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Some People at Pfizer Whose Fault This Isn’t

It’s worth keeping in mind, as the Pfizer/AZ story develops, that there are some people that don’t get mentioned who aren’t enjoying this, either: the scientists in Pfizer’s labs. As I’ve mentioned, I know folks there, and I know that there are (still) an awful lot of good scientists working there. And they, of course, have nothing to do with the corporate strategy. They’re just along for the ride, strapped in with everyone else.
And in the employment situation we have in the industry today, what else can they do? You can’t just up and quit your job because you don’t like all the business decisions your company is making, not in this environment, and not when you’re trying to pay the mortgage and not have to move your kids somewhere new in the middle of their schooling. At the same time, I know for a fact that Pfizer’s decision to go after AstraZeneca not only dismays many people at AZ; it dismays a lot of people at Pfizer as well. But their jobs do not involve advising the CEO and the rest of the executive suite – they’re working in med-chem, assay development, formulations, tox and all the rest of what many of the readers of this site do for a living. And there’s nothing they can do about it.
It’s a very painful situation. I’ve felt a bit of what they’re feeling before, when companies I’ve worked for have done things that I thought were ill-advised. Sitting in the back of the bus and watching the driver take the wrong exit is intensely frustrating. I’m not trying to add to people’s pain and by publicly whacking on their company – but at the same time, this is the biggest current event in the industry at the moment, and (for better or worse) it’s a perfect illustration of the state that the industry’s gotten itself into. (And the state that Pfizer’s gotten itself into, for that matter).
So it’s something that I’m going to comment on, and that I have to comment on. The whole point of having a blog like this is to talk about such issues, and to say what I think about them. What I have to say about Pfizer’s strategy is very uncomplimentary. But Pfizer’s strategy is not Pfizer’s people, and for them (the overwhelming majority of them), I have sympathy, because this really isn’t their fault.

49 comments on “Some People at Pfizer Whose Fault This Isn’t”

  1. Chrispy says:

    At a certain point the employees of a company are responsible for what the company is. If your company is making poor decisions then it is your obligation to let them know. Part of the reason this industry is such a mess is that we’ve become a bunch of cowards, clinging to what’s left of our jobs and letting our silence be a tacit approval of the company’s actions.

  2. Am I Lloyd peptide says:

    #1 Chrispy: As Derek asks, what do you expect the scientific employees of Pfizer to do? It’s not like they are going to find another job in this economy at the drop of a hat if they quit. I also agree that there are still excellent scientists working on interesting projects at Pfizer, and I can see why some of them intensely disapprove of what their higher-ups are doing and yet cannot leave, not just because they have nowhere else to go but because the science they are doing actually happens to be interesting and relevant. Also, “letting them know” is going to end up being both futile as well as damaging to your career. If you wanted to quit every time the top 1% of management made bad decisions then you should probably never work in the private sector.
    Personally I would not work at Pfizer, but I cannot see how we can denigrate every scientist working there for not leaving or loudly speaking up. Let’s be realistic and let’s actually give credit to the few good scientists in the company who are trying to maintain a semblance of a high-quality scientific environment amidst all this destruction and chaos.

  3. Anon says:

    So it’s something that I’m going to comment on, and that I have to comment on. The whole point of having a blog like this is to talk about such issues, and to say what I think about them.
    What exactly is your comment?

  4. Anchor says:

    Derek: I am directing this inquiry @ you (as you are on top of everything) and ask you to take a guess on lively hood destroyed (cumulative) by Pfizer’s reckless action over the past 15+ years. I also welcome response from others as well. Needless to say, it has been devastating on many families that came of Pfizer’s action one way or another.

  5. mrtwoiron says:

    Dear PFE and AZN scientists;
    Start working like hell. Intensely. Stay off the web. Save half your pay; you are paid quite well, relative to the average Joe, so cut your domestic expenses way down.
    You’ve got about a year, so make the most of it.

  6. Hap says:

    1) I don’t think it’s reasonable to assume that Pfizer employees have been silent. Given the amount of vitriol and rational criticism Pfizer has taken, their management has to be aware of their position; it’s more likely that Pfizer management doesn’t listen or care what people think of it. You can talk, but you can’t make others listen.
    2) Jonathan Franzen had a quote in an essay (roughly): “Silence is a message only when someone expects to be heard.” You can leave Pfizer, and hope that your silence (and that of others) will make them change, but since no one is hearing anyway, it seems pointless. It is similar to not voting as a method of expressing disapproval with the system and its candidates; if people don’t listen to you, they’re not going to listen to your silence, either. Unless everyone goes away, the people with the power to change their behavior won’t (actually, considering Pfizer, everyone going away seems almost their intent, other than keeping a few scientists for camoflage and to lower purchase costs for other tech).
    At some point, we are respoonsible for the things we do, and buy, but I’m not sure that shunning their employees is going to change Pfizer. The company seems to have given up caring about its reputation long ago, so indulging anger at its people seems to add more evil to the fire but does not change the company and does not mete any reasonable form of justice.

  7. Fat Old Man says:

    OK, since I spent over 30 yrs in this industry and participated in one of Pfizer’s acquisitions (might say I was a victim, depending on how you look at it), I hope someone out there has some kind of answer to my question, since I sense a lot of animosity to corporate M&A’s.
    Let’s consider the economical environment
    -The market demands growth
    -growth in our business is difficult because of increasingly higher costs to launch new drugs, loss of our company’s products (84% of prescriptions written in the US are now generic), and maybe some other reasons.
    What else is the management supposed to do??

  8. Sharp Tool says:

    If the big fish keeps swallowing smaller ones he surely becomes slower and slower and encounters fewer fish to feed on. Then he eventually sinks to the bottom and putrefies (or is it Putrepfize?).
    AZ shareholders, if you read Derek’s blog – there must be some after all – hold on to your shares. There is no price that is the right price on this one. You bought them for good reason, not to swap silver for bronze.

  9. Hap says:

    We expect individuals to refrain from robbing other people, however lucrative a pastime it may be. Why do we not expect the same of management?
    Basically, the “merge yourself to greatness” model relies on cashing out all the work the previous owners put in – it doesn’t make the company more able to do anything, but leaves a mess for everyone else to clean up, at least if they actually want something useful. I’m not certain why I should feel sympathetic that they have no choice but to pillage to make a remunerative living. They could do something useful (and make lots of money, still), but have chosen not to.
    I see this as different than directing vitriol at Pfizer’s rank and file because, unlike most of their staff, management could change its actions. It would make them less money to do so, though, and that is not acceptable to them. If your choices have power (and thus reasonably anticipable outcomes), then you deserve what credit comes for those outcomes.

  10. biotechtoreador says:

    “At a certain point the employees of a company are responsible for what the company is”
    As much as philosophically I’d like to believe that, having been at fairly senior positions in much much smaller companies, I just don’t think it’s true. (Though I still find this amusing:
    “just following orders” is sometimes the only way to survive.

  11. johnnyboy says:

    @1: you are out of line. If you think that an employee scientist “speaking out” to company execs about what he feels are their bad management decisions would actually change their course of action, you obviously have never worked in a big company.
    @7: Well, there’s a hint of a possible way forward in the Novartis-GSK-Lilly deal announced earlier. Trading specific therapeutic areas so that companies can focus on areas where they are leading, instead of every company trying to do everything, makes a lot more sense and is a hell of a lot less destructive to the industry than what the Pfizer-Borg has been doing.

  12. Anon says:

    There’s an interesting discussion about “reputation” here. I concur that Pfizer no longer cares about its reputation, but presumably it does care about how its shareholders perceive it. Since Pfizer’s shareholders are happy as long as the stock doesn’t sink – no matter how destructive the company is otherwise – aren’t the shareholders as much to blame for what the company is doing as upper management? Clearly Pfizer and its shareholders have the same perception of the “reputation” of the company, a perception very different from the one around here. So I do agree that all that Pfizer’s upper management cares about is the stock price and their own bonuses, but this is a goal that’s made possible only because of those who purchase and sell Pfizer stock. Then why not blame them too?

  13. Hap says:

    @12: Yes, they are. Kind of like companies demanding prices from their suppliers that (more or less) require illegal or harmful actions, and then claim that they knew nothing when the acts come to light.
    The engineering concept of being unable to outsource the responsbility for your actions to subcontractors seems appropriate here.

  14. Sharp Tool says:

    I hear a lot of talk on this subject and I have to say that it really is not ‘inevitable’, it does not ‘have’ to happen, AstraZeneca shareholders do not ‘have’ to sell. Recall the residents and home-owners at the Menai estate in Aberdeenshire who stood firm whilst Donald Trump threw money at them to leave to enable his golf resort plans. Stop believing that money is the only imperative.
    If it fails to materialise, and I sincerely hope it does fail, then AZ will continue to develop and sell drugs, Pfizer will continue to develop and sell drugs, and the pharma industry – and more importantly the patient population – will be all the better for such a scenario.
    Vive la resistance Pascal!

  15. Cellbio says:

    @31 and #2,
    In a way, both are right, and in the developing history of our current state of this industry people in all levels of positions have stood up and said ‘this is wrong’ while others have kept their heads down and tried to survive. Guess what happens over a few decades? You got it, the survivors survive and the ones who say the emperor has no clothes find they have no future and are branded by the catch phrase of the day, be that not ‘getting it’, not being a ‘team player’ or not being a ‘change agent’. In the end, you have organizations that have selected for people whose career decisions are based around meeting the mortgage and kids’ school situations while simultaneously shedding the staff who protest decisions that negatively impact the reason they show up every day, namely, to make a difference in patients lives through advancing clinical candidates.
    Did you work at a big company whose vibrant culture was destroyed? If so, something like the phrase ‘It is what it is’ crept into the company lexicon as code to say, ‘yeah I agree, but time to go quiet and survive’.

  16. Annon says:

    More & more, the business of big Pharma is… Anyone who is considering being a drug R&D researcher in big Pharma or small Biotech, needs to be alert to the risks associated with both. This is something that needs to be better openly shared with students getting degrees in the related areas so they are somewhat aware, even though they cannot fully appreciate the full extent of disruption, when such decisions hit. Unfortunately, most academic programs ignore this topic since it is not in their best interests.

  17. johnnyboy says:

    @14: Of course AZ shareholders don’t ‘have’ to sell. However in most companies, the majority of voting stock is held by big investors (investment banks, hedge funds, retirement funds), and big investors wouldn’t be doing their jobs if they turned down an offer to buy their stock at about twice the price it was before the takeover. They would only have justification to refuse if they think that the stock could be worth even more in the future with the current management. Which, the way AZ was going lately, seems rather unlikely.
    When your job is to be an investor, then money IS the only imperative, i’m afraid. That’s the conundrum of modern drug development: it’s only viable with the funding that a capitalist system can provide, but then it is beholden to capitalist rules, where money (not drugs) is the final objective.

  18. DCRogers says:

    There’s a curious analogy to another sector: newspapers. It’s not that long ago when newspapers were money-spinners, with stunningly-high ROIs (20% level as I recall).
    Move forward in time: the first signs of weakness. Management response: cutbacks to keep high returns. More weakness: more cutbacks. Feedback loop kicks in, crappier products accelerate decline, but no change in strategy.
    TLDR; the once-high profitability of newspapers contributed to their decline, as it encouraged management to focus on finance rather than content.
    You can make an analogy to pharma as you see fit, but I think it’s a close match, right up to PFE/AZN merger, a deal apparently driven by financials.

  19. Old Timer says:

    #4: From WSJ “Since 2005, Pfizer Inc. has eliminated more than 56,000 jobs world-wide—a number roughly equal to the population of a large suburb. More job losses could be on the way.” – from “In Drug Mergers, There’s One Sure Bet: The Layoffs”

  20. luysii says:

    Not to fight the Vietnam war all over again, BUT —
    The position of a research scientist at Pfizer disagreeing with where management is taking the company uncomfortably resembles the position of a career army officer from ’68 to ’70 when we had 500,000 men in Vietnam.
    For some reason the service was very short of Neurologists back then and so with only 1 year of neurology residency I was assigned to an excellent army hospital (Fitzsimons). It was a plum assignment.
    The tour of duty for any non-career MD was two years, and those who’d spent their first year in Vietnam pretty much had their choice of the best assignments for their second year — so I saw a lot of them in my two years at Fitz.
    I never met a single MD who thought we were winning over there, and most thought that we were losing and badly.
    If you were a West Point grad who’d been over there, planning to make the military your career, you were very much like the Pfizer career scientist today. Speaking up would destroy your career. So most did not, and those who did were ignored and probably suffered.

  21. Dr Manhattan says:

    Having worked at three big pharmas (including Pfizer & AZ), I can concur that there are many fine scientists at Pfizer. One of the best chemists I ever worked with was and still is at Pfizer. As Derek notes, the employees are along for the ride, and I was there for two of Pfizer’s early 2000 acquisitions. No fun for anyone trying to get anything accomplished during these times.

  22. Fat Old Man says:

    Pfizer scientists speaking out against management?
    what planet are you guys living on?
    The scientists are not even at the same location as the guys making these decisions. They’re finding out about it in real time as we are. Everybody they know has the same opinion as them and us. What are they supposed to do, camp out in front of headquarters in Manhattan?

  23. Anonymous says:

    “What are they supposed to do, camp out in front of headquarters in Manhattan?”
    Drop a turd through Ian Read’s mailbox?

  24. Pfisted says:

    – Do you want to be liked? Or rich?
    – Large institutional investors / pension funds hold most stock and therefore sway…their job…to grow their funds…see above.
    – Pfizer always had a philosophy: 1 + 1 = 1.1
    – 90 % of folk should plan now.
    – Anyone in small mols at AZ…adopt the brace position…

  25. Anonymous says:

    @17 and most others here.
    Pharma business has and will always be a business. The goal is to increase shareholder value-nothing else. It just happens that the widgets sold here are therapeutics. It should not come as an enormous surprise that businesses make decisions which are best for increasing shareholder value, not employee longevity/happiness. Sometimes those decisions work well, sometimes they do not.
    Companies do what is best for their survival, sometimes at the detriment of individual employees, not unlike a multicellular organism.
    Pfizer will and should do what it can to make itself more competitive while increasing shareholder value. Its called capitalism. Seems sometimes that people here think that companies are in business to keep scientists employed. The goal of these companies is not to employ chemists/biologists etc. They’ll do what it takes to survive and hopefully thrive. Its what they are supposed to do….

  26. Hap says:

    @26: Companies are in business to do something. Capitalism is a useful system because it mostly puts resources in the hands of the people who can use them best, and because it is more likely than many other systems to produce useful stuff. It wasn’t handed down by God, and its touch doesn’t render actions taken under its aegis good. It just works, mostly.
    Pfizer hasn’t just been pillaged for firing scientists like Stalin fired dissidents during one of his purges. They haven’t made money for most of their shareholders during this time, either. If their job was to make money for shareholders, then perhaps someone else should be doing it. Instead, Pfizer has been about monetizing their reputation and the effectiveness of other companies in finding drugs (and liquidating them both). It’s a good way to make money, but it destroys the means to make money in the future. Looting your neighborhood or eating the seed corn are both lucrative in the short term, but they depend on the work of others to generate value, and they make it likely that that work will no longer continue.
    Even if their only job were to make money, their behavior would be self-defeating. However, the fact is, companies exist to do something; they make money because they have something useful to do. People can make money trading lots of things back and forth, or stealing from one another, but when useful things stop being done, no one’s going to be making money, because dead people don’t count their change. When they cease to do it, and work to destroy the ability of others to do useful things (to destroy the ability to do them and the reason), well it seems like something to dislike.
    Finally, I’m pretty certain it won’t take a genius to figure out who will get the fruits of these *cough* labors. The shareholders (the people who allegedly are the absolute reason for Pfizer to exist and make money) won’t get the major part of the money. Most of it will end up piddled away, in the hands of mergers people and other remoras. In that case, it looks like capitalism in action in the same way that the LA riots were capitalism in action. I don’t think that’s going to be part of Sowell’s next economics text.

  27. patentgeek says:

    @ Hap #27:
    ” However, the fact is, companies exist to do something; they make money because they have something useful to do.”
    Thank you for bringing a bit of moral (such an old-fashioned concept!) clarity to the discussion.

  28. Anton says:

    I see Derek is stirring up trouble again on his blog. Only if he spent as much time and energy in drug development.
    Look at the facts people, PFE will by AZ. AZ scientist will be fired. PFE will move all R&D to China.

  29. aa3 says:

    Getting rid of research seems bad on the face of it.. but this is under the assumption that these huge organizations are capable of allowing breakthrough creative ideas.
    If the research that needs to be done is a mechanistic, huge process, then huge organizations are incredible at that. But when they hit the end of the road of that huge process, where do they go? Then they need creative/outside the box thinking. Which just is not going to get approved.
    But what these corporations can do is see startup and small corporations trying wild/crazy ideas, and seeing which ideas are bearing fruit. Then using what they are good at, the aspects of the industry that do not involve creativity, things like high quality production, massive capitalization, global distribution, clinical trials, patent filing, etc. Even on those fronts, no way they come up with the marketing ideas or legal strategies in house, those will be outsourced to small firms who can come up with innovate ideas.
    Whether they spend 5 billion or 10 billion on research doesn’t matter if they can’t allow that creativity.

  30. newnickname says:

    1. It’s hard to be heard when no one is listening. 2. @26, this is NOT the widget business so that model doesn’t hold. Many people (the public; financiers; investors; et al) THINK it’s the widget business and expect similar actions to produce similar outcomes. It doesn’t work that way. 3. I surely agree @27 Hap about who will profit from this: the disclosures so far have been chum for the sharks, lawyers and bankers all hoping to sink their teeth into $100+ billion as it moves from PFE to AZN. What are M&A fees and costs these days, around 10%? $10 billion to be dispensed to The Big Firms at $600-$1000 per hour (billed in 6-minute increments) to move a piece of paper across a desk? (Maybe they’ll work at a small discount to dismantle the failed acquisition 2 years later?)

  31. dearieme says:

    The Golden Age of medicine is over. The pharma business is in secular decline. One obvious response is cost-cutting mergers. CEOs rarely recoil from the obvious.
    It’s rotten for the employees but it’s hard to see a different outcome unless somehow there is a huge intellectual advance in the science of drugs. Pray for your Newton!

  32. Anonymous says:

    I am really surprised to see so many emotional scientists here. It’s 2014 and we live in a world where making profit is the one and only goal of a company. It does not matter if the company is making drugs or making weapons. Why would the “big guys” or the management care for the employees if the company will make more money or make more sales for their stocks?
    I have always thought that scientists could understand the world and the true mission of capitalism better than the regular people. Apparently, I am wrong. I wonder if these people ever wondered what happened to the small businesses or companies (and their employees, the families of them) that were bought by these or other companies. A company in a developed country like the USA can go and buy off any small business in a “third world” country and lay off as many people as they want and pay a starvation wage for the rest of the employees there. This is happening almost all the time. Never realized it? I now see that even scientists are far from the reality in the world. It’s only when the same thing is about to happen to them that they can realize how cruel the world is.
    There is a buyer and there is a seller (even though they are reluctant to sell). If this transaction does not happen now, it will eventually happen. Because, everything has a price and as long as these companies are measured by a value determined by the stock market, this will stay the same.
    You should realize that this is a business transaction. How many of you would turn down a better paying/position offer? I am almost sure that most people would quit their jobs for a higher paying job.

  33. Anonymous BMS Researcher says:

    Regarding the Vietnam analogy: Dan Rather has said nobody at or below the rank of Company Commander ever lied to him in Vietnam, but he was regularly lied to by officers above that rank. Once while interviewing LBJ he advised the President to start inviting Company Commanders to the White House if he really wanted to know the truth of what was happening over there.

  34. Anonymous says:

    “I am really surprised to see so many emotional scientists here. It’s 2014 and we live in a world where making profit is the one and only goal of a company. It does not matter if the company is making drugs or making weapons.
    I have always thought that scientists could understand the world and the true mission of capitalism better than the regular people. Apparently, I am wrong.”
    You are wrong about who misunderstands capitalism – it is you. True capitalists would want to ensure their company has long term viability. They would welcome fair competition. Scientists understand that a company that functions through the permanent destruction of knowledge of its own industry (i.e. discarding experienced scientists while lobbying for expansion of the supply of STEM workers) will not last forever. This distortion of capitalism which focuses on the good of the short term smacks sourly of Keynes.
    As Ayn Rand wrote, “I will never live for the sake of another man, nor ask another man to live for mine.” Those who take the labors of others (drugs and drug candidates) through brute force (hostile take over bids, lobbying political officials) are moochers through and through. A capitalist would want to produce not steal from producers.
    Any company, such as Pfizer, which asks its employees to sign prewritten letters to their congressman is monetizing influence not productive work. Capitalist does not describe Pfizer.

  35. sp3 says:

    In 2013 there were 37 biotech IPOs in the US and already 24 this year. OK, I know, this cannot continue but the point is that small pharma is vibrant and is where some of the best research in the world is occurring. Just look at the number of antibiotic drugs (there are 8) in Phase III. See many large pharma here – nope? Many excellent scientists from large pharma have migrated to these small start ups and have the freedom to innovate. Don’t lament the passing of the dinosaurs – it had to happen.

  36. Anonymous says:

    “How many of you would turn down a better paying/position offer?”
    I have turned down an opportunity to have a better paying position. Reason? It was at Pfizer. Been there, done that. Sick of packaging up my research every 9months – 1 year to transfer it to a site which will eventually close down and/or transfer the research again.
    Research needs continuity if it will ever add value to society. Continuity does not exist at Pfizer. My current job provides more continuity, and my work has more meaning because of it.

  37. Anonymous says:

    This isn’t an either-or thing, and there is a plan C: organise. Be as hush-hush as you have to be at first, but make sure you’re ready to act to defend your fellows when the time comes–and make sure that management knows it, too.

  38. aa3 says:

    #35.. that is a reason widely held public capitalism is slowly dying. If a large company like VW is owned by a family, they want to gradually build up the capital for the long run.
    In the public co’s the management is essentially caretakers of the shareholders money.. but they know the higher they get, the shorter the time they are going to last in the job. So it is completely rational to make short term decisions. Eg.. you might realize a lot of cash today by spinning off a long built up area.

  39. Sharp Tool says:

    @Anonymous #33:
    Scientists get emotional when they see something illogical or irrational before their eyes or evidence of the inability to learn from past mistakes. You have an absolute right to your opinion but I choose to disagree with it. It is 2014, the 21st century, but I fear you carry a 20th century notion that “profit is the one and only goal of a company”. Ask Pfizer and AstraZeneca what their goals are. I’ll be surprised if you get a one-word answer. Of course I’m not naive nor idealistic, these are big fish and they do swallow smaller fish with little outcry. It’s not the principle that I believe is flawed here, it is the illogicality of this proposed merger.

  40. Nick K says:

    #33: You have a problem with logic as you are confusing a necessity with a purpose. I have to eat to stay alive. It does NOT follow that I live to eat. Similarly, a company must make a profit to stay in business, but it does not follow that the company exists merely to make a profit.

  41. Anonymous says:

    Sure, companies can aspire to do things beyond make a profit. But, without profit, you are out of business pretty fast. In the boardroom, decisions are nearly always focused on how to increase shareholder value/profit. Otherwise, go to a non-profit and be a pillar of society.

  42. Wavefunctione says:

    I think the question is about long-term vs short-term profit. Do you take a slight hit in the short-term and keep your company sustainable in the long-term or do you go out with guns blazing in the short-term?

  43. Hap says:

    1) If there is no long-term, then why invest in a business that has (and can have) only long-term?
    2) I’m sure workmen can make money selling their tools, and if they’re only concerned about the short term, it will make them money. Selling their tools, however, guarantees that eventually they will either have to pay for new tools, which will cost far more than the old ones, or they will have to do something else that doesn’t require them, probably something less lucrative. In that case (and, analogously, in the case of Pfizer), acting for short-term profit and long-term profits are mutually exclusive. It also guarantees that someone’s going to be left holding the bag – a bunch of worthless stock – when they’ve run out of victims on which to feed.
    Not all destruction is creative. If pillaging other businesses for revenue and resources (without having anything better to do with them) is the only way to make money, then it seems like we are writing our economic system’s suicide note, and maybe our own.

  44. Wavefunction says:

    Yes, your first question was the one I was asking and you would think these executives would be asking it too, but they are clearly not. Sadly companies like PFE have decided to cut open the goose that lays the golden eggs. Little do they realize that not only will there be no goose but there won’t be that many golden eggs either.

  45. Anonymous says:

    I too have taken a position for a bit lesser money than I made at MRK. I can now focus on the science, rather than my resume.
    And yes, I am passionate about the science. Scientists are not cold-blooded reptiles, and the drive to discover and develop is often derivative of a love of logic. A strong desire to make sense of the world. Why are these emotions castigated by #33? That is illogical. Robots don’t discover and develop – very human scientists do that.
    The PFE mgmt is illogical, unless you factor in the prevailing attitude of upper mgmt: “In 5 years I wont be here, neither will you, so its good to eat the seed corn.” These guys are the reptiles.

  46. zDNA says:

    @44 Hap:
    The Austrian economist Ludwig von Mises had a similar analogy: Don’t burn your furniture thinking you’ve found a great new way to heat your home.

  47. srp says:

    The whole long-run v. short-run discussion here is misguided. Pfizer’s stock price today incorporates investors’ expectations from zero to infinity of expected NPV of earnings plus or minus any bubble beliefs (about other people’s expectations of the stock). That expectation is contingent on beliefs about what Pfizer’s strategy will be going forward and then beliefs about the relative merits of the different strategies in the support of the probability distribution.
    If investors believed the claims made by commentators on this site, then they would conclude that Pfizer’s management stinks at drug discovery and so Pfizer should be separating such R&D activities from this inappropriate management structure and instead should be emphasizing those activities that Pfizer is good at. The interesting questions is whether there already exists a better management structure for discovery at some other company or whether such a better structure needs to be invented from scratch. Is AZ’s management structure The Answer, or have they also been screwing up over the long term?
    In the end, it seems to me that the unstated working hypothesis of many of the commentators here is that if you just left a drug discovery organization to its own devices over a long period of time, provided lots of career stability to small-molecule chemists, and kept pumping in liquid resources, a bonanza of new and profitable drugs would result that had a positive NPV. That was unquestionably true in the past, but it seems a dubious proposition under contemporary conditions.

  48. Nick K says:

    #42: Of course, a company HAS to make a profit to remain in business. That is not its PURPOSE. You are merely repeating the point I made.

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