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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: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

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December 19, 2013

Bristol-Myers Squibb Exits Diabetes

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Posted by Derek

As the Wall Street Journal reported last night, Bristol-Myers Squibb is getting out of the diabetes business entirely, selling its collaboration with AstraZeneca back to AZ.

As part of the transaction, and subject to local consultation and legislation, Bristol-Myers Squibb and AstraZeneca anticipate that substantially all employees of Bristol-Myers Squibb dedicated to the diabetes business will be transferred to AstraZeneca. A number of R&D and manufacturing employees dedicated to diabetes will remain with Bristol-Myers Squibb to progress the diabetes portfolio and support the transition for these areas. Bristol-Myers Squibb will work closely with AstraZeneca to ensure a smooth transition.

What happens once that diabetes portfolio is "progressed"? I haven't heard details yet, and they may not even be available. Given the recent moves by BMS, though, this announcement shouldn't come as a huge surprise. It does say some interesting things about the positions of the two companies. BMS sees big opportunities in its oncology portfolio, and by comparison, the diabetes business looks slow-moving and too expensive for the return it offers. AstraZeneca, by contrast, needs all the help it can get. Actual drugs that are bringing in actual money, and whose patents are not expiring next Tuesday? Not bad.

Comments (21) + TrackBacks (0) | Category: Business and Markets | Diabetes and Obesity


COMMENTS

1. Anonymous on December 19, 2013 9:09 AM writes...

Expect AZ to solve their dilemma by laying off more people.

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2. alig on December 19, 2013 9:23 AM writes...

So do the employees transferred from BMS to AZ get to keep their years of service? It is a lot cheaper to lay off someone with 1 year with a company than 25.

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3. G on December 19, 2013 12:16 PM writes...

It seems like pharma is slowly getting out of the business of making drugs.

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4. Anonymous on December 19, 2013 1:43 PM writes...

@3: And without any back-up.

Pharma will eventually disappear altogether as it tries to bury it's head further and further up its own **s.

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5. Bender on December 19, 2013 2:17 PM writes...

And the execs will all get a nice bonus as they exit.

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6. SteveM on December 19, 2013 2:55 PM writes...

Big Pharma companies are morphing into airlines. I.e., businesses with huge capital costs, but without a sustainable way to make money...

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7. Corporate Clone on December 19, 2013 3:08 PM writes...

As a corporate clone, my initial reaction would be that scenario-based correlations are enabling a heart-of-the-business upside focus. Clearly a cross-industry landscape enables a better balance, while action items prioritize a goal-oriented approach. I think this move represents a transition to a more forward-looking model, which is why I approve wholeheartedly.

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8. Corporate Clone on December 19, 2013 3:08 PM writes...

As a corporate clone, my initial reaction would be that scenario-based correlations are enabling a heart-of-the-business upside focus. Clearly a cross-industry landscape enables a better balance, while action items prioritize a goal-oriented approach. I think this move represents a transition to a more forward-looking model, which is why I approve wholeheartedly.

Permalink to Comment

9. Anonymous on December 19, 2013 4:09 PM writes...

It only makes sense to focus if you are absolutely certain you have a viable business model. Otherwise, when your current model stops working, you must diversify and experiment until you find another one that works.

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10. Dr. Manhattan on December 19, 2013 4:22 PM writes...

It does go someway towards solving AZ's immediate pipeline problems. I would be somewhat uncomfortable to be a BMS employee being "transferred" to AZ (or any other company of that matter). As pointed out, a whole load of individual "issues" for transferring employees need to be spelled out in detail.

Whatever happened to the "portfolio" approach in Pharma? Companies such as BMS are slowly morphing into specialty companies with an almost biotech focus on single areas. Guess it says a lot about the trials and tribulations of Big Pharma!

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11. Am I Lloyd peptide on December 19, 2013 5:10 PM writes...

In a few years Big Pharma will no longer be Big Pharma. Rather it will represent something akin to a central bank, doling out loans to academic labs and small companies, getting revenue out of the resulting products, and basically outsourcing every part of the drug discovery process including clinical trials. It will no longer be in the business of discovering drugs.

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12. Anonymous on December 19, 2013 6:57 PM writes...

@11:

Were probably about half-way there since most companies in-license ca. 50% of their pipelines. For the better given track record of many big pharma discovery groups. Companies will do what it takes to survive.

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13. SteveM on December 19, 2013 7:12 PM writes...

Re: #10 Dr. Manhattan and #11 Am I Lloyd peptide

Good call. Big Pharma will probably morph into companies with a VC arm for early R&D (and closing down their internal R&D units in parallel), an outsourced downstream arm for clinical trial testing, while keeping manufacturing and marketing in-house.

What that means for the scientists? Prepare yourselves for a dog eat dog professional existence as contract employees. I.e., the Pharma equivalent of itinerant academic "Distinguished Lecturers"

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14. anonymous on December 19, 2013 7:46 PM writes...

There is little doubt that AZ will FIRE all the unfortunate BMS Diabetes folks who are "transferred" ! Why am I so certain you ask? BECAUSE THEY"VE ALREADY FIRED ALMOST ALL OF THEIR OWN DIABETES RESEARCHERS ! It's a crime !

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15. Anonymous on December 19, 2013 9:10 PM writes...

Re:#14 Are you sure about that AZ has fired ALMOST ALL OF THEIR OWN DIABETES RESEARCHERS? Would you like to elaborate on that?

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16. Anonymous on December 20, 2013 2:09 AM writes...

(Obesity)/Diabetes is now located Mölndal (CVMD imed) and they reduced R workforce this year by ~50% to around 200 (obesity is not a research focus anymore), establishing several collaboration with academic labs. I don't know how the ~ 4000 BMS people are mixed between R&D/Production, but the R&D part there or in Mölndal will get a hard time.
Overall AZ paid ~7 billion for products making what 500-800 million revenue? I am not so good at the math, but one can hope that the franchise idea somehow works out ...

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17. TX raven on December 20, 2013 9:39 AM writes...

@13...
Well... prepare yourself for a world with fewer new medicines...

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18. jacktooth on December 20, 2013 8:28 PM writes...

@13
Scientists, or at least chemists are already screwed. It can't get much worse. If your extremely lucky enough to get a pharma job, you will be laid off in a few years anyways.

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19. steve on December 21, 2013 2:24 PM writes...

The problem stems from ill-considered criticism from Steve Nissen about Actos and Avandia. Destroyed multi-billion a year drugs with claims that ultimately proved false. Now diabetics will suffer because FDA has raised the bar on safety making it almost impossible to run the gauntlet and get a diabetes drug approved.

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20. Anonymous on December 24, 2013 6:03 PM writes...

Why not get clinical trial funding from venture capital and cut out big pharma altogether?

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21. cloned clown on December 25, 2013 1:58 AM writes...

@20: Who needs big pharma anyway? Only the patients! To do the development, formulation, labeling, and regulatory waltz to get the drug to market!

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