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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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January 15, 2014

"We Had to Clear Out Some Chemists"

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Posted by Derek

Matthew Herper at Forbes got a phone interview in with Merck's Roger Perlmutter, and some interesting things came up:

Perlmutter has praised chemistry – the ability to synthesize new drug molecules, as one of Merck’s core strengths. Which is why rumors that he’s been laying off chemists came as a surprise. And the rumors are true.

“It is the case that we have a superb chemistry organization, and having coming back I’m impressed with the progress the chemistry organization has made in terms of the compositions of matter,” he says. In hepatitis C, in particular, he notes that molecule are 700 to 1,000 daltons, way bigger than the company would have previously considered using. But he says he needed to clear out some chemists to hire more biologists.

“The reality is, as every chemist knows, you need great biologists to identify where to focus and we need to strengthen our biology capabilities and that just requires a different kind of investment. and we need to make headroom — it’s kind of a zero sum game. I was not happy, I don’t want to fire people, but on the other hand I know we have to live within our means.”

It seems that he could drop the "kind of" in front of "zero sum game", if that's what's really going on (and it may well be). It's true that you can have the wrong balance of chemists to biologists, and you can have it in either direction. We can argue (and people do) about what the proper settings are, but I don't think that anyone would dispute that it's possible to go too far. Whether Merck's research organization was, in fact, that imbalanced is open to argument, too, of course.

But when I hear this sort of rationale, I can't help but think of Randall Jarrell's lines: "You can't break eggs without making an omelette / - That's what they tell the eggs."

Comments (67) + TrackBacks (0) | Category: Business and Markets


1. Bob on January 15, 2014 8:34 AM writes...

Ahh. I just love medics. Can't get enough of them. They do all the discovering don't you know. Roger, knows how it should be done! Sheesh, I always had the feeling that Merck was doomed, well there you go. Roge, mate, you don't need great biologists to identify where to focus, you need great teams with biologists and chemists, and DMPK experts and clinicians to identify what you need to do. Perhaps you should try it. Locally, Roger would be referred to as a numpty.

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2. Anonymous on January 15, 2014 9:20 AM writes...

"but it is amazing how many eggs one can break without making a decent omelette"
Peter Ludwig von der Pahlen

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3. The Fat Layer on January 15, 2014 9:20 AM writes...

Why don't they just admit that they consider chemists to be a commodity?

Chemistry operations and inputs are better defined and standardized than biology, making the latter trickier to make it work vs. chemistry (in my humble opinion).

So they do the 'tricky' part within the organization and the chemistry... well... we all know... gets outsourced.

Has Merck ever outsourced (or any other big pharma company for that matter) the biology upon which they will bet an entire research program?

Does everybody know?

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4. Anonzymous on January 15, 2014 9:28 AM writes...

It's pretty clear that with the advent of phenotypic screening and the need for better target validation, biologists rather than chemists are going to be key in drug discovery efforts.

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5. marcello on January 15, 2014 10:18 AM writes...

it is hard not to agree with #4 and #3

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6. Hap on January 15, 2014 10:19 AM writes...

Maybe they're hoping the biologists will both find new drugs and explain their systems. Lots of pharma seems to be hoping that biologics with their longer exclusivities (via more difficult generic duplication) and generally higher prices will make them more profitable, and they don't seem to need the chemists to make them. If that's the case, then we will get a partial test of the idea that extending exclusivity will lead to more and/or better drugs.

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7. Anonymous on January 15, 2014 10:33 AM writes...

Adding to comment of #1- I worked at Amgen, where we had great teams, biologists and protein chemists first then later a chemistry effort added the chemists. Roger came in and had very little appreciation for the team concept and looked for the "superstar" biologists (as measured by academic standards) as if the problem was knowing where to focus. Of course, this translated into working on a industry wide, common list of hot targets that were the recent subject matter of Science, Nature and Cell publications. Scientists looking to build their careers got up early to get the on line publication of the journals and copy figures outlining the stunning mouse biology into powerpoint to be the first to "recognize" the next area to focus on. This led to a fractured effort with biologists, some with little drug discovery background, directing the effort of teams as if they were PIs, with an inefficient process that did not attack target classes in a coherent manner. He's a smart guy, so maybe he has learned.

Alternatively, does merck not value biologists enough now? It was a culture shock for me when the firsts chemists showed up and some had very little respect for biologists ( most had plenty of respect). For the worst cases, the biologists were just the folks that decorated their molecules with data. I have no insight into whether this is a Merck culture issue now, but learned from industry veterans that this was an issue at other companies in prior times.

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8. Chemjobber on January 15, 2014 10:34 AM writes...

Does anyone know why Perlmutter is praising bigger molecules? Is it acknowledging that Merck is breaking out of the Ro5 mindset? (Did they have such a mindset before?)

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9. Anchor on January 15, 2014 10:48 AM writes...

Roger! Go ahead, ignore the Merck chemists at your own peril! A shameless interview with Matt Harper. A drug is born out of biologist and a chemist.

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10. CMCguy on January 15, 2014 10:55 AM writes...

The approach suggested appears almost academic one as might be good for finding lead compounds however doing actual refined medchem to generate a few more solid molecules with enhanced probability to become drugs will suffer. I recall (with envy) when Merck had substantial and top notch people resources in both Chemistry and Biology so that when an particular new area and project was hot they would shift people around to get to good candidates ASAP, often ahead of the competition. Typically I think any imbalances where handled by having an overabundance of new ideas that could become exploratory projects with a small team that was supported by established infrastructure and could be expanded if showed promise. This was pre-Combichem/pre-HTS when became fashionable to think could do these tasks of drug discovery quicker and easier with less hands and minds.

Sounds almost like Merck wants to engage in cyclic development mode similar to small start-ups where original focus is heavy on R but when move into D much of the R people are not retained. This may at times be effective in cutting immediate burn rates, although based on costs of D verses savings in R never been sure it truly provides an adequate sustained funding model, but the thing it does accomplish is elimination or narrowing of projects that might lead to improved 2nd generation or compounds for different targets.

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11. Toad on January 15, 2014 11:10 AM writes...

Merck is not the only large pharma actively pursuing larger (MW>500) molecules. Significant effort is being focused on macrocycles and stapled peptides, and the like. Successes in these areas are fueling the work, as is lack of success with smaller molecules in certain disease targets and diseases.

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12. darwinsdog on January 15, 2014 11:25 AM writes...

Funny thing about Perlmutter is that he gets away, popular sentiment-wise, with comments of this nature and heavy handed changes to an organization. Its because he is smart, often gets it right and he is a good scientist (well going back a long ways but he hasn't lost it, yet, like a lot of execs who might claim something like an MD in their pedigree but you wouldn't trust them to do a Heimlich correctly). Comparisons to Obama (and the website rollout) come to mind.

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13. Chrispy on January 15, 2014 11:33 AM writes...

Drug pipeline crumbles
Fire the experienced ones
Problem solved, look away

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14. a. nonymaus on January 15, 2014 11:38 AM writes...

"Yes, but where is the omelette?" -- George Orwell

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15. Curious Wavefunction on January 15, 2014 11:58 AM writes...

"If you wish to make an omelette from scratch, you must first invent the universe. Then you must invent commonsense"- Fake Carl Sagan.

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16. anonymous on January 15, 2014 12:12 PM writes...

Of course, the rest of the story that they don't mention is that they target older expensive chemists and replace with inexpensive chemists in India and China to maximize "headroom utilization," all the while charging Americans the highest drug prices in the world.

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17. Anon on January 15, 2014 12:13 PM writes...

As a biologist I really don't agree with this.

1. If it is a zero sum game between chemists and biologists, then why are there lobbyists trying to increase the number of scientists? (

2. if biologists are suddenly valued, why has the budget not increased to account for that? If more biologists increases your R&D ROI, why isn't there ANY increase in the R&D personnel budget?

3. while biologists help...we do just that, help. Look at how many "mechanisms" of p53 are published every year...and that is just one of how many proteins out there? Yea, we don't really know the answer to that question either (splice variants, modifications, etc.) much less where they are all the time or what they are doing.

IMO, Perlmutter knows Herper's and his audience's views and is just playing to that.

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18. cynical1 on January 15, 2014 12:15 PM writes...

Why is it that I can't get Humpty Dumpty out of my head........

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19. Anonymous on January 15, 2014 12:20 PM writes...

More like breaking eggs and omelettes to make a complete mess.

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20. Anonymous on January 15, 2014 12:25 PM writes...

More like breaking eggs and omelettes to make a complete mess.

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21. nameless on January 15, 2014 12:39 PM writes...

"I had one of our very senior chemists express to me her concern that maybe she just isn't any good at this," Perlmutter said. "She got to the point where she really doubted her own ability. And that level of self-doubt has an effect on people's performance."

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22. Recently ex-Merck chemist on January 15, 2014 12:42 PM writes...

I feel like an egg that was just dropped on the floor.

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23. Billy on January 15, 2014 12:48 PM writes...

@21, maybe SHE isn't.

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24. qvxb on January 15, 2014 1:03 PM writes...

As Glenn Frey might say

I'm sorry it went down like this
The chemists had to lose
It's the nature of the bus'ness
It's the pharma blues
Pharma blues

There's lots of shady characters
Lots of dirty deals
It's the lure of easy money
It's gotta very strong appeal
Perhaps you'd understand it better
Standin in my shoes
It's the ultimate enticement
It's the pharma blues
Pharma blues

You see it in the headlines
You hear it ev'ry day
They say they're gonna stop it
Better update your resume

It's a losing proposition
But one a CEO can't refuse
It's all about economics
It's the pharma blues
Pharma blues

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25. Chemjobber on January 15, 2014 1:25 PM writes...

21's prize quote is from a Reuters article yesterday. It's linked in my handle.

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26. Doug Steinman on January 15, 2014 1:35 PM writes...

Trying to define an optimal ratio of biologists to chemists is stupid. That number, if such a thing exists, is highly dependent on the project and whether or not the project biology is highly developed. And why is it that the chemists seem to always be the ones to take the greatest hit? Is it because chemistry is thought to be more easily outsourced than biology? Finally, if headcount is the issue, why not consider firing accountants or marketing people or lawyers? They all make more money than chemists and they add nothing to the future of a company whose survival depends on scientists discovering and developing new drugs. My rant for today.

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27. MostXcellAnt on January 15, 2014 1:54 PM writes...

Do the Pharma Shuffle
Hear the money rustle
Watch the scientists tumble
Feel the earnings crumble
You need chemist's hands to make a start
If you wanna make money
You need the luck to make a buck
If you wanna be Merck, Plough
You've gotta be cool to Wall Street
You've gotta be cool to Wall Street
When your pipeline is low
Dow Jones ain't got time for the bums
you'll wind up on retiree row with gold in their pockets
They plead with you, buddy can you save some dimes
But you got more on the mind
Doin' the....
Doin' the....
Oh, M&O
Did your money make you better?
Are you waiting for the hour
When you can screw me?
`Cos you're big enough
To do the Research Shuffle
Let your money hustle
Bet you'd sell your mother
You can buy another
Doin' the....
Doin' the....
You buy and sell
You wheel and deal
But you're living on instinct
You get a tip
You follow it
And you make a big killing
On Wall Street

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28. The Aqueous Layer on January 15, 2014 2:07 PM writes...

"I had one of our very senior chemists express to me her concern that maybe she just isn't any good at this," Perlmutter said. "She got to the point where she really doubted her own ability. And that level of self-doubt has an effect on people's performance."

And, as such, we had to clear her out.

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29. CMCguy on January 15, 2014 2:12 PM writes...

Derek I am somewhat surprised you or any comments did not additionally mention another potentially impactful part of Herper's piece regarding reorganization with Marketing involvement in selection of development projects based on “the unambiguous promotability of the molecule.” I was under the impression that this was already the established norm at Pharma Companies and assumed true of Merck so that project interest and support are ultimately fated to Sales and Marketing "figures". This has meant there often is weaning out of any early projects that do not satisfy certain projections for acceptable patient populations and likewise frequently dictates choices of most Phase III Clinical Studies(& more Phase IV). Although Marketing can provide valuable input and can not forget require business success as well if it becomes the chief driver then projects can greatly lose science focus in decisions reducing probability will even get a new drug approval. In many cases the Marketing projections appear to entail even more extreme guess work than carnival fortune tellers and development can get altered based on observations and learning therefore I am personally doubtful that there are many cases where can appropriately predict “unambiguous promotability” until very late in the game (and on occasion never know potential till after gain commercial approval.

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30. Anonymous on January 15, 2014 2:44 PM writes...

"I had one of our very senior chemists express to me her concern that maybe she just isn't any good at this," Perlmutter said. "She got to the point where she really doubted her own ability. And that level of self-doubt has an effect on people's performance."

This gets to the core of the effect RP had on the team work culture at Amgen. He took things from a place where individuals were supported and nurtured to make meaningful contributions to a culture where people were dissected into component skills and ranked against one another, all after he and others proclaimed publicly that current staff, those that built billions of dollars of value that paid his salary, were not good enough. In total, this created a cut throat environment that made a lot of people unsure of their status with an impact on confidence and performance, both individual and organizational. Sounds like the same is happening at Merck.

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31. Hap on January 15, 2014 3:03 PM writes...

Big Pharma seems like the children of a tycoon spending their way through the his money. Before long, their money's got to generate income at a greater clip because they're eating at the principal, forcing riskier and short-term investment. The alternative - living within their means - isn't acceptable, and so they spend until they can't any more.

Big Pharma had been generating revenue dependably, but that wasn't enough. To get more money, they had to sell what they had overzealously (which made people mistrust them and made it harder to get and sell future drugs) and cut their research, since it didn't make them money right now. Of course, cutting research didn't make it more efficient, but less, and so now, they really can't generate products and future cash flow. And of course, the only cure is to cut more, sell more, and hope for people willing to find your products for not much. I'm not taking bets on whether that will work.

How much do people think their investments will be generating when your company has no products or is paying through the nose for what they do have?

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32. Anonymous on January 15, 2014 3:05 PM writes...

Further, really good people, and many outstanding scientists have self doubt because they know how much they don't know, while really bad leaders possess no self doubt.

Why is the leader of a major Pharma R&D shop sharing publicly what was probably a very private and sensitive comment? Who does this help?

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33. Anonymous on January 15, 2014 3:24 PM writes...

@Hap: 16% profits every year by the industry (when the average for the fortune 500 is 1%) is not enough?

Its time for big Pharma to take a huge fall. I would love to see Medicare be able to negotiate prices, which would be just the push of the boulder needed.

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34. Anonymous on January 15, 2014 3:28 PM writes...

Could the lack of confidence be the result of 5 successive years of layoffs and re-organizations at Merck, rather than challenges in bringing new drugs to market?

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35. surferdude on January 15, 2014 3:58 PM writes...

@33 Anonymous: The pharmaceutical industry is not the most profitable industry in America. I'll leave you to figure out what is. Secondly, 16% is the profit margin, not the profit. Comparing the profit margins of Walmart and Merck and then proclaiming "It's time for big Pharma to take a huge fall" is ignorant.

Getting back to the topic at hand, as a current employee of Merck, I will say that for at least half of the projects I've been a part of over the past 5 years, we (chemists) have been "waiting for the biology to catch up." Meaning we had molecules that matched our desired in vitro profile, but did not have one or more critical assays developed, which were needed to move those molecules forward. Whether this had to be corrected in a "zero sum" manner is debatable. Furthermore, while chemists took the hit this time around, in the last round (when certain therapeutic areas were moved or axed), biologists took a disproportionate hit.

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36. Am I Lloyd peptide on January 15, 2014 4:01 PM writes...

Shorter Perlmutter and other Big Pharma: "We had to clear out people with lack of morale after we lowered their morale through layoffs and downsizing."

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37. Hap on January 15, 2014 4:02 PM writes...

Apparently it wasn't. Perhaps they'll figure out that 16 is bigger than 0; on the other hand, many of the people responsible don't care, since they're first in line to get paid from selling the family silver. The rest of their investors and employees get another math lesson, I guess.

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38. Chemjobber on January 15, 2014 4:12 PM writes...

32: Regarding your 2nd sentence, I agree entirely.

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39. steggy101 on January 15, 2014 4:39 PM writes...

The phrase ‘zero sum game’ has caused some strong reaction. It seems to me what Roger meant was for the given amount of the R&D budget he wants to have more biologists to work in Biologics area (new investment). The phrase ‘zero-sum game’ should be applied to the whole R&D picture not that biologists versus chemistry working in small molecule space.

As a trend Merck and other big Pharms are downsizing the overall investment in the small molecule space. A recent example is BMS’s announcement of exiting Diabetics and Neuroscience areas.

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40. bacillus on January 15, 2014 5:28 PM writes...

As a mere microbiologist, I was most envious to discover that the median starting salary for a PHD chemist was roughly double the average for my profession. I suspect it was because many more chemists worked in the private sector versus the biologists. Presumably, they enjoy parity in industry? I think industry might have a big problem hiring the kind of biologists that can perform all the in vivo stuff in the numbers they require. I was being called "Dino" behind my back 15 years ago for doing this type of work, and we sure aren't training future generations to do physiology, toxicology, pathology etc except maybe at vet schools. Just about everyone else is a specialist omicsist nowadays, but I'm not sure how they are any more valuable to Pharma than chemists.

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41. Anonymous on January 15, 2014 5:51 PM writes...

What Perlmutter means by "zero-sum" is:

Lots of jobs in China/India - Lots of jobs in US/EU = 0

Simple! :-)

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42. Anonymous on January 15, 2014 6:27 PM writes...

Or maybe he is saying the sum of all his efforts will come to zero ... or will bring Merck's value down to zero?

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