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Reconnecting To Science

Pharma research conference looks beyond the 'blockbuster' business model

by Rick Mullin
August 28, 2006 | A version of this story appeared in Volume 84, Issue 35

Credit: Rick Mullin/C&EN
Business leaders like Paul from Lilly (left) and Corr (right) of Pfizer joined acting FDA commissioner von Eschenbach (center) at the DDT conference in Boston.
Credit: Rick Mullin/C&EN
Business leaders like Paul from Lilly (left) and Corr (right) of Pfizer joined acting FDA commissioner von Eschenbach (center) at the DDT conference in Boston.

Speakers at IBC life science's Drug Discovery Technology & Development (DDT) conference in Boston earlier this month addressed what some called a crisis in pharmaceutical research and development: the simultaneous fall in innovation and rise in the cost of bringing significant new drugs to market. Although some representatives of major drug companies pointed to developments in R&D pipelines that they say dispel the notion of crisis, they agreed that the process of discovering, developing, and marketing new drugs needs to be made significantly more efficient.

The annual DDT conference had the word "development" appended to its name in 2005, and many of the sessions this year, the conference's 11th, dealt with development strategies. Several speakers argued that a disconnect between science-focused early discovery and business-oriented development at large drug companies has resulted over the past decade in the stifling of research on drug candidates deemed unlikely to approach $1 billion in annual sales.

Arjun Bedi, a partner in the health and life sciences practice of consulting firm Accenture, said the drug industry has seen its star fall on Wall Street, primarily because investors perceive a lack of innovation. In 2000, according to Bedi, two-thirds of the stock value generated by pharmaceutical companies emanated from R&D, and the rest from drugs already on the market. Now, he says, only one-third of the value generated by big drug companies comes from research. "The market has lost faith in R&D's ability to innovate and drive products to market," Bedi said.

William A. Haseltine, founder of Human Genome Sciences and currently chairman of Haseltine Global Health, castigated big pharmaceutical companies for developing business processes that do not promote breakthrough research. Assailing the so-called blockbuster business model, he noted that although industry mergers of the last decade, notably Pfizer's with Pharmacia and Warner-Lambert, were justified partly by an anticipated acceleration of research productivity, exactly the opposite was achieved.

Laying the blame at the feet of management, Haseltine said there is nonetheless reason for optimism in the lab. "There are enormously bright prospects," he said. "The problem is the translation of knowledge into the creation of products. You'd have to look long and hard to find an industry that has been less productive."

Innovative science, Haseltine maintained, is sidelined by business management at big drug companies. "Leadership wants to talk about marketing and development, not about discovery," he said. "It's as if they don't realize there is money in innovation."

Haseltine floated the idea of small drug development companies picking up assets from the portfolio backlogs of larger firms and pursuing development with the simple criterion of a reasonable return on investment. "But this terrifies R&D managers at big drug companies," he said. "There would be brutal fights over assets."

Haseltine acknowledged that major drug companies have been working to cut their costs, partly through increased outsourcing. But he said simply cutting costs misses the point. "If you impose professional management that doesn't understand the science, you have a recipe for trouble," he said. "You have to change the general structure of the process."

William M. Kluwe, vice president of strategic alliances at Pfizer Global Research & Development, argued in a panel discussion following Haseltine's talk that large drug companies are pursuing a stronger link between research and business management as they reorganize and cut costs. "Our business model is inefficient, and we now see that we need to integrate discovery and our ability to put information into a mechanism that we can take forward," Kluwe said.

However, Jan Lundberg, executive vice president for global discovery research at AstraZeneca, objected to the idea that size is an impediment to advancing research. "There is no indication that smaller is better," he said. "We have a broad program, and large pharma companies are sharing information across disease areas. This look across diseases is where big pharma will succeed."

Keynote speakers at the event acknowledged the need to balance science and business in such a way that promising drug candidates move to market faster and at a lower cost. They also called for greater collaboration between industry, academia, and government, as well as between research institutes that have traditionally taken a competitive stance toward each other.

Andrew C. von Eschenbach, acting commissioner of the Food & Drug Administration, said the industry and his 100-year-old agency must work together to direct the "systemic change" in drug discovery that began with the discovery of DNA 53 years ago and accelerated with the recent explosion of genetics- and molecular-biology-based research and the reams of new data on the mechanisms of biology and disease.

He said the agency will have to adapt by "morphing" from a science-based to a science-led organization, working collaboratively with industry and government health institutions to develop a global information technology infrastructure and new research tools such as biomarkers. "We have often been trained as individuals to pursue individual goals," von Eschenbach said. "Well, the game has changed from golf to basketball."

According to Peter B. Corr, senior vice president for science and technology at Pfizer, the industry's R&D spending has risen 70% over 10 years to $60 billion this year. One way to control spending and boost performance, he said, is to make better use of partnerships in order to curtail spending, access know-how, and expedite research.

"We need to collaborate," Corr said. "The complexity of science makes that mandatory." He discussed several new consortia, including the National Institutes of Health's Biomarker Consortium, the National Cancer Institute's Clinical Research Information Exchange, and the Genetic Association Information Network, which is hosted by the National Human Genome Research Institute.

Corr said drugmakers also need to deal more effectively with the general public's unrealistic expectations, which he believes have contributed to a battering of the industry's image in recent years.

"The public thinks we know more than we do about the mechanisms of biology, about safety, and about how diseases are initiated," Corr said. "Why don't we know more? Because it's very complex. We need to come clean about this with the public."

Susan Hockfield, president of Massachusetts Institute of Technology, agreed. "The public has an insufficient understanding of our ignorance," she said. Both discussed the need to increase and improve collaboration between industrial and academic researchers.

Steven M. Paul, executive vice president for science and technology at Lilly Research Laboratories, told attendees that improvements in the conduct of clinical trials at Lilly are aimed at reducing the cost of bringing a new molecular entity to market to $800 million, from the $1.2 billion he said it currently costs.

Although no DDT speaker maintained that the drug discovery and development process is trouble-free, David Langley, a compound manager at GlaxoSmithKline Research & Development, pointed out that the industry needs to do a better job of communicating to the public the significant gains it has made.

Industry observers agreed that delivering even more benefits in the future will require managing the challenges of new science and developing a science-guided mode of running businesses. "This is an unprecedented time for drug discovery," Lilly's Paul said. "We have it within our reach to cure cancer, Alzheimer's disease, and infectious diseases. But the impediments are significant."


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