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Bernard Munos Rides Again

I’ve been meaning to link to Matthew Herper’s piece on Bernard Munos and his ideas on what’s wrong with the drug business. Readers will recall several long discussions here about Munos and his published thoughts (Parts one, two, three and four). A take-home message:

So how can companies avoid tossing away billions on medicines that won’t work? By picking better targets. Munos says the companies that have done best made very big bets in untrammeled areas of pharmacology. . .Munos also showed that mergers—endemic in the industry—don’t fix productivity and may actually hurt it. . . What correlated most with the number of new drugs approved was the total number of companies in the industry. More companies, more successful drugs.

I should note that the last time I saw Munos, he was emphasizing that these big bets need to be in areas where you can get a solid answer in the clinic in the shortest amount of time possible – otherwise, you’re really setting yourself up with too much risk. Alzheimer’s, for example, is a disease that he was advising that drug developers basically stay away from: tricky unanswered medical questions, tough drug development problems, followed up by big huge long expensive clinical trials. If you’re going to jump into a wild, untamed medical area (as he says you should), then pick one where you don’t have to spend years in the clinic. (And yes, this would seem to mean a focus on an awful lot of orphan diseases, the way I look at it).
But, as the article goes on to say, the next thought after all this is: why do your researchers need to be in the same building? Or the same site? Or in the same company? Why not spin out the various areas and programs as much as possible, so that as many new ideas get tried out as can be tried? One way to interpret that is “Outsource everything!” which is where a lot of people jump off the bus. But he’s not thinking in terms of “Keep lots of central control and make other people do all your grunt work”. His take is more radical:

(Munos) points to the Pentagon’s Defense Advanced Research Projects Agency, the innovation engine of the military, which developed GPS, night vision and biosensors with a staff of only 140 people—and vast imagination. What if drug companies acted that way? What areas of medicine might be revolutionized?

DARPA is a very interesting case, which a lot of people have sought to emulate. From what I know of them, their success has indeed been through funding – lightly funding – an awful lot of ideas, and basically giving them just enough money to try to prove their worth before doling out any more. They have not been afraid of going after a lot of things that might be considered “out there”, which is to their credit. But neither have they been charged with making money, much less reporting earnings quarterly. I don’t really know what the intersection of DARPA and a publicly traded company might look like (the old Bell Labs?), or if that’s possible today. If it isn’t, so much the worse for us, most likely.

116 comments on “Bernard Munos Rides Again”

  1. Rick says:

    To put a finer point on it Derek, Munos 7th step in his 7-step process to improve R&D productivity is: “Cut R&D”. Specifically, he recommends eliminating in-house corporate research and letting that be done by “outside” organizations.
    I can’t believe that, after the volumes of organizational research – which I would’ve thought Munos would’ve read, but maybe not, which is another scary thought – have addressed the questions “why do your researchers need to be in the same building? Or the same site? Or in the same company?” and found that “it often works best that way”, Munos can offer wholesale trashing R&D without attempting to refute, or even acknowledge, this vast body of knowledge. But then again, he’s a marketing guy, and in that world, the important thing is NOT what people know, but what you can convince them of, so this is about what I’d expect. Little wonder that R&D productivity has crashed under the “leadership” of Munos and his bretheren.
    To better understand the avoidable stupidity of the situation, try the following thought experiment: give research scientists free rein to determine how marketing does its job and and predict the response of the business community. Fortunately, scientists don’t try to tell marketers how to do their job nearly as much as marketers tell scientists how to do their, so I guess you could say the glass is only half-empty.

  2. Two quick points: Bernard certainly still believes in focusing in areas where you can get proof of potential breakthrough efficacy early on. It’s to that idea that If that didn’t come through, it’s my fault.
    Rick, Munos certainly isn’t saying to cut all R&D, but he is saying that it’s now possible to allow a lot of the research to be done by small groups that are more loosely networked together. Part of the idea is to make it culturally easier for executives to kill more programs early.
    Cutting R&D does not need to mean cutting R, either. I think a lot of this, in his vision, would be saved by not funding so many clinical trials, and by taking bigger, riskier bets on things like stem cell research, regenerative medicine, synthetic biology, etc.
    Thanks for the discussion, Derek. It’s much appreciated.

  3. lynn says:

    I was speaking with Munos recently – he was promoting his outsourcing/innovation stuff – and I said, all well and good letting academics and others have a go at drug discovery – but they have no experience, no knowledge of drug discovery, of what the problems are, of what can go wrong. They will be spending too much time reinventing wheels that have already proved unworkable [like that novel elliptical wheel design]. Somehow, before one sends the innovators off to play, they should get some basic education. He didn’t disagree – but I don’t think he has internalized the role that experience and expertise play as a background to innovation. And, as Rick says [#1], that is the benefit of larger organizations – the possibility of spreading lore and expertise.
    As to DARPA – some good stuff yes, but a lot of garbage funded too. Not that this is bad. The Bell Labs model was one that several Big Pharmas tried to emulate [at least a little] in the 80s, anyway – let a lot of good scientists do what they wanted and something would emerge. Things did emerge, there was a pipeline; but the advent of yearly evaluations based on short term “objectives” and the drive for efficiency stemmed that. I’ve always thought that the early stages of discovery, being quite cheap within a Big Pharma context, should have a reasonable amount of free time for scientists. Small groups could work on several projects at once – and commit to ones that were progressible. How to set up that sort of system in the present day economic climate?
    I have been sitting on NIH study drug discovery study sections lately, and almost all of the academic proposals suffer from a lack of understanding of the obstacles to drug discovery. Grrr.

  4. SciParker says:

    Derek, this trend dovetails nicely with the open innovation paradigm which companies like GSK are embracing whole-heartedly. Complimenting senior execs in a forum such as this is not always popular but this is one space where I feel strongly that the likes of Moncef Slaoui and Partick Vallance @GSK have been well ahead of the curve. The science park in Stevenage, Uk, promises to be a real engine of innovation that, far from threatening jobs across the piece, has the potential to secure future growth and deliver a 21st century pipeline. There is great hope that an entirely new “ecosystem” can be created in the park where the strengths of big and small companies can cross-fertilize to mutual benefit. Jackie Hunter, fGSK, has been an articulate proponent of this model and has written a widely-quoted piece on this, see She and a number of other ex-GSK-ers, Mike Barnes for example, are very active in this endeavour so I think we should keep a close eye on this spece.

  5. Anonymous says:

    #2 Matt – While Mr. Munros may still beleive in “focusing in areas where you can get proof of potential breakthrough efficacy early on”, that can be taken in differing ways. True breakthroughs on diseases that society cares about do not come “early”. At least in terms of the time he seems to be monitizing those dreams.
    If he is stating that using those distributed methods will clearly shorten that time from “conceptual breakthrough” to actual product, then OK. Still will take some years to prove that out.

  6. Anonymous says:

    #4 – SciParker seems to be a recurrent PR tout for GSK – in varying names. Munos’ seemingly novel POV aside, this is in fact not a new or singular stretegy. Most to all of the top Pharma’s have been investing in decentralizing R&D, and improving the tools, org., and process to manage that vision. However, only GSK has seen to “green light” such obviously corp. PR statements.

  7. Anonymous says:

    1) Your link doesn’t work.
    2) Usually the GSK PR machine jumps on here AFTER they layoff thousands of people. Foreshadowing?

  8. MoMo says:

    Lynn- Your comment about academics and “a lack of understanding of the obstacles to drug discovery” is curious to me.
    What bothers you? I would love to know as a spirit who walks in both worlds. I can only guess that its a lack of understanding how important it is to have animal data that is meaningful and relevant.

  9. #5 — Some breakthroughs do show themselves early. The argument is more that the risk is great no matter what you do, so swing for the fences, I think. Bill Chin, who co-write a Science Translational Medicine piece with Munos, was much more focused on this and did not agree with cutting R&D.
    Would Lipitor be invented under this model? Probably not. But Munos seems to believe that the industry’s problem has been chasing too hard after Lipitors (a me-too that changed the world) and ignoring innovation.
    What GSK is doing may match Munos’ ideas in intent, but I’d question whether it really matches what he’s saying here. I do think simply saying “well companies have been outsourcing a great deal” is not quite getting the point.

  10. David Lilienfeld says:

    There’s a fundamental difference between DARPA and any other model: DARPA not only funds lots of projects, only some of which will be fruitful, it also does so in lots of institutions with different cultures. That’s quite a big difference, and it may explain in part the success DARPA has enjoyed over the years.

  11. lynn says:

    @MoMo#9 – My experience is with anti-infectives, particularly antibacterials. Animal work is important and, with antibacterials, very predictive; but most NIH grants seem to put animal work way downstream when, in industry, we would do it much more upfront to get an idea of PK, efficacy, etc. But it is more a question of what the problems are in selecting targets [or maybe not needing to select targets at all]; of setting up HTS; how to do negative controls; recognizing the likelihood of resistance arising with most targets, knowing that just because your compound hits your enzyme, it is probably killing your bacterium by another mechanism; knowing it’s really easy to kill bacteria – but much harder to do it without killing the host; realizing that we do not know how [rationally] to get a compound into a gram negative bacterium, so that finding an inhibitor of yet another gram negative enzyme is not addressing the hardest part of the problem. Lots of that kind of stuff. I’m sure there are other problems in other areas of drug discovery, too.

  12. LabRat2CodeMonkey says:

    Perhaps,”SciParker”,you meant this link:
    One question for you, SciParker: What has been the uptake at the Stevenage Science Park so far? I heard a rumor that it’s not been great but I may be mistaken. Finally, I’m not sure the wider scientific community here in the UK thinks so highly of the guys you’ve mentioned but, once again, I may be wrong and people would like it to succeed as opportunities are diminishing.

  13. JC says:

    GPS, nightvision goggles & the like do not have to be approved by the FDA before they are deployed.

  14. Anonymous says:

    #10 – What past breakthroughs have “shown themselves early”?
    I agree that innovation can be boosted by applying network sciences to innovative discovery. Perhaps we need to differentiate between “outsourcing development” which has been well-in-hand for twenty years, versus this newer idea of improving how researchers interact (virtually as opposed to on the same site.) “Decentralized research” is a clumsy phrase, but as a scientist I see hope for it.
    However as a scientist, I again look for signals of proving any such hypothesis. Again, proof of this will take some years. Breakthroughs in understanding disease and interventions will still take years to prove out safety and efficacy in models that regulators mandate. Unless R&D will be less fettered by such rules and ethics in other regions…..

  15. drug_hunter says:

    Just so we’re all clear: Lipitor did not “change the world.” It was not, repeat NOT, a medical breakthrough. Mevacor was the breakthrough. Medical practice (and clinical outcomes) would not be dramatically different if lipitor or Crestor didn’t exist but the other statins (e.g. Zocor) were still around. Please do not refer to lipitor as anything other than an incremental innovation.

  16. MoMo says:

    Lynn-Thanks for the answer! I hear you about the promiscuous effects of “antibacterials” and the lack of their understanding by academics, but it occurs in Pharma too.
    But its derivative of the “ugly baby” syndrome in Pharma where no one wants to admit that their drug-child is covered with warts and has fangs dripping blood. Meanwhile its perturbing all 4 macromolecular synthesis pathways.
    But you would do well on the SBIR study sections and your observations may change, as small companies are quite cognisant of this while the academics apply to the NIH to discover and develop their membrane-shattering molecules.
    But that is what good drug hunters should do, recognize toxic molecules above all, early and often. But you also realize by now that ego and thoughts of blockbuster fame and grandiosity interfere with rational thinking while drug-baby sits in the corner, sprouting horns and drooling.
    And the only people worth dosing with it are Pharma MBA’s as they will not be missed.

  17. Lipitor changed the world by generating $11 billion in annual sales.

  18. lynn says:

    @momo #16 I am on SBIR panels – and I do think the grants are better than the RO1s. But there is still a lack of knowledge. Also, as to Big Pharma, in my day, we made it standard practice to give our own compounds the hardest time. We would admit to the “ugly baby”. However, I agree that later on [one of the reasons I left] it became harder for folks – at the bench and higher up – to admit the problems in any program. Bad way to do science.

  19. MoMo says:

    Thanks again Lynn! Then you’ll be seeing applications from my new company “MoMo Pharmaceutics” where our motto is “More Molecules-Less MBA’s”.
    And now back to Derek Lowe’s continuing saga-
    “How Pfizer Destroyed the World”

  20. DrSnowboard says:

    @sciparker – so what exactly in Jackie Hunters track record is there that says she should be listened to / prioritised overother opinions, other than she is “fGSK”?
    Will a proponent of contracted out virtualised research please give us a concrete, real life example where it has proved to be a genuine success? And by that I mean a compound from screen to patient, not picking up a cpd post P1 and punting it down the road picking up more investment? Just one, please, I like evidence based arguments.

  21. #10: I agree completely.
    How many breakthroughs have we seen fail in phase II or phase III trials? There is a certain amount of pre-clinical evidence that you can gather to test if your new molecule is going to be a breakthrough, but you’re still at the whims of the multi-million dollar clinical trials.
    I hate to judge ideas based on where they are coming from, but Munos is a sales/marketing guy, not a scientist. I think he is lacking a certain level of understanding of the drug development process and where the risk really lies.

  22. darwin says:

    Hmmm…ask a surgeon how to fix a problem and he tells you it needs to be cut. Mundos has successfully discovered the last retarted idea that has been left untouched by mgmt.

  23. r.pal says:

    Given the fact that 90% of human genome consists of bacteria and viruses and since these depend on the host for survival it is probable that here species may be mounting an attack on drugs and making them less effective or generating a inflammatory process that makes the disease worse with unintended side effects. The focus is shifting to metagenome and what role these play.
    A fresh approach is needed to replace the one diseases one receptor and one drug approach

  24. Chrispy says:

    I have to agree with drug_hunter that Lipitor was an incremental change, scientifically speaking. The $11B in sales has a lot more to do with marketing than science. More to your point, MH, the world change was probably the triumph of marketing over science in this industry, and Lipitor is really only a refection of that.

  25. @24,
    I have no doubt that marketing played a large role in Lipitor’s sales, but atorvastatin had a lot of things going for it, that the other statins didn’t (or at least Pfizer got the data for it first).
    * atorvastatin is better tolerated a higher doses (many of the other statins have dose limiting side effects)
    * atorvastatin reduces cholesterol levels to an overall greater degree than many other statins (related to point #1)
    * atorvastatin got approved for reducing triglycerides before all the other statins
    * unlike other statins (when Lipitor was first introduced) atorvastatin’s starting dose got a majority of patient’s LDL levels under control, reducing the need to dose, test, adjust dose, retest, etc. (Doctors like that!)
    Warner-Lambert/Pfizer certainly did the marketing right, but it wasn’t like they were pushing snake oil either.

  26. petros says:

    When I was last at Stevenage a few months back, while the Science Park buildings had made progress there was still no indication of any takers for the facilities being built.

  27. AKS says:

    You state “I don’t really know what the intersection of DARPA and a publicly traded company might look like (the old Bell Labs?), or if that’s possible today. If it isn’t, so much the worse for us, most likely.”
    Yeah, running a public pharma company like DARPA probably doesn’t make sense. But Francis Collins could conceivably run his new drug discovery initiative this way and maybe it would work there.

  28. drug_hunter says:

    @25 (BiotechTranslated) – No one thinks Lipitor was snake oil. Agree with you 100% it was an improvement. The factors you listed are reasonable. My point is that these were incremental. That’s not a bad thing to achieve, if you can’t come up with anything more transformational. It is certainly better than failure.
    Anyone who thinks Lipitor “changed the world” must be focusing more on the amount of money it made than how transformational for medicine it really was. Just a fundamentally different worldview. Guess that makes sense for someone writing for Forbes, but hopefully is less common among Derek’s audience.

  29. Rick says:

    Matt #2, I beg to differ. At heart, Munos’ proposal is based on a common managerial misconception that drug discovery research is scalable and fungible in a manner similar to software code writing or house-painting. (i.e. if four painters can paint a room in a half-day, two can paint it in 1 day and one can paint it in 2 days) Every drug discovery team manager I’ve ever known knows you need a critical mass of researchers, working in sufficiently close proximity that they’d see each other every day in the lab, hallway or cafeteria. Below that number, you could still get lab work done and occasionally get interesting data, but as far as formulating, collecting and testing the diversity of ideas and information that comprise successful discovery research, you’re wasting money because it doesn’t work. Munos’ proposal would cut corporate R&D below that critical mass, effectively eliminating it even though it would have headcount allocated to it.

  30. @28 (drug_hunter)
    Fair enough. I would argue that as a class, the statins are a breakthrough. A 60% reduction in cardiac events is huge, especially with a class of drugs so well tolerated. Merck deserves credit for bringing the first statin to market, although the initial work was done in academia by Endo.
    Unfortunately, credit is assigned in drug discovery the same way it’s assigned in investing: after the fact. Pfizer did luck out when they developed Lipitor, since there was no way they could have known it would have the efficacy profile I mentioned above.

  31. Shalon Wood says:

    “I don’t really know what the intersection of DARPA and a publicly traded company might look like”
    As a computer programmer, the first thing that came to my mind (right around the word ‘company’, and before I got to your suggestion of Bell Labs) was Xerox PARC.
    Interestingly, if you look at all the things they failed to commercialize (e.g., the GUI), it might be hard to argue that it was (in practice, rather than theory) run with an eye toward making money, which might have contributed to its success with regards to innovation by allowing for things which were not obviously profitable to get a small budget for experimentation.

  32. Rick says:

    Shalon #31 Thanks for mentioning Xerox PARC! I agree that it is rich with examples of the challenges and missteps associated with managing a talented, diverse research program.
    To your point about lack of focus on making money: a lot of people consider the GUI story to be an example of the opposite – too narrow focus on making money… fast. If management had had more expansive vision and timelines, Xerox could well have been the company that invented the personal computer and Apple would just be a fruit. Instead, they couldn’t think beyond their preconceived ideas and short profit timelines and, voila!, Apple is a legend and Xerox PARC, plus an unknowable number of breakthrough ideas, are lost and gone forever.

  33. Clueless says:

    Is there really a common model of success for a pharma or pharmas? Every successful drug has a story of it’s own. Don’t Pfizer things around to none.

  34. Clueless says:

    Those who say Lipitor is only a me-too drug have no idea what innovation truly means. Lipitor is different and the best in class, and that is innovative.

  35. Anonymous says:

    Perhaps I’m naive, but I’d say the solution to big pharma’s research woes is back to the basics: (i) hire smart people and give them a broad canvas (ii) get them in the lab (not in their offices) to work on difficult problems (iii) outsource routine work where reliable expertise exists outside and (iv) hold on to institutional knowledge.
    Good things happen when smart, interested, hardworking people work on challenging problems. That’s where innovation comes from. Not from “tools to measure it”. I won’t dignify rest of Munos’s thoughts by commenting on them but
    I can almost bet that the ROI in Munos’s outsourcing model is going to be less than in R&D orgs (otherwise life science VCs would have grown into Pfizers of the world).

  36. @ #35 (Anonymous)
    You know what? You should start an R&D consulting firm and I’m serious about that comment. I agree 100% with your points about how to run an R&D organization.
    If any company wants to run an effective R&D organization, they only have to create the environment where it is allowed to flourish. Effective R&D groups tend to be that way, not because they have the “right” strategy, but because they don’t have outside forces messing things up.

  37. Esteban says:

    Munos is giving the same talking points as the leadership of his employer (Lilly). I know firsthand as I’m a recent ex-employee. Two prominent themes in recent years at the company town halls have been: (1) big mergers don’t work; (2) outsource as much R&D as possible. Research employees are naturally reassured by #1 and terrified by #2.

  38. Nuclear Option says:

    In cancer drug development, we fundamentally need more and more creative shots on goal. Clinical studies of mechanistically new compounds, ideally in focused and leveraged groups of patients. It is just totally irrelevant whether these molecules derive from academia or industry.
    The pharma discovery model is changing, as I see it, because internal R&D is destined to fail to produce molecules profitable enough to influence the balance sheet of companies addicted to lifestyle drugs and old impactful agents like statins. It is less an internal supply problem than an internal demand problem.
    My experience is transferring technologies from my academic lab into commercial entities staffed by industry professionals. The transitions have been very smooth, and fresh eyes with industry experience invariably contribute tangibly to the direction of the research. But overall we set them on the right path, and the handoff has been far more collaborative than corrective. Most importantly the molecules are in the clinic, prioritized in the way you raise your only child as opposed to running a daycare of molecules championed by chemists who have lost their voice in handoffs to clinical development teams or worse scientIsts from another company made redundant by a merger/purchase.
    My sense is that creative drug discovery might best occur in a well-resourced environment comfortable with long discovery timelines required to prosecute historic targets (myc, ras, etc), and where long-term commitments are made to supporting champions. Academia is only one such place, but moving forward academia can only play a larger role in discovery chemistry due to financial pressures on pharma in a changing economic and political environment. To the topic of this post, more directly, academic handoffs do lend themselves well to prompting clinical experiments, if positioned into project-focsued companies with a uniformity of opinion and laser focus on what proof of concept entails.

  39. Morten G says:

    I fail to see the difference between cutting all of R&D and cutting all of sales and marketing (S&M).
    Basically I see a clash of incentives/goals: S&M marketing have quarterly goals, R&D has the goal of NMEs. When the incentives of rest of the organisation are aligned to either of these the whole organisation suffers. A CEO who’s bonus is based on sales figures will cripple R&D and a CEO who’s bonus is based on NME’s will cripple R&D.
    In other chemical industries a project set to run over two years is considered to be really out there.

  40. Roburr says:

    *4. SciParker
    Are you real?
    Sorry but when I showed this thread to a GSK-Stevenage insider her comment was you must a corporate plant.
    Morale within GSK Discovery is simply awful: fear rules, and instead of “great hope”, everyone is simply bunkering down for another massive cull from the ongoing DPU reviews.
    Right now, the science park feels like an irrelevance – the first buildings look more like tombstones.

  41. Bernard Munos says:

    I am sorry I missed this very interesting discussion, but I appreciate the feedback. I would also like to clarify a few points.
    1. The role of drug research is to translate cutting-edge knowledge into novel therapies. As companies attempt to do so, they must tackle two formidable challenges: (1) produce enough innovation; (2) make it affordable
    2. History has shown that nearly all breakthroughs come from engaging in high-risk, unconventional research. The implication is that if one wants to be innovative, one has to be bold, and the bolder the better.
    3. Corporate R&D labs used to be places where scientists could conduct unfettered research, and investigate bold hypotheses. That model worked well, and allowed the companies that practiced it best to grow into what became the big pharmas. Things started to change about 20 years ago when a new crop of non-scientist leaders in the industry came up the idea that scientists needed to be responsive to the needs of the market. In their view, those needs are articulated by marketers, and scientists should discover and develop compounds that meet the ‘needs’ identified by the marketing folks. End of the scientists’ independence to pursue opportunities as they arise in science. This quickly resulted in runaway madness, in which scientists were asked to produce drugs that feed their companies’ marketing franchises. Misguided techniques such as portfolio management were embraced, and ‘sophisticated’ planning exercises in which drug candidates are selected and advanced to replace drugs losing patents became the norm.
    4. Unfortunately, this is not the way science works, and this new model produced tepid innovation, and not much of it. As Ted Torphy, VP of External Innovation and Advanced Technology at J&J aptly puts it: “therapeutic franchises focus on existing pie[s], not on creating new pies. Simply put, therapeutic franchises don’t make breakthrough drugs. Breakthrough drugs make therapeutic franchises”.
    5. To put it differently, the scientists’ jobs is NOT to be responsive to the needs of the market, as seen by the marketers, but to discover therapeutic breakthroughs, wherever they can find them. And the marketers’ job is NOT to worry about the permanence of their cherished ‘franchises’, but to market these breakthroughs. And if they cannot do that, they bring no value to their companies.
    6. One implication of this single-minded focus on breakthroughs is that companies should restrict their funding to them, and de-fund everything else. Not to pick on AstraZeneca, but does Seroquel really need to be supported by 72 phase III and 39 phase IV trials? How much money has this focus on blockbusters diverted from the search for breakthroughs? This is a company with 80% of its sales going generic in the next 5 years, but it still has 6 recruiting phase III trials for Seroquel. And yet, there are very smart scientists at AZN, but, instead of being allowed to find the next breakthrough, they are asked to bring Nexium + aspirin to the market. This is an extreme, but not unique example of the dysfunctionality that the blockbuster mentality has brought to the industry. Almost every company has similar examples.
    7. To the extent that big pharma scientists can come up with novel hypotheses and ideas that can transform therapy, they should get the funding and freedom to pursue them. Let’s remind ourselves, however, that innovation is a by-product of culture, NOT a by-product of six-sigma, portfolio management, organization, or anything else. And the current big pharma culture with its emphasis on process is hardly a place that fosters innovation (with happy exceptions for companies such as Novartis). To put it differently, innovation cannot thrive upon law and order. Until big pharma accepts that and recreates an innovation culture (which they used to have), they will have to look for it outside, among the myriad small pharmas where ‘mad scientists’ can still roam free.
    8. Even if big pharma recreate an innovation culture, they will need to cultivate an external innovation network to assemble a portfolio of potential breakthroughs that is broad enough to mitigate risk effectively. This is another discussion, but an essential aspect of drug R&D that must be integrated into any successful model. More about it in another thread.

  42. Casalini says:

    Reading the GSK discussion brings to mind Colin Powell’s warning before the 2003 Iraq invasion: ‘China shop rules. You break it, you own it.’
    Moncef Slaoui and Partick Vallance – how long before Derek is blogging about YOUR Damascene conversion?

  43. Hopeless says:

    General practitioner Munos’ prescription for R&D malignancy at lethal dose is good for cancer patients like Pfizer and AstraZeneca at best.

  44. Colobus says:

    A really great discussion going on here, should be required reading for those who run the Pharma industry though I’m sure many would not like what they read. Bernard Munos himself makes some very pertinent points here in diagnosing what went wrong with the industry. My only quibble is that there is agreement on the diagnosis but not on how to treat it. As for “SciParker” and GSK, I think some of the replies above adequately address that pathetic piece of corpo-speak drivel. And Jackie Hunter as the great champion of “open innovation”, well just ask a few of the many unfortunates who sorry but I’m wetting myself laughing! One real problem at GSK when I was there was the number of people doing what they call “non-jobs” in the UK public service, these guys thrived as “business analysts”, “project managers”, “strategizers” etc ad nauseum. They may have cleared many of these types out but a quick review of many current director-level GSK employees’ profiles on LinkedIn indicates that, alas, many of these parasites remain sucking the life blood out of the organisation!

  45. VMax says:

    Great stuff all round! Thanks for the light relief, SciParker, you’ve really made me laugh!

  46. provocateur says:

    Do you know the single best public policy initiative that has been a smashing success in relation to the money spent?
    Graduate school education.The system works!
    Almost all the reactions we use are a product of some graduate student working for a passionate boss,
    If we can fine tune(remove the insecurities of a graduate student) the process of high reward(papers can be replaced for money/funding) to discovery of novel therapies, it will work.
    Remove all the management and stupid meetings that go around in the name of ‘work’ in pharma!We need the MBA’s on our side for getting the funding necessary!

  47. PhoneyBigpharmascientist says:

    Please, let’s remember a few facts:
    Big Pharma “discovers” little to nothing, never did.
    Mergers, are business decisions made to gain market share and eliminate competition. Claims of R+D productivity are nothing more than public relations ploys.
    Financial pressures have made Big Pharma realize they don’t really need to spend money on “just for show” R+D.
    Lastly, VC’s took a look at the overall success rate of startup pharma’s and the numbers aren’t that good, actually, biotech/pharma startups have gone down in history as the single biggest money losing endeavor in the history of mankind. If you shorted every IPO, you’d be a millionaire for sure.
    It’s funny how such “educated” people can’t seem to grasp these simple concepts. Having hung around pharma labs for 20 years, I always marveled at how little common sense there was, how people were unable to see the big picture, how quick they were to buy in the corporate charade. Then again, if you spent years in grad school, and post doc’ing, you’d just be happy to have a job too.
    Perhaps that was the biggest problem, such people will never make good managers, never make good business decisions.

  48. anon says:

    You reiterated the problems in the sector.I guess a solution is what we are discussing yur argument, biotech startups/big pharma are both wasteful!I personally dont agree with the ‘startup is an ipo waiting to be shorted analysis’ although i do agree with the big pharma picture.
    The temerity of Munos/Herper opinions who have come to have a say in scientific endeavors is amazing.
    When he writes, Herper still blushes on Lipitor and Munos wont be a voice without Lipitor-like molecules..these ppl are the same who comment on innovation!Are they expert innovators?What kind of expertise do they have to be experts on ‘innovation’? Can you train writers to be Shakespeares?The creative process work in isolation and collaboration with like-minded individuals.The moment we try to ‘manage’ the creative process, you spell doom.Leave us alone like you left us from the 50’s to the 80’s.Advice on funding not on the process!And get ppl who have expertise on both to be managers.Keep out Munos and Herper.Learn your lessons and remember them!

  49. Cellbio says:

    Excellent points. I started in biotech more than 20 years ago,and my experiences have me arrive at pretty much the same place as you do.
    I saw the marketing influence come in, at first for some good, then transform to drivel. The good was drawing to some reasonable focus of disease areas and paying attention to life cycle management, which does make sense if scaled properly. The bad appears as finely tuned projections including “Target Product Profiles” for projects not yet in the first stages of screening. As one would guess, these TPPs never had warts, so real life determination of less than ideal attributes was a disappointment, or worse. Worse came along with the insane fail fast mentality that trained and rewarded cynically minded scientists to predict failure and stop at the first challenge.
    Re innovation, you state it comes from high risk, unconventional research. I am not sure I agree, and would like to hear your historical evidence. Our difference may be in definitions only, but I look at early biotech as applying a new but clearly defined technology which was ready to use for cloning growth factors and manufacture of recombinant proteins, and statins as attacking a rate limiting enzyme in a well defined pathway, and anti-TNFs as another shot on goal, or rather shot on a different goal after tirals in sepsis, HER2 as a well supported target with technical growth of antibodies as therapeutics. Most things seem to grow rationally from a R perspective rather than emerge from truly wild hair ideas, but then struggle to get enough resources to have more than one or two shots on goal to explore clinical utility.
    Re point 7, I wish big pharma scientist could get funding and freedom, but don’t see it happening. I advocated for such a system before leaving the bigco I was with. We were choked with performance reviews, metrics, 6 sigma, portals, blah, blah, blah. Scientists were not scientist anymore, just staff that served internal metrics that triggered bonus payments. The really tough part of this prospect of a return to freedom is the paucity of funding for the smallcos, and the total lack of funding that would accept the premise you put forward and that I agree with, namely, patient money without predetermined success metrics. ‘Mad scientists’ have to be funded, and today’s market is not the same as 20 years ago, because as #47 points out, overall, the numbers do not support the premise of continued investment, at least not in the same manner and most likely not at the same scale.
    Perhaps external innovation is part of the answer. Certainly it is a way of industry taping into federally funded research on the cheap, and for academic institutions to add a source of funding. I think it is a positive that federally funded research has more a greater chance to impact human health in a timely way, so hope this model works. Not so sure this model helps the fate of us industry research folks much.
    I am afraid the contraction we have experienced will not turn around and arguably, our industry was/is outsized for our ability to produce meaningful new meds.

  50. Terry says:

    Outsourcing is an efficient way to handle the noneffiicent traditional big phamar’s R&D
    strategy. This is obviously, most staff, once being hired by big pharma, would not try their best to finish a project by working overtime, most profs after getting tenure will change their attitude to the scientific research and enjoy their life.
    If out sourcing is unavoidable, why not give a hug to it and try to join the small company for outsourcing? At least you can be a project manager to manage the outsourcing.
    Another way so solve this problem is that change the situation in graduate school, to distribute the industry projects into graduate school to train project manager. There will be lots of cheap labours and they are passionate to be successful in business combined with science, these students are willing to work 72hours /week to make the projects done. If the PI wants to hire foreigner labour, it is much easer to manage with high efficiency, since the PI doesn’t need to think the future of the students, they can take advantage of this situation legally.
    I don’t think the pharma industry is suitable for local native US ppl now, if you are born in US and educated here it is a time to rethink your future career. On the other hand, If you hate somebody, just send his children to graduate school to study chemistry or biology. In my point there would not be an organic lab in US after 10 years.

  51. Bruce Hamilton says:

    Many of the above is predicated on current scientists ( individually or collectively ) being able to innovate if given loose reins. Can they?.
    Perhaps some scientists are not able to innovate because they selected employers for the diversity of expensive toys available and the career paths, rather than freedom to pursue innovations.
    Without being intentionally offensive, maybe the pharma scientists self-selected for security, and the innovators departed as mergers further constrained R&D freedom?.
    The problems of the last twenty years are, in part due to big pharma providing expensive, world-leading, investment in R&D infrastructure with little return. R&D cost and success seldom correlate.
    For the first decade or so of the heavy investment, R&D was in the hands of scientists. Once big pharma management decided empty pipelines indicated the ever-increasing costly process wasn’t working as hoped, they meddled. But who can blame them?. R&D had changed from being strategic to an expensive, ongoing, cost centre promising much but delivering little.
    Some costs could be attributed to new regulations, but much of the cost didn’t even produce drug candidates that started down the regulatory path.
    Someone, somewhere has to set the strategy and objectives, and convince funders to invest. Maybe available VC money produces more assured returns in other fields, such as software. Given the recent track record of the scientists, would you investment in pharma R&D?.

  52. Bbooooooya says:

    47: re shorting very ipo, do you have any “data” to support this? I assume that you are a scientist, and these data are readily avaliable, so what do they show?
    If your conjecture were true, very few chemists would have jobs. I agree many biotech iPod are crAp, but if it were as easy as saying every o e was a short there would be a porkies rich hedge fund managers.

  53. Bbooooooya says:

    47: re shorting very ipo, do you have any “data” to support this or are you just talking out of your ass? I assume that you are a scientist, and these data are readily avaliable, so what do they show?
    If your conjecture were true, very few chemists would have jobs. I agree many biotech iPod are crAp, but if it were as easy as saying every o e was a short there would be a porkies rich hedge fund managers.

  54. Anonymous says:

    Questions for Bernard Munos: You give favorable mention to Novartis, do you think they are following the type of strategy you outline?
    Are there any other examples, big or small, using your approach?
    As for “SciParker”, I too think the idea of Jackie Hunter as an “open source” consultant is risible. She’s the perfect exemplar of the Big Pharma insider, ruthless politician and lousy scientist. As for the other guy you mention, Mike Barnes, who is he and what has he contributed?

  55. petros says:

    Mike Barnes who I had to Google, appears to be a computational biologist
    Barnes, MR, et al. (2009) Dropping the pharmaceutical industry firewalls: Pre-competitive data sharing in the public domain. Nature Reviews Drug Discovery. 8(9):701-8.

  56. Cellbio says:

    Absolutely, there has been a selection process for scientists that fit the current model. These individuals are comfortable not rocking the boat, happy to count progress towards internal metrics as success, and generally will follow the path presented to them. True also that innovators leave this environment. However, to innovate well, one needs this crew of really good executers who follow well. Innovation is only known to be innovative after successful execution. So, the task, in my opinion, of turning around pharma lies in changing leadership and company structure to free the teams to pursue innovative paths. Almost all of the scientists that have been selected for today in big pharma would be re-invigorated with spirited, challenging, raucous and uncertain discovery efforts. One needs an environment where risk is expected and failure is safe and scientists at the bench decide what is worked on.
    I know of 3 blockbusters that competing scientific management actively worked to halt, even trying to get the persistant scientists fired. Phrases we know all too well today as career killers where used: not a team player, not aligned with company goals, etc. However, great leadership in the executive suite did not allow the work or the scientist to be squashed. And yes, that leadership had roots at the bench.
    This example makes me reflect, duh, that the roots of the problem are not uniquely in the MBA ranks, but broadly part of human nature to compete and gain control, and it took magnificent leadership to keep that drive from having a negative impact on creativity. that leadership is rare, and rarer still in MBAs without an appreciation for creativity, which may be the vast majority of MBAs, but as I think about it, it is also the clear majority of PhDs.

  57. CMCguy says:

    Cellbio as always appreciate you insights that appears to have come from long and varied industry experiences. Effective innovation does typically be spawned by strong leadership and appropriate culture/environment however to make it practical need broad based expertise in many functional areas (with good executors). In the last few decades Big Pharma, which for most part used to have all three (maybe because pre-merger craze weren’t Big but Medium?), IMO have largely mishandled the first two (mostly R) and in more recent times have recently began to destroy the latter (mostly D). Unfortunately majority of Biotech probably has had more of the first two elements and often stumbled when comes the third. Fewer places of either are willing to accept risks/failures. I too don’t absolve Science/PhD types in poor leadership/not recognizing bad directions as often are overly self-isolated in own worlds, or worse become Yes-men (persons) in order to gain promotions, however agree not unique to MBAs since they have been predominately in power I do focus frustration toward that mindset.
    I have never been involved in project that eventually was ultimately successful that wasn’t near or resurrected from death (often more than once). Those are the times where good science/good business/good executors have to all show good cross communication and leadership. Although I now better understand, and more agree in worth Munos’ view I do wonder in what type of organization one can get and maintain those qualities in combined manner necessary to result is new drugs.

  58. Elliot says:

    51.Bruce Hamilton and 56.Cellbio
    Well done to you both for highlighting the most dispiriting outcome of the waves of selection processes in recent years: the creation within Big Pharma R&D of a homogeneous cadre of “politician-scientists”, driven by short-term financial incentive and career advancement rather than affinity for actual Discovery.
    Ruthlessly self-serving and glistening with ego and an over-arching sense of entitlement, this new professional class prefer to flit from one CV-burnishing opportunity to another, shamelessly appropriating credit from the innovators but never staying long enough to be detained by the hard work of execution. Feted as favourite sons (rarely daughters) by current management, these “leaders of the future” render true change from inside an ever-receding possibility.
    It makes me weep to say that Big Pharma is rapidly selecting the workforce it deserves.

  59. Hopeless says:

    Any scientist who said Boss, you are wrong and still have a job, please raise your hand.

  60. SteveM says:

    Re: 58 Elliot – “politician-scientists”, driven by short-term financial incentive and career advancement”
    I don’t work in Pharma, so this is a real question. Doesn’t research career advancement relate to getting molecules into clinical trials? I mean what else is there except good science that gets pumped into the value chain?
    Parenthetically, the theory is that the DoD promotion system to flag and general officers has gotten almost totally politicized because most have never led actual combat operations. Since the competitors can’t point to winning battles, the suck up is the alternative advancement strategy.
    I hope Pharma is not quite the 5 sided Pleasure Palace yet.

  61. TJMC says:

    While I spent 20 years in Pharma R&D, and focus solely on that area now, I am concerned about some of the discussions above. Some say that innovation has to be isolated from market demands or expectations.
    My perspective is that the main purpose of the drug industry is to serve the needs of society (do not worry, I AM a capitalist.) Past channels of informing and guiding R&D of society needs have come through imperfect (perhaps distorting, self-serving) marketing functions. However whatever channel, society will ultimately define what a firm will be reimbursed for, for its investment and risks. That is somewhat defined by “markets” – whether capital, government reimbursement programs, insurers, etc.
    Research that embraces innovation that is not informed by what society needs (and is willing to pay for) will run out of funding and become a “hobby” very quickly. Neither NIH or VC’s can pay into “trust me” schemes for the decade they will take to show value.

  62. cliffintokyo says:

    @61, TJMC
    Oh Yes they will! The current pharma industry
    R & D mantra [perhaps always has been, because of the unique long-term vision needed, but just not so explicitly stated?] is *Trust But Verify*
    Academia also perhaps needs to swallow a dose of this medicine, instead of taking offense when politely asked to demonstrate the veracity of their results.

  63. Bernard Munos says:

    Response to #54
    Novartis is a company that has successfully created an innovation culture. They don’t worry about blockbusters, they worry about breakthroughs, and the passion for science that runs through their discovery group is remarkable. The fact that they have produced so many new treatments is not fortuitous. Ten years ago, when NPVs, blockbusters, portfolio management, marketing franchises and other fads swept the industry, they had the courage to recognize that this was nonsense, and to break ranks with the rest of the industry. The results speak for themselves. While most companies spend large amounts of money funding phase III trials of compounds that are hardly better or safer than existing drugs, Novartis funds breakthrough science, and will not take a candidate to the clinic unless it has a breakthrough profile backed by compelling data.
    When a company’s R&D group is so productive, it does not need to rely as much on an external innovation network, but I still think it needs one. Cross-pollination is an essential ingredient of innovation. Some comments in this thread have criticized me for promoting outsourcing. In fact, I am myself a critic of outsourcing, especially for innovation. Companies that have tried to outsource their grey matter have invariably fared poorly. What I am advocating is not outsourcing, but co-creation, i.e., using a network of partners to overcome tough scientific challenges. Novartis clearly does some of that, but I do not have enough information to assess the breadth of its innovation network.
    Another reason why pharma companies need innovation networks to cushion risk. Risk mitigation is the most important factor that drives company survival, even ahead of R&D productivity. To avoid patent cliffs, companies need a large portfolio of potential breakthroughs at the discovery level, quite larger than what they can foster internally. Portfolio management cannot be used in drug R&D because it assumes well-behaved, normal probability distributions that simply do not exist in this industry. New tools are needed. This an area of research that goes beyond this thread, but I’ll be happy to discuss it off-line.
    Beside Novartis, I think Sanofi is doing clever things to build up its innovation network. I have been impressed by the change that Chris Viehbacher and Elias Zerhouni are bringing to their company. They were dealt a tough hand, but I believe their strategy is correct. GSK is also doing interesting things. Andrew Witty understands the challenges and has the right instincts, but, in the past, implementation has sometimes been half-hearted. Lilly has also done a lot to enable open innovation. Its new website ( is worth a visit. In the past though, the quality of its innovation has suffered from meddling by non-scientists.

  64. Bernard Munos says:

    Response to #54
    Novartis is a company that has successfully created an innovation culture. They don’t worry about blockbusters, they worry about breakthroughs, and the passion for science that runs through their discovery group is remarkable. The fact that they have produced so many new treatments is not fortuitous. Ten years ago, when NPVs, blockbusters, portfolio management, marketing franchises and other fads swept the industry, they had the courage to recognize that this was nonsense, and to break ranks with the rest of the industry. The results speak for themselves. While most companies spend large amounts of money funding phase III trials of compounds that are hardly better or safer than existing drugs, Novartis funds breakthrough science, and will not take a candidate to the clinic unless it has a breakthrough profile backed by compelling data.
    When a company’s R&D group is so productive, it does not need to rely as much on an external innovation network, but I still think it needs one. Cross-pollination is an essential ingredient of innovation. Some comments in this thread have criticized me for promoting outsourcing. In fact, I am myself a critic of outsourcing, especially for innovation. Companies that have tried to outsource their grey matter have invariably fared poorly. What I am advocating is not outsourcing, but co-creation, i.e., using a network of partners to overcome tough scientific challenges. Novartis clearly does some of that, but I do not have enough information to assess the breadth of its innovation network.
    Another reason why pharma companies need innovation networks to cushion risk. Risk mitigation is the most important factor that drives company survival, even ahead of R&D productivity. To avoid patent cliffs, companies need a large portfolio of potential breakthroughs at the discovery level, quite larger than what they can foster internally. Portfolio management cannot be used in drug R&D because it assumes well-behaved, normal probability distributions that simply do not exist in this industry. New tools are needed. This an area of research that goes beyond this thread, but I’ll be happy to discuss it off-line.
    Beside Novartis, I think Sanofi is doing clever things to build up its innovation network. I have been impressed by the change that Chris Viehbacher and Elias Zerhouni are bringing to their company. They were dealt a tough hand, but I believe their strategy is correct. GSK is also doing interesting things. Andrew Witty understands the challenges and has the right instincts, but, in the past, implementation has sometimes been half-hearted. Lilly has also done a lot to enable open innovation. Its new website ( is worth a visit. In the past though, the quality of its innovation has suffered from meddling by non-scientists.

  65. WB says:

    Out of curiosity, what is Bernard Munos’ background? It seems to me that the ones who always want to cut R&D are the ones who know nothing about it. Please correct me if I’m wrong–are there any real scientists who do support cuts to R&D?

  66. WB says:

    #41 note 3
    Bernard does have a good point though about marketeers forcing the direction of R&D. Even in my current workplace, politics rather than sound science often determines if a project continues or is terminated. We currently have a number of useless projects running and no neutral party to assess their actual goals and the competency of the people in charge. I think most workplaces can look at trimming the excesses and focusing on what is scientifically viable, but it is very difficult to get an impartial judgment on these things.

  67. chemist turned banker says:

    #52, 47
    The picture is not quite as grim as painted,but not much better. According to Bloomberg data, if you had invested the same cash amount in each of the 123 biotech IPOs I can find since 2005, you would have made 3%. If you have weighted your investment by deal size (which is pretty likely), the return would be -20%. If you look at it regionally, the simple return would by +3% for North America, -15% for Europe, +28% for Asia and -8% for emerging markets. Something in there for both of you…

  68. Anonymous says:

    I’ll be interested to see how Novartis’ “innovation culture” copes as the Diovan and Gleevec patent cliffs creep ever closer. I truly hope they avoid the Pfizer path, but there will be tremendous pressure from shareholders to lower the R&D bill.
    Ps excellent post and commentary as always (other than our friendly GSK-troll at #4 of course!).

  69. Mayhem says:

    Speaking as a complete outsider, what DARPA really did was funnel government funding to lots of different organisations to have a go at an idea. In some cases, they would directly sponsor several competing companies, in others they would put up a sizeable prize for the first company to provide a workable demo – each approach attracts a very different kind of interest. They provided initial research funding, time and materials limited. If they got promising results, they would either extend contracts to develop the idea further, or more often, bring the new project in under direct (and classified) military funding in partnership with whichever arm of the military would best benefit.
    So while they did get some superb results, many of them were heavily subsidised with behind closed doors government military funding, not directly through DARPA.
    From a drug pov, have they actually tried to having dedicated research houses, that specialise in innovation, and get steady regular investment funding to investigate specific targets, but who then pass the more promising candidates to someone else to pick up and do the required trials on?
    I guess the idea is to get lots of smaller ‘hungrier’ teams to work on all kinds of blue sky ideas *at a set cost*, and then cherry pick the results that might lead to profitable solutions to bring back inhouse for further development.
    I strongly suspect that if this model did start to work, the big pharma companies would promptly buy out the more successful research houses to prevent the now proven expertise being used by their competitors, to the overall detriment of the market.

  70. Anonymous says:

    Thanks to Bernard Munos for his reply to me, #54 above. Your comment on GSK “Andrew Witty understands the challenges and has the right instincts, but, in the past, implementation has sometimes been half-hearted.” is interesting. Andrew Witty is undoubtedly a huge improvement on his predecessor and appears to be well respected, I left GSK some time ago so do not claim to be current with things there though I hear snippets from friends who remain in its employ. The problem I fear is that Witty has delegated science to certain individuals who assuredly do not command respect either within the company or in the wider world. Numerous comments on this site over the past few years bear ample witness to what former and current GSK employees think of them.
    Thanks also to the replier regarding M. Barnes, there also appears to be a bix book edited by the same guy so one can assume he’s got some credibility though I never heard of him while @GSK.

  71. Cellbio says:

    “To avoid patent cliffs, companies need a large portfolio of potential breakthroughs at the discovery level, quite larger than what they can foster internally.”
    I am sorry but this is complete drivel, and belies your next point of portfolio management not being appropriate for R&D. I have seen this very mandate, derived from failure rates at each phase, multiplying back to the number of projects needed in discovery. This manner of thinking yields volumes of projects, which as you note, cannot be properly resourced. So how do you make resourcing decisions to advance the “potential blockbusters” which one has no ability to predict? Couple this numbers game with a metrics game, and you’ve got today’s army of pharma scientists checking of on task lists, presenting to portal bodies who assure the task list are met and the portfolio looks great. This is a sure fire way to consume time and select for task masters, all of which squeeze out innovation. I have personally lived through this process, and it drove bonus payments, promotions and selected for scientists who are clever readers of management comfort zones rather than innovative mavericks who think of the end game, true clinical impact.
    This system was in place long enough (10 years and counting) to produce multiple clinical candidates that were never tested in the clinic because of either a lack of budget or competition with other programs for patient recruitment. The good news is that a finely tuned R group can produce a lot of clinical candidates that are high quality in every regard. The difficulty remains that we do not know their clinical potential until they are tested thoroughly, which is where the real resources are consumed, and where logistical challenges become very tough. Though these pipelines are put before the markets to support the notion of a great future, succes rates have not been higher. In fact, we see what we believe are spectacular, surprising failures, driven in part in our newly minted faith in our validation metrics. Unfortunately, we can’t look at pipelines like a pig in the python and assume clinical success is well fed by a bolus of early projects.
    Re innovation networks, I think this has always been part of pharma and biotech. Whether biological insight, biotech growth factors/enzymes or clinical utility, the role of academic partners has been vital. I have seen the pendulum swing, with success, to want to do more and more inside. I am not sure now if the pendulum is adjusting appropriately, or cutting to deep. Maybe depth is less important per the thoughts in this thread than the nature of who is retained, though with this model I would think the innovators have less reason to be inside than ever.

  72. Rick says:

    WB, #64 Munos is from marketing. As I said in my first post here, background counts and I think it’s appropriate for you to question Munos’ training and qualifications regarding how to “handle” R&D. Being an upper level executive does not in any way even remotely substitute for research experience. Saying so only demeans the effort required to achieve even a PhD, let alone a productive research career. Then again, that would explain why today’s crop of CEOs seems so comfortable suggesting cutting R&D to solve the dry pipeline problem. “Starve the beast”, eh?

  73. Anonymous says:

    Much of the rhetoric above and in past years is based upon a vast difference in time expectations for business management vs. R&D innovations, or improvements in the process. Someone noted that any success in pipelines today can probably thank the R&D leader from ten years ago that was summarily dumped (really for the sins of his predecessors.)
    Extending that time driver, these discussions trigger questions that may become useful. For instance, is our problem really that we are seeing diminishing returns because of the nature of remaining diseases that cost too much to act upon? And is that complexity (e.g., cancer, Alzheimer’s , RA, …) at the heart of those diminishing returns? If so, noone will pay enough, and for enough time to solve them.
    This relates to the “orphan” disease strategies. The ROI of such a small cohort means an unacceptable cost per year of life extended, or else the intent is really to use that approval to “extend” the drug’s use to other groups or “related” conditions. That trojan horse will only work so many times. In the end, if the R&D complexity ramps up and “performance” is flat, (and as #61 mentions), will our society be willing to pay for such small returns that benefit so few?
    Just some musings but to paraphrase #62 above, we then need to not “Trust then verify”, but probe or at least examine the plausibility of the idea. Is the problem beyond just Pharma R&D? If effort per reward is going up logarithmically , do our improved strategies promise to keep up?

  74. George_Kaplan says:

    @29 Quite right: drug discovery is an intellect limited exercise, not, as practiced in Pharma, a resource limited exercise. Adding resources may actually impede the scientific problem solving exercise. Contemporary Pharma management doesn’t appreciate that the intrinsic limitations are in the knowledge domain, not cash domain: solving scientific problems takes time, effort and money, all in the correct measure.

  75. MoMo says:

    Steve M -Your comment “Doesn’t research career advancement relate to getting molecules into clinical trials?” deserves more attention.
    It used to until the management started demonizing and dismissing the most innovative scientists, isolating them and slowly diminishing their control over their own patents and inventions.
    Its seen time and time again in the industry and it doesnt make any sense. Its threatening to upper management to have a handful of innovators that are responsible for the lion’s share of progress in a company. They are treated like Milton in “Office Space”- shoved out of their own inventions as other ass-kissers take the science, tweak it ever so little- and co-opt it as their own.
    But that’s what they learned in Planet MBA school-how to screw scientists and their hard-earned innovations.
    But here’s the answer for all the Munos’s and Herpers yakking away about how to solve this! How about we pay the innovators and chemists as much as we pay the CEOS, and force the scientists pay onto MBA management?
    Then you will see drugs again and the field will be equalized.
    Until then you all can talk all you want, as its cheap and plentiful.

  76. Hap says:

    #58: I just read Plastic Fantastic, and it sounds similar to what happened at Bell Labs – people were promoted for getting lots of papers that could be easily publicized, while quality control was deemphasized (or at least not given the resources appropriate). In that environment, well, you get people like Schoen, because that’s what the environment selects for. Whether the corpse of Lucent got anything useful from it, well… In resource-poor environments with management emphasis on things that are measurable and look good, this precis would indicate that you’re likely to see more self-aggrandizement and exaggeration in such an environment, but not necessarily more products.

  77. Bernard Munos says:

    It seems that my recommendation to reduce R&D spending has hit a raw nerve, and I empathize. But let’s face it, as long as our industry spends $125 billion a year on R&D (and counting), to get ~25 new drugs, it guarantees that our innovation will be unaffordable. Asking our customers (patients) to give us their life savings in exchange for a few extra weeks of life is not a sustainable business model. Even if they do, they (and their heirs) will hate us until their last day. And the thought that we don’t need to worry about this, because in most cases insurance pays, is dangerous. Insurance is society, and you don’t have to scratch too far to see that society is losing patience with the antics of our industry. Do I need to mention the ethical violations, the endless recalls, the medicare fraud, the off-label promotion, etc, etc? Most of these may not involve scientists directly, but as far as the man in the street is concerned, we’re all in the same hopper. We must be careful. Our industry has a covenant with society. It gives us patents (which it can scale back), and expects breakthroughs in return, not unaffordable marginal innovation.
    Half of phase III trials end up in failure for lack of efficacy or safety. One wonders on what basis these compounds advanced to that stage. It could not be on the basis of their superior clinical profiles. This is the sort of R&D spending that we do NOT need. And it adds up to enormous amounts of money. The industry would be better off saving some of this, and shifting the rest to early discovery so that it can fund breakthrough science.
    As an industry, we also need to be adaptable. We cannot insist on doing science like we’ve always done it. Open innovation models (e.g, Innocentive, Chorus, PD2, TD2, etc) offer novel avenues to do more with less. Collaborative research models (e.g., Sage Bionetworks, ARCH2POCM, public-private partnerships, etc) also offer opportunities to save by eliminating duplicative work. The industry needs to embrace these opportunities with greater resolve.
    Unless the industry finds a way to make its innovation affordable, its current strategies could be short-lived. John LaMattina recently observed that most cancer patients take three of more drugs. At $80,000 each, patients could be stuck with a quarter-of-a-million dollar bill for a couple of months of not-so-great life. Sustainable? Francis Collins likewise observed that there are 30 million patients affected by rare diseases in the US. At $200,000 a pop, the bill adds to to $6 trillion annually. Sustainable? Like it or not, we must learn to deliver more with less.

  78. Nerina says:

    “We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been”.
    George W Merck (Dec 1950)

  79. Bernard Munos says:

    To Cellbio (#70)
    It seems that we are in agreement. The portfolio management process that you describe is useless, and I have said so repeatedly (see for instance my March 2011 paper in InVivo). Yet, if they want to survive drug companies need to mitigate risk effectively. The data clearly show that one does not need to be big to succeed in the drug business, but one must mitigate risk effectively (see my Nature paper of Dec 2009). Given the nature of the probabilities that underpin our industry, the only way to do so is to fund a large number of projects, much larger than what companies have traditionally been able to do. To do this, companies must cease to fund expensive late stage clinical trials of compounds that are hardly better than existing drugs, and and shift their spending instead to breakthrough discovery science (See the paper Bill Chin and I published in Science Translational Medicine on June 29.)

  80. Luigi says:

    Bernard – part tell how semagacestat made it to Phase III with poor selectivity versus Notch and questionable brain access

  81. Bernard Munos says:

    You’re spot on. Semagacestat is what you get when non-scientists meddle with R&D decision-making, and insist on using inappropriate tools to mitigate risk they don’t understand. Had it been subjected to a breakthrough requirement, it would have never entered clinical trials, and vast amounts of money would have been saved (or possibly been available to support research into more promising treatments)

  82. CMCguy says:

    Bernard Munos in #76 say “Half of phase III trials end up in failure for lack of efficacy or safety. One wonders on what basis these compounds advanced to that stage.” Perhaps I am overstating, and recognize some of your points do speak to this, but suggest many programs get pushed to this stage largely due to Market/Sales estimates when science/clinical data less certain. As are a Marketing person you can counter argue however I see it has been over emphasis of the Marketing side of the business that accelerated deterioration (loss of trust, blockbusteritis, “extremes” in pricing, off-label promotion).
    I think most people in R&D would relish being able to focus effort on “breakthroughs” however there needs to be recognition how much harder that approach is and thus requires reliable funding support in the face of set backs. I can’t imagine it will come that much cheap either once you spread the funds around to many littler projects and likewise can never always adequately predict what happens in clinical trials.

  83. Morten G says:

    “59. Hopeless on August 7, 2011 1:38 PM writes…
    Any scientist who said Boss, you are wrong and still have a job, please raise your hand.”
    Sometimes this happens in academia too though.

  84. Tt says:

    #70 Cellbio
    Hit the nail on the head. It’s why I left Merck. Fundamentally, reward and recognition became less about “innovation” and getting the hard work done, and more about metrics, lean, oversight, checklists, market estimates, etc… With less emphasis on the science. The politician-scientist was thusly born. Couple this with low morale, constant re-organizations, and a stupid merger and it is little wonder that the future there was so bleak. This industry needs change, but I doubt that it will come without a high price. The strange thing is that every bench scientist can see the problem, but the decision makers don’t want to hear it.

  85. Anonymous says:

    Here’s a couple of reasons for the lack of productivity in big pharma:
    1. Demotivation of employees by the departmental managers agendas…ie: favoritism, bias, morale destruction etc. Everyone sees what’s going on but no one says anything. Keep the politics out of pharma research. After all, we all work for a place of business and are supposed to conduct ourselves in the interest of the company ONLY!!
    2. The number of “man made” road blocks leading to the ID of drug candidates. There are many assays etc that produce false positive / inconclusive/questionable results that filter out potentially good compounds. I won’t go into detail but look back on early drug discovery… “assay to in vivo” no road blocks.
    3. A “lack of patience” to discover a drug largely based on years of failure and points # 1 & 2 above. Management wants the goods now! Give me what you have NOW and we will move it forward……a failure waiting to happen.
    4. Budget constraints and under staffing of projects… If you cut corners and rush to meet timelines, in the end you lose. Take the time to do it right.
    5. Running too many projects in parallel. This is a sign of indecision, inability to focus and desperation. The fail fast philosophy doesn’t work…you’re more likely to overlook something and miss out. Choose biology targets with deliberation and and then commit to them. That’s what Biotech does because they have limited resource, time and money.

  86. Bernard Munos says:

    To CMCguy (#81)
    Actually, I have been arguing in my publications that sales forecasts of drugs in development are worthless, and cannot be used to guide R&D spending. (Mathematical economists have recently shown that, in blockbuster-dominated industries, the accuracy of sales forecast has to be zero. It does not matter how smart one is, the forecast will always be way off, except by sheer luck.) One of Mark Fishman’s prescient moves at Novartis was to anticipate this, and ban the use of useless forecasts at NIBR.
    On the other hand, scientists are usually pretty good at recognizing a breakthrough when they see one. So the “look and feel” of breakthroughs is a better compass in selecting drug candidates. There needs to be discipline however, and, if the incoming data no longer supports the breakthrough potential of a candidate, it should be de-funded, and the money reallocated.
    Let’s also keep in mind that everyone loves breakthroughs: physicians, patients, regulators, policymakers, etc. Remember Gleevec? Everyone wants to say that they did their bit to make it happen. This consensus in turn paves the way for the commercial adoption.
    I agree with you that breakthroughs are hard to come by, but scientists are also pretty good at racking their brains to come up with clever stuff. If this the way to get money, they’ll deliver.

  87. Pharmadude says:

    Interesting discussion. I’ll add to the list my observations of ‘problems with the pharma industry’. The first is a problem that appears to exist on all big pharma, and that is a focus on politics over science. Reality and science just aren’t as important in big pharma as pleasing one’s boss. There is little connection between proving value and reward. The brings about a lowering of moral and everything goes downhill from there. The second problem effects big and small companies and thats a lack of creativity on the part of most scientists, especially medicinal chemistry. I’m just amazed by how unwilling chemists are to work on new or interesting projects. Trying to get med chemists to work on something different is like teaching grandma to use a cell phone (I don’t need that dang fancy dagnabbit techno gibberish sonny…).

  88. Pharmdude says:

    PS- excuse the typos above. I’m watching the kids and typing at the same time!

  89. Foolseverywhere says:

    A banking shill, Bernard Munos, spreading lies to a bunch of dum dum scientists that the “industry will collapse!!” unless they work for nothing.
    Guess what dum dum scientists: does the insolvent banking system ever collapse? Funny how in all those freshly minted trillion dollars handed to dead banks, you poor peasants called scientists can’t manage to scrape out a dime to your name. Meanwhile Banker Exhibit A hands himself a 100 million dollar bonus for managing a dead bank….boy you guys need Derek to keep you real dumb.

  90. Anonymous says:

    @ 86, I agree with a couple of your points. However, perhaps the uncooperative “med. chemists” that you refer to are the “boys” of a possibly inept chem management. Some are arrogant, dismissive, have a tendency to disqualify other’s ideas and it’s supported by biased management. In some cases, there’s no track record to support their favored stature. You need to seek the down to earth “out of the box” thinkers with a track record, partner with them and get moving. The problem is that many of those individuals are GONE, and politics was/is a driver!

  91. anon says:

    Did MBA’s kill innovation or was it the death of innovation which brought the MBA’s? There seems to be a very nostalgic tone to many of the comments.

  92. Clueless says:

    @76. Munos, please do us scientists a favor, leave your concerns to those who are more innovative.

  93. drug_hunter says:

    @clueless #91, I don’t agree with you. That doesn’t mean I agree with everything Munos says; it just means that I think he’s doing all of us a valuable service by raising critical points and offering a reasonable set of suggestions (which we can then all debate till we’re blue in the face). I”m speaking as someone with >20 years of pharma R&D experience who wants to do whatever I can to make pharma R&D more effective and is interested in casting a wide net looking for ideas.

  94. Clueless says:

    When Munoses in big offices talk about “patient needs”, they never realize the scientists they have actually never ever talked to any doctors and patients. What we should do about this? Answer is quite clear.
    When they say about “rare diseases”, they don’t even have any clue how much work could be involved. Let’s put that # of drugs per $ expenditure back, I guess we all know their new formula for success has solved the quiz already.
    At any given time, scientists know exactly what they can do and should do, that include rare disease and better me-too medicines. They understand they work for patient needs as well as for profits.

  95. Philip says:

    Rick (#29), writing software code is not scalable. There is a correct number of programmers for a project. Go above that number and the project slows down. See “The Mythical Man-Month” for more information. I assume it is the same in drug discovery.
    Shalon Wood (#31) and Rick (#32), A modern example of an innovative work environment in software development is Google’s “Innovation Time Off”. Google encourages their engineers to spend 20% of their work time on projects that interest them. Is something like this possible in pharma? Should it be 100% of a scientist’s time? Could pharma do an internal sabbatical as a reward for good work?
    I was surprised that compensation was not brought up until #74. The scientists I know value freedom, stability and security a lot. Money, after a point is not a great motivator. That does not mean that excessive compensation for MBAs, managers and CEOs is not a demotivator.
    As an outsider to pharma it looks like big pharma is doing less and less R&D and what they are doing is crippled by too much management. I do not think that out sourcing the same way as the computer industry is going to work for pharma. What looks like is happening is that big pharma is using startup/small pharma to find promising compounds and then entering marketing agreements for the compound. Sometimes big pharma buys the startup/small pharma, but that is a mistake. Big pharma just does not seem to be able to leave the bought company alone and let it function as it did when it was successful.
    End of software geek’s summary. Nice to read intelligent discussions (except for a couple).

  96. Cartesian says:

    To Bernard Munos (#63)
    You are right that innovation culture is important, and with an historical view, we can remember at Galilei Galileo, and the pressure of the church on innovation, at a time innovators had to work as priests (so with not a lot of money and no children and wife), the culture was : sacrifice your life for the well being of others (a bit like slaves). And what we can hope is that this part of the culture is going to really be improved also, because innovation is bringing a big part of power actually, but innovators are still not very respected.

  97. Curt F. says:

    Munos in #85: On the other hand, scientists are usually pretty good at recognizing a breakthrough when they see one.
    Pharmadude in #86: The second problem effects big and small companies and thats a lack of creativity on the part of most scientists, especially medicinal chemistry. I’m just amazed by how unwilling chemists are to work on new or interesting projects.
    On the surface, these statements seem incompatible. Do Mr. Munos and pharmadude actually have incompatible views on the quality of the median medicinal chemist? Or maybe, Mr. Munos is right about scientists seeing breakthroughs — but only in hindsight. And thus that when deciding what to work on, median scientists, without having any obvious, looming successes to grab on to, prefer instead to avoid “work on new or interesting projects”.
    Either way I’d welcome more input from either Munos or pharmadude on how the attitudes and outlooks of working scientists affect the success of the pharmaceutical industry – for better or worse.

  98. Bernard Munos says:

    To Curt F (#96)
    I agree that not every discovery scientist has the magic touch. Some are better than others. In fact there is fascinating research that shows that creative scientists often share similar traits, e.g., deep curiosity, dissatisfaction with status quo, competence in multiple disciplines, ability to cross intellectual barriers, multicultural and multilingual backgrounds. But organizations in which scientists operate also play a role: expectations, compensation, attitude regarding risk and uncertainty, and regimentation to name a few attributes.
    Most people perform to meet expectations. If companies reward incremental innovation, and many do, that’s what they get. It builds mediocrity into the reward system. Small companies are more prone to embrace novel ideas because it’s tough to get funding for boring science. Expectations are higher, and their scientists work hard to meet them. If big pharma were to raise the bar and restrict funding to breakthrough science, they would get more of it. Not every scientist might be up for it, but I believe many would. Many, in fact, joined the industry to discover and develop drugs that make a difference, only to be asked instead to run six sigma processes or other innovation-sterilizing task.
    I may be an optimist, but I have faith in the talent of industry scientists. They can deliver. They used to do it. They can do it again.

  99. Rick says:

    Philip #94,
    Thanks for your comment. The difference in scalability (or non-scalability) between software and drug discovery I aluded to in comment #29 is quantitative, not qualititative. In any endeavor, including house painting, the maxim “too many cooks spoil the broth” applies. The more noteworthy and relevant difference is on the bottom end of the range (smaller headcount, fewer resources) drug discovery is even less scalable than software, hence my inference that software was more scalable.
    With respect to your comment on allocating specific fractions of time has been tried in pharma and the 20% figure was common. Although I haven’t seen any study on whether it worked, my own experience says it didn’t; it has certainly been abandoned. I can think of three reasons why it didn’t work and you don’t see it much, if at all, in the industry today: 1, you simply can’t tell researchers with basic science training (biochemists, chemists, cell biologists, microbiologists, etc.) to artibrarily spend X% of their time doing “basic research” and expect them not to go too far one way or another; 2, basic research isn’t fungible (i.e. you can’t split your time up into 1 day of basic research interrupted by 4 days of applied or technology research because basic research isn’t an interruptable thing); 3, management never really meant for scientists to actually do that, but rather just said that to attract scientists from top schools. In my experience, I have seen ample evidence of all three things.

  100. Ex-AZ says:

    Thanks Bernard for coming on here and actually commenting on things. Whilst I might not agree with everything you suggest I think you deserve great credit for engaging with the community here.
    I agree that many scientists, myself included, got into this industry to try to invent a cure for a disease. And some people so indeed seem to be better at it than others. And I agree that the way in which scinetists are incentivised has a big impact on what they do.
    Personally, I think that the biggest thing that pharma could do to to help would be to stop talking about risk and minimising it. It’s led to a culture (and man it was bad at AZ and still is) of not making decisions and doing nothing. Because if you do nothing, you won’t fail and so you will have “managed” the risk and your annula bonus will appear. I’ve seen many a tall but dim manager come up with elaborate reasons not do do something to mitigate risk rather than doing an experiment and having some actual data on which to make an actual decision.
    I believe, too, that there is talent out there and innovation but under the current system it will take a supremely brave CEO to let their scientists get on with it.

  101. Cartesian says:

    P.-S.: For “innovators had to work as priests” it means a lot of them, because I am not very sure that it was normally for all. But it is also possible to read in “Mein Kampf” by Adolf Hitler that sacrifice is an important thing, and it was a part of his strategy, but it was not really appreciated by Werner Heisenberg for example: “…Our compatriots will understand, I hope fast enough, that we can not participate any more to the modern life without an efficient research ; they will may be acknowledge, especially relatively to the atomic physics, that the disdain shown toward the fundamental research by the actual national-socialist régime has contributed to the actual catastrophe or at least has constituted a symptom of it.” (See the part : “The way of the new start” in the book “Physics and Beyond”). Thus it seems that Hitler wanted, this way, to subject some persons more intelligent than him and some others. What does not mean that sometimes an effort is possible.

  102. Cartesian says:

    Sorry for the end it was : “What does not mean that sometimes an effort is not possible.”

  103. Rick says:

    Bernard re: # 63, 78, 80, 97
    First, I apreciate your willingness to step into the hornet’s nest and engage in the conversation and the tone you have maintained in the face of some fairly belligerent comments.
    You mention “risk management” quite a bit in both your comments and your writings elsewhere and I’d like you to shed more light on what you mean and what you think can reliably be accomplished in this area. I have a PhD and 20 years experience in pharma/biotech R&D, training Project Management (including PMP certification) and have spent the past 3 years talking with several contributors to the PMBOK, the project management bible (specifically the section on risk management), and it seems to be generally accepted that we still have nothing close to a risk management framework that can be used to analyze and mitigate risk in drug discovery. Some of your comments reflect that to some extent. As you probably know, applying standard risk management tools and techniques, which were developed for very different industries, to drug discovery R&D, especially for breakthrough (as opposed to incremental research), yields nonesensical results because the failure probabilities are too high and the range of probabilities is too broad. I would also say that management decision tools, like NPV analysis, that depend on these tools are also therefore little better than guesswork.
    Because of this, risk management in drug discovery R&D is itself a subject of research that is still in its infancy. Therefore, proposals in the name of risk mitigation such as yours should be regarded as experiments, which may be well worth trying on an appropriate scale, rather than as prescriptions for how the industry as a whole should operate. Would you agree or do you believe that we already know enough about risk mitigation in drug discovery research to adopt your proposals on an industry-wide basis?

  104. CMCguy says:

    Bernard Munos I appreciate the reply in #85 although see this view is the “Exception rather than the rule” that have been in place. As seems your motivation is to change, or bring awareness, to that current mode hopefully those presently “in control” Marketing/MBAs will listen. #92 drug_hunter expressed it well in that not in full agreement but glad you raise the issues and spur discussion. I think problem with most R&D types is that tend to wish to stay isolated in their own little areas and not become engaged in larger company “vision” when opportunities occur. Does appear to be “us vs them” environments in most of Pharma these days.
    I also like that later comment (#97) where elaborate that not all scientists are equal when dealing with breakthroughs. I think is very rare to find strength centered in a single individual and since drug discovery truly requires many diverse disciplines a more collective approach of multiple people is often necessary. Its not only about creating the proper culture but then staffing of appropriate teams to explore, recognize and begin to translate the breakthrough. Most Pharma used to have enough of the “right people/skill sets” through numbers however not certain with the cuts in R&D in recent years (inadequately focused?) has retained to conduct internal efforts much less collaborate and/or perform due diligence of external programs.

  105. Drsnowboard says:

    @ex AZ guy: LOL
    In one company I worked for their ethics position was to answer the question: Would you be happy describing your actions to your family? To see it in the local paper? To see it in the national news?
    Perhaps those of us in drug discovery, rather than thinking of the label which can be rather abstract, should be asking ourselves (at various stages) – would I be happy taking this (or seeing my family taking it) as a healthy volunteer? As a patient? Would I pay either for part of the project or for the drug candidate out of my own pocket for my family? Would I pay for it for my neighbour?
    Might focus the mind and sharpen the decision making.

  106. WB says:

    Like it or not, we scientists are in the same boat with the marketeers and MBAs and accountants. We blame them for pharma’s woes because we don’t think they “get it”, and the science is just way beyond their grasp. They, on the other hand, blame us because we’re not “innovating” or delivering on their expectations or implementing their latest management fad as they see fit. So we all need to sit down and make concessions.
    But please do correct me if I’m wrong: the most productive and profitable days of Pharma were the days when scientists rose through the ranks of management and handled the decisions, and the worst days of Pharma were when then non-science people became CEOs and managers of this business. There will always be a place for marketeers and MBAs in a pharma company. But they should not be in control.

  107. Cellbio says:

    Thank you for driving spirited and informed discussion. I do think we are mostly in agreement. Not sure I will live to see the day, however, that a company will prioritize funding R over D, even if D only offers incremental improvement. Let me know if you pick up the reigns of a company and give it a try.

  108. Bernard Munos says:

    To Rick (#102)
    Risk management in drug R&D is at the cutting edge of research. There is no good tool because, until recently, we did not even understand the nature of this risk, and could not describe it in terms of its probability distribution. We are now beyond that, thanks to the groundbreaking work of Art de Vany, at UC-Irvine. The bad news though, is that the mathematical complexity is numbing. In fact, de Vany has created a new branch of economics, blockbuster economics, that describes the dynamics ‘black-swan’ dominated industries such as pharma, movies, music, oil exploration, etc. (De Vany did his own work on movies.)
    The challenge in mitigating drug R&D risk can be appreciated by observing that if you have a blockbuster in your pipeline, you will probably do fine regardless of what else is there. And if you don’t, you will likely be in trouble regardless of what else is there. And whether you have a blockbuster is a rare, unpredictable, “black-swan’ event over which scientists and planners have no control. De Vany has shown that the movie industry has developed clever tools (e.g., adaptive contracts) to deal with this. That may come to pharma too, and in fact he is working on creating such tools.
    In the meantime, one can build on the work of Frank Scherer at Harvard, and Dietmar Harhoff. (Andrew Lo at MIT is also working on this). Using simulations, they have shown that traditional portfolio management (as practiced in pharma) does achieve a degree of risk mitigation, but far too little to be effective. In other words, because of the extremely skewed probability distributions in our industry, the residual variance, after you’ve done portfolio management, is large enough to put you out of business if you hit a dry spell. That’s why big pharma is looking down patent cliffs that portfolio management was meant to avoid. Scherer’s work also shows that the broader the pipeline, the better the risk mitigation. So we know directionally where to go, but we need more work to estimate the breadth of the pipeline that is needed to get risk under control.
    Pfizer’s example, however, gives us a clue. With nearly $9 billion in R&D spend, and a massive pipeline, they were unable to avoid patent cliffs. If they could not do it, chances are that no single pharma company can create internally a pipeline that is broad enough to tame risk. However, a nimble network, focused on creating a pipeline of potential breakthroughs at the discovery level, might achieve that goal. Intuitively, it’s a reasonable assumption, but more research is needed to model it and show how it would work. For this model to be sustainable, however, one has to be very careful about what goes to the clinic. Trials of compounds that are no better or safer than current drugs have to stop so that the money saved can be reallocated to discovery where it can support a greater number of projects.
    Sorry for the long post. Hope this helps.

  109. Bernard Munos says:

    To all the posters on this blog
    Thanks for the spirited discussion over the last few days. If we agreed on everything, life would be boring (and progress would stop). I always enjoy a good debate, and you have given me much to think about. Thanks again, and keep up the good work. We won’t make it without you.

  110. VMax says:

    A discussion-cum-debate of the very highest standard with plenty to mull over!

  111. Rick says:

    Bernard, #107
    Thanks for sharing these sources. More of the debate needs to be had at this level. It’s not as immediately or viscerally satisfying as arguing over blame, but cortical thinking generally yields better outcomes than brain stem thinking in complex situations like this. The difficulty of the work and the preliminary nature of these studies compels us all stop and think before advocating sweeping, dramatic changes to the industry. It’s cold comfort, but it sounds like the industry’s decades-long productivity decline has provided data from the “undesirable” end of the spectrum that these studies need.
    Speaking for myself as part of the industrial waste from pharma’s savage R&D cuts, it’s also slightly therapeutic to contemplate what’s happening from a more analytical, rather than personal, perspective. It is a meaty intellectual challenge that can appeal to that part of the brain that drew many of us into science in the first place. There’s also some perverse amusement in thinking of one’s self as being a subject in risk and complexity management experiments AND being able to read the study results too. (Maybe it’s karmic retribution for all those trillions of bacteria, fungi, cells and viruses I killed during my infectious disease drug discovery days!)
    Unfortunately, for the many thousands of currently and soon-to-be unemployed PhDs, as sincere and well-intentioned as your last comment (#108) – “…keep up the good work. We won’t make it without you.” – was, it’s a non-sequitur because the industry has already decided that there is no good work for us to continue and it intends make it without us. Perhaps it’s more appropriate to say “Good luck in your new endeavors”.

  112. Cellbio says:

    Post 107 is solid until the last paragraph. Pfizer’s budget, and the aggregate budget of pharma, argue that scale is not the answer, as you point out. The solution, a nimble network,
    is precisely the kind of meaningless MBA speak that drives this scientist nuts. Let’s just make it seamlessly aligned nimble network of excellence delivering meaningful Med today for the problems of tomorrow.
    Couple of other problems, IMO. We don’t really know the profile of our compounds, be it safety, efficacy or market success until a good clinical study like is common with Ph2b. So, we do need to get more compounds flowing into the clinic to get an idea of whether we are creating any real value. And then, as much as I like the movie metaphor, discovery and entry into the clinic is akin to script writing, except that the resources are tremendous, and as CMCGuy points out often here, requires not a solo agent, or small team of writers (with consumables being coffee, cigarettes and whiskey), but a crew of skilled, experienced and resourced scientists of many types. I am unsure if the model you invoke, and fairly point out needs more thought, is adequately addressing this need, at least as I see it.
    Finally, and related to resourcing discovery, nimble usually means that people cam be let go quickly without severance. This is a horrible environment for scientists to work in if one believes the effort requires time, is best done with experience, and one desires not to select for self preservation as the driving force behind conviction for and passion in one’s project. We’d be right back to today’s big pharma, or in a different style, VC hype. What would sustain employment in the nimble network? For Pfizer, the answer is the NIH.

  113. AlChemist says:

    The difference between big phama and startup is start- big phama has profits at risk and shareholers, boards, etc. that like the money – and start ups are working to get the profits. Small companies have great ideas then are swallowed up. Look at Sugen and the company that ate them. Some companies have good ideas, get into clinic then need to sacrifice R because of the expense of D.
    Small vs large: The discussion reminds me of the David Baltimore vs Leroy Hood argument. Cottage science vs industrial complex.
    As for startups, they still have to go through the big phama committee, review boards etc for partnering the expensive clinicals.

  114. Anonymous says:

    Anyone see DARPA’s latest news – I think this qualifies as a failure:
    “DARPA Loses Hypersonic Vehicle, Goes From $320M to Zero in 2,700 Seconds”

  115. bef says:

    To everyone here interested in drug development, I’d like to bring to your attention the article here:
    In the area of biodefense, HHS Assistant Secretary for Preparedness and Response Nicole Lurie has this suggestion:
    “Lurie recommended that a nongovernmental investment fund be formed that would deliver money to private firms researching medicines that would be used in the event of a naturally occurring epidemic or bioterror incident. The strategic investor fund would exist separately from the federal government and would operate much like a standard venture capital system.
    ‘The strategic investor initiative would promote the transition of medical countermeasure development and procurement from a ‘one bug, one drug’ approach to an enterprise capable of responding to any threat at any time,’ the HHS official said in provided remarks to the House subcommittee.”
    I really can’t see how this is superior to the current approach, but maybe someone else here does.

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