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The last couple of weeks have been particularly challenging for the pharmaceutical industry as companies large and small have announced further staffing cuts to reduce their monthly burn rates. In late January, Pfizer continued its attrition, announcing another 10,000 layoffs, followed only a couple of weeks later by the shuttering of three manufacturing facilities in southern Ireland.
Similarly, AstraZeneca announced its plans to release 3000 members of its workforce and Vancouver-based Inflazyme Pharmaceuticals announced it would cut 70% of its workforce to "maximize value for shareholders"—although, how much value can shareholders expect when they will likely be left shortly with a building and a couple of company cars?
"We need to maximize near- and long-term revenues from our current product portfolio, from our pipeline and from external opportunities," said Jeffrey B. Kindler, Pfizer chairman and CEO. "We must reduce our absolute costs and put in place a more flexible cost structure. We are establishing smaller operating units that can enhance innovation and accountability while still drawing on the advantages that our scale and resources provide. We also are taking steps to enhance our collaborations with patients, customers, scientists and business partners, as well as to make Pfizer an even better place to work for our people. We believe executing against these key priorities will help Pfizer continue as a market and industry leader in the 21st century, and in the process, deliver superior shareholder returns over the short, medium and long term."
Interestingly, no sooner do these companies announce dramatic cost-cutting measures than many of them turn around and announce plans to acquire other companies in a desperate bid to gain pipeline. For example, on February 1, Pfizer announced its plans to acquire BioRexis Pharmaceutical and AstraZeneca announced its plans to acquire Arrow Therapeutics.
"The acquisition is a further step in Pfizer's strategy to accelerate our business development and licensing activity while ensuring appropriate operational and financial discipline," said David Shedlarz, vice chairman of Pfizer. "Our strategy is focused on complementing Pfizer's current portfolio of medicines and acquiring technologies that can be applied to strengthen and add value to our portfolio."
Deals that would likely have been licensing agreements one or two years ago are suddenly acquisitions—an intellectual land grab to rival the gold rush of the 1800s, and likely to be fraught with just as many hazards for the majority of players.
It seems that no matter how long the band plays, the dance is always the same, and the dancers repeat the same steps over and over again:
1. Develop a blockbuster drug;
2. Shift attention from R&D to sales & marketing (S&M—a coincidence, I think not);
3. Outsource that bothersome R&D function;
4. Make scads of money on sales;
5. Spend scads of money on marketing;
6. Watch pipeline dry up;
7. Watch competitors hit market and sales dilute;
8. Spend more money on marketing to bolster flagging sales;
9. In-license like crazy;
10. Watch patents dissolve into ether;
11. Lay off sales & marketing staff; and
12. Buy an intellectual lifeline.
Thus it was in the days of our drug discovering forefathers, so it shall be for evermore.
While the vagaries of the marketplace and changing regulatory and social landscapes bear some responsibility for the current state of affairs, it is getting harder and harder to listen to the same tired excuses from corporate management. Maybe it's time for a new MBA program that trains tomorrow's executives that "sustained growth" is measured in years or decades, not weeks or months.
Until that happens, I fear we will continue to rob discovery to pay marketing.
OUR READERS RESPOND
I understand frustrations running high over the ineptitude of Big Pharma Executives and Boards. Jobs are getting cut right and left. Fewer meaningful drugs are being discovered, developed, and approved. If it weren't for smaller, innovative discovery and development companies this industry would go the way of Madonna's career.
Some folks don't think the responsibility lies squarely at the feet of Big Pharma, but I tend to agree with you. Your artistic dance commentary provides systemic repeating evidence of the drug giants' (de)evolution.
As for "we will continue to rob discovery to pay marketing," I see this as an opportunity to market and sell to the old pharmaceutical houses. Discover new ideas, compounds, methods; develop them to a point of marketable value; and then strike a licensing or acquisition deal with the Big Pharma customer.
It isn't easy, nor is it risk free, but it beats the alternatives.
Bret L. MacPherson, VP, Sound Pharmaceuticals
You missed the tons of money spent on sales in the guise of research; otherwise, you hit the nail on the head. By the way, does anybody know how many tax payer dollars are diverted to keep these bloated behemoths afloat?
Edward Andrulis, Philadelphia, PA
Finally an analysis that is truthful and right on the mark! I have often wondered why they pay CEOs so much money—a secretary with only 6 weeks experience could do the job the way pharmaceutical CEOs perform today! P.S. My husband is a PhD chemist and agrees.
Leora A. Traynor, M.D., Medina County, OH
Good morning. As a member of the academic army for nearly three decades, I have been learning a lot from all your columns, so I decided it was time to say thanks.
Having read some of Sir James Black's interviews about discovery and leads as well as having had Gertrude Elion as a friend and mentor...as the years pass I have come to realize that great drugs may never become products of any sort unless there is IP. While I am a capitalist and altruist and a few other "ists" (pediatric hematologist-oncologist and pharmacologist) I find the arena frustrating for additional reasons other than listed in your current editorial. For example I have been, via OPD grants and grants through the usual academic venue, studying a "new" old drug with no IP and we have been developing treatments incorporating time proven, patient friendly drugs in novel ways. Getting support despite the science and the wealth of clinical data available to increase the pace of the clinical studies has been near impossible. Your pithy comments open my eyes wider to the realities of drug or at least protocol development.
Specifically, with regard to the theme in your current editorial, another major issue for big pharma is that as science catches up to our empiric successes, certainly in oncology, is that there are much better ways to use the "old," less expensive, time-proven drugs. The concepts of MTDs and DLTs are being redefined or aren't even the end point. This is especially true as "metronomic therapy," most likely anti-angiogenic or immune or inflammatory modulating" becomes more topical.
Therefore, in addition to the scenario presented in your current article, we, physicians at the bedside and academic(ists), translational(ists) have the added problem of how to develop better treatment using greater information about the empirically successful drugs in the modern era of molecular biology but with little external support as their may be little financial support forthcoming unless there is a likelihood of greater return.
Thanks again for entertaining and enlightening reading.
Barton A Kamen, M.D., Ph.D.,
Cancer Institute of New Jersey,
Robert Wood Johnson Medical School