Author: Derek Lowe

2010 has gotten off to a vile start for the large pharma companies. They were key players right from the beginning of the Obama administration’s health care reform efforts – or, looked at another way, they were co-opted early – but are now facing a dead loss on their investment. And their problems did not lessen one bit during all the legislative wrangling. Drug discovery is still at what looks like an unsustainably low pace, regulatory and safety concerns are keener than ever, and patent expirations are still looming.

That’s why we’re seeing both AstraZeneca and GlaxoSmithKline announcing
layoffs, yet again. (Well, GSK’s announcement isn’t out yet, but the
wording of the sudden cancellation of a long-planned managerial retreat
in the face of their earnings announcement leads to only one
conclusion). More chemists and biologists are heading out unwillingly
into the least welcoming market for pharma jobs in memory, and their
places are being taken by either contract employees in Asia or (in some
areas) by no one at all, as the companies contract their areas of
research.

Those of us in the industry have mostly given up
trying predict when this cycle will end. After all, people are still
getting sick, and many of them have diseases that need better
treatments than we now have. Somehow, though, we’ve gotten ourselves
overextended, paying for large research organizations that haven’t been
able to deliver enough new medicines. But making the companies smaller
doesn’t seem like it’ll help much, either. More and more, it’s looking
like the industry needs some new research (and financial) models – and
more and more, it looks as if we don’t have any idea of what those
might be. Individual partnership financing for drug projects?
Open-source research of some sort? Teaming up with disease foundations
for early-stage research? More collaborations between rivals to
disperse the risks? If you have any ideas, come on down. Now’s the time.

Derek Lowe blogs from inside the drug labs at In the Pipeline.

Merck and Schering-Plough, Wyeth and Pfizer. . .well, OK, everybody and Pfizer. There have been plenty of big mergers over the last few years in the drug industry, and they’ve always been accompanied by talk of economies of scale, critical mass, synergies, incredible opportunities that will come from merging two wonderful research pipelines and terrific development organizations. It’s enough to make you think that these things are good ideas.

Until you look at the numbers, that is
A researcher named Bernard Munos at Eli Lilly has done that, though,
and reports his results in a well-respected industry forum, Nature Reviews: Drug Discovery.
The reality is much closer to the one reported by the grumbling
scientists at these companies, rather than the one inhabited by the
CEOs. Companies that have gone through big mergers have been
underperforming the industry averages for development of new drugs, not
the other way around. Shareholders should perhaps take note next time
they’re asked to approve another one of these deals.

In fact,
one of Muno’s main conclusions is that very little that drug companies
have done over the last 60 years seems to have affected the underlying
rate of drug discovery. That process, in fact, models best as an
essentially random one, impervious to the best schemes of scientists
and MBAs alike. It’s possible that a number of factors have fought to a
draw to make the figures come out that way, but several others have
also remained static – the chances of a new molecule becoming a
blockbuster, for example. One thing that hasn’t stayed the same,
though, is the cost of finding these drugs. Munos estimates that that’s
been going up at about 13% a year since the 1950s, and that trend shows
no sign of slowing down.

Derek Lowe blogs from inside the drug labs at In the Pipeline.