to see if Perlmutter stays committed.

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48. Anonymous on June 15, 2013 4:24 PM writes...

I was so happy to leave when they opex'ed me and gave me a package. I liked many people there I worked with. Unfortunately, most of them had to leave the company for lack of leadership. What was left of Merck after that is all leadership, politics and no science. I am glad that the MF mafia was finally removed. But the British clowns at Merck are no better. Guess that it takes another CEO to remove them.

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49. Anonymous on June 15, 2013 4:30 PM writes...

#46 "And management still insists that external scientists & academics know more than those inside the company."

It must insist this because insiders know that management are politicians whose primary goal and skill is self preservation and promotion.

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