Derek Lowe
Derek Lowe is a drug discovery chemist with 20 years of experience in the pharmaceutical industry, which is still very much his day job. He's worked on projects targeted at Alzheimer's, cancer, diabetes, infectious diseases, and other areas, but like most discovery scientists in the business, he has yet to produce a marketed drug. Explaining how and why this happens is what led to the launch of his blog, "In the Pipeline", in 2002, and the explaining continues. . .
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Nov 11 2009, 11:15AM
Swinging The Ax At The Drug Companies
Two big mergers are now shaking out in the drug business: Pfizer/Wyeth and Merck/Schering-Plough. Employees at the latter have told me that they're still waiting for the cuts that they know have to come, but the Pfizer and Wyeth people are facing them right now. And the size and shape of those layoffs, and others around the industry, is not encouraging.
Jul 9 2009, 2:30PM
R&D v. Marketing: Where Should Drug Companies Spend?
Just how much does the drug industry spend on R&D? And how does that compare to what it spends on sales and marketing? These are argument-inducing questions, but we now have some more data to argue about.
Jun 2 2009, 10:15AM
Heavy Atoms and Hard Times
There's a deal that was announced this morning in the pharmaceutical business that shows two (nearly contradictory) things at the same time. Concert Pharmaceuticals, a start-up company in Massachusetts, has partnered with behemoth GlaxoSmithKline to develop a series of compounds which might show improved blood levels and toxicity profiles compared to existing drugs. So far, so good - deals like this happen all the time. But there's an odd feature here.
May 18 2009, 10:20AM
Is Bay Area Biotech in Trouble?
One of the key biotech research concentrations in the US may be in trouble. The pharmaceutical and biotech industry is (at first glance) scattered all over the country. Some of the scatter, though, is due to a few large outliers (like Eli Lilly in Indianapolis), or to a background sprinkling of many small and often short-lived companies that emerge from nearby universities.
Apr 17 2009, 11:45AM
GSK and Pfizer: Partnering Up?
The HIV-drug alliance between GlaxoSmithKline and Pfizer is getting a lot more play in the press than I thought it would. Deals between the big pharmaceutical outfits are not rare. Merck and Schering Plough teamed up for Vytorin, and Merck similarly joined Bristol-Myers Squibb on a (failed) diabetes drug a few years ago. J&J and Bayer are partnered on a Bayer anticoagulant drug, Schering-Plough and J&J split Remicade (an agreement which is complicating S-P's current merger plans), and Pfizer had teamed up with Warner-Lambert on Lipitor before they up and bought the whole company. There have also been several joint ventures over the years, such as Takeda-Abbott and Astra-Merck.
Apr 17 2009, 11:00AM
Is The Blockbuster Era Over for Big Pharma?
It's been quite a ride, at least for the drug companies fortunate enough to have discovered one. The blockbuster drugs are the ones that transform companies with a flood of revenue, changing them forever in just a few short years while the patent is in force. There's a list of famous names in this category, going back to Valium from Hoffman LaRoche, through Zantac with Glaxo, and leading to the biggest of them all (so far): Lipitor (Warner-Lambert and then Pfizer).
Apr 15 2009, 8:34AM
Age Before Beauty, Revisited
Megan's "Age Before Beauty" post is certainly true - older workers most definitely have a harder time landing a new job, particularly in a down economy. In my own industry (pharmaceuticals) I hear persistent stories of some of the large companies deliberately reworking the demographics of their work force in a way that brings this problem to mind.
The terminal degree for a scientist is a PhD. In most drug companies, that's the degree you'll need to have if you plan to have people reporting to you. A Master's degree, by contrast, will mean that much more time will elapse before you supervise others, if you ever do at all. Some companies are more willing to promote MS level people (eventually) to the same ranks as the PhDs (and thus have lab assistants report to them), while others have an impermeable ceiling that prevents this from ever happening. At any rate, years of experience will gradually raise the salaries of both groups, with the older Master's-degree scientists coming to earn a good deal more than entry-level hires with Doctorates.
The terminal degree for a scientist is a PhD. In most drug companies, that's the degree you'll need to have if you plan to have people reporting to you. A Master's degree, by contrast, will mean that much more time will elapse before you supervise others, if you ever do at all. Some companies are more willing to promote MS level people (eventually) to the same ranks as the PhDs (and thus have lab assistants report to them), while others have an impermeable ceiling that prevents this from ever happening. At any rate, years of experience will gradually raise the salaries of both groups, with the older Master's-degree scientists coming to earn a good deal more than entry-level hires with Doctorates.
Mar 17 2009, 1:45PM
Startups run dry: the numbers speak
I wrote here about a potential entrepreneurial freeze in the biotech and pharmaceutical world, and it appears to be underway. Take a look at the figures for IPOs in the area (and thanks to the Wall Street Journal's Health Blog for pointing these out). Last year was the worst year for taking a biotech company public since at least 1996 (there was one IPO) and it's hard to imagine that 2009 will be much better.
Mar 9 2009, 11:03AM
Merck buys Schering-Plough: first thoughts
So after weeks of rumors, Merck has decided to buy Schering-Plough. This ends two eras - the one where S-P was one of the last mid-sized pharmaceutical companies, and the one where Merck grew mostly from the inside. I have to say, I'm sorry to see the end of both. Drug discovery is risky and complicated, and it needs as many different viewpoints and shots on goal as possible. Big mergers like this don't help the industry's ecology much. Today's merger isn't as disturbing as the Blob-like growth of Pfizer, but it's still not happy news. (Full disclosure: I used to work at Schering-Plough in the 1990s - a few tales from that era can be found here and here).
Does this deal make sense?
Does this deal make sense?
Mar 5 2009, 1:21AM
The Court reins in the FDA
The Supreme Court made news yesterday with its decision in Wyeth v. Levine, a case that brought up the possibility that if a drug (and its warning labels) had been approved by the FDA, that state-level court decisions couldn't alter them or open the door to lawsuits regarding them. This idea (pre-emption) is not unknown. It exists in some forms for medical devices, but the court thoroughly rejected the idea that it applies to prescription drugs. Stevens, Kennedy, Souter, Ginsberg, Breyer and Thomas (with an interesting concurrence) came down in the majority. Some take-away lessons from the decision are:
Mar 2 2009, 9:49AM
India drug business stumbles
India is a source for a goodly amount of the world's generic drugs - there are some large and serious companies there, with a lot of expertise. And in recent years, they've just been getting larger and more serious all the time, which makes a couple of recent news items very disturbing reading.
Feb 19 2009, 10:49AM
Stem cells: time to put some money down?
So now that the Obama administration looks set to change the Bush administration's restrictions on stem cell research, is it time to invest in the area? Only with money you can absolutely afford to lose, in my opinion.
There are several reasons for this. For one thing, the administration hasn't acted yet, and a few people who expected immediate action are starting to wonder if that means something unpleasant. But even when the rules change, the effect on the stocks of publicly traded companies is probably going to be mostly psychological. That's because the Bush rules applied only to government funding, a fact that all too many people forget. Private industry has been free to plow right ahead as it sees fit, and it has. Companies like Geron have been working on embryonic stem cells the whole time, with no NIH money involved.
There are several reasons for this. For one thing, the administration hasn't acted yet, and a few people who expected immediate action are starting to wonder if that means something unpleasant. But even when the rules change, the effect on the stocks of publicly traded companies is probably going to be mostly psychological. That's because the Bush rules applied only to government funding, a fact that all too many people forget. Private industry has been free to plow right ahead as it sees fit, and it has. Companies like Geron have been working on embryonic stem cells the whole time, with no NIH money involved.
Feb 13 2009, 8:20AM
All the small startups: running dry?
You've probably never heard of La Jolla Pharmaceuticals. To be honest, even though I work in the industry, neither had I. But this small company had a drug in Phase III for lupus, a disease for which there are no good treatments. And today they were notified by their review board that the whole study had to be scrapped, immediately: there was no chance that the drug could possibly be showing a useful endpoint, and continuing it would be unethical. La Jolla's stock went down about 90 per cent, and I would imagine that the future of the company is very much in doubt (especially given the current climate for financing).
There are all sorts of small drug companies like this, pursuing long-shot ideas and hoping for the best. Once in a while, one of them comes through, and we're all better off for it. But we're all better off for the willingness of investors to back such ideas in general, and that's one of the things that worries me about the current economic troubles. The United States has one of its greatest advantages in its constant bubbling ferment of start-up companies - and not just in the drug industry, of course. But many of these outfits have been caught short by the downturn, since they run close to the edge of their finances even under good conditions.
How many ideas that might have taken off are we going to miss, and how many therapies that could have worked out, if the money had held out a bit longer? The Citis and Caterpillers of the world are getting the headlines with their massive layoffs, understandably. But there are a lot of outfits that you've never heard of that are in the process of losing everything. Money wouldn't have saved La Jolla Pharmaceutical's drug for lupus - the science just wasn't there, in the end. But lack of money could keep the next drug from even being found.
There are all sorts of small drug companies like this, pursuing long-shot ideas and hoping for the best. Once in a while, one of them comes through, and we're all better off for it. But we're all better off for the willingness of investors to back such ideas in general, and that's one of the things that worries me about the current economic troubles. The United States has one of its greatest advantages in its constant bubbling ferment of start-up companies - and not just in the drug industry, of course. But many of these outfits have been caught short by the downturn, since they run close to the edge of their finances even under good conditions.
How many ideas that might have taken off are we going to miss, and how many therapies that could have worked out, if the money had held out a bit longer? The Citis and Caterpillers of the world are getting the headlines with their massive layoffs, understandably. But there are a lot of outfits that you've never heard of that are in the process of losing everything. Money wouldn't have saved La Jolla Pharmaceutical's drug for lupus - the science just wasn't there, in the end. But lack of money could keep the next drug from even being found.
Feb 6 2009, 2:39PM
Carl Icahn's not through with biotech yet
So Carl Icahn is back to make another attempt at the board of directors of Biogen, one of the largest of the biotech companies. (For reasons that a securities lawyer would best be able to figure out, Icahn is also proposing to change the company's jurisdiction of incorporation to North Dakota, and no, I'm not just making that part up). This comes after his adventure at Imclone, where he successfully caused the company to cease to exist, selling it out to Eli Lilly at a good profit.
Feb 5 2009, 7:15AM
Fear and trembling in the drug companies
The current economic slump couldn't have come at a worse time for the drug industry, which has been staggering through a prolonged slump in the number of good drugs brought to market (and in the number that stay there, come to think of it). But many of the companies are still rich in cash, for now, and the pressure to do something with it is bringing all kinds of stupid ideas out.
Feb 3 2009, 11:16AM
Merck and Schering-Plough make their targets
So Merck and Schering-Plough are out today with some news that really gets attention these days: they beat their earnings forecasts. So, what on Earth could that mean?
Well, for one thing, both these companies (like nearly everyone else in the drug business) have been cutting costs like mad for the past year or so (for which read, mostly, shedding staff and closing facilities). And that seems to have worked, insofar as you can trust the numbers, or anyone's numbers. But there's only so far that that can take you: eventually, that slicing blade hits some vital tissue. You can't go on shutting things down and laying off people year after year, obviously. So while both companies did a good job of hitting their numbers this time, it's worth noting that they did so in spite of sales figures that weren't as good as either of them had been hoping for. So how much of this is due to one-time cost savings, and how big a worry are those sales?
Both companies have some things to worry about: Merck's Gardasil vaccine for cervical cancer has been big, but not quite as big as they'd been planning for. Singulair (for asthma) seems to have plateaued. And Merck has patent-protection problems - they lost Fosamax (for osteoporosis) last year, and Cozaar (cardiovascular) goes off patent in another two years. Schering doesn't have anything looming, but both they and Merck both have the well-publicized troubles with their Vytorin cholesterol medication to deal with. And that's a bigger percentage of S-P's sales, so it's hurt their stock correspondingly more.
Of course, both of them have interesting things coming along in their drug pipelines, too. So that takes us right back to the usual model of drug company finance: get as much money as you can out of your existing medications (wasting assets, all of them), while frantically bringing up things to replace them. Overall, both Merck and Schering-Plough are in better shape than many of their competitors in both of these categories, but the motto that should be carved over the door of every research lab in the industry is You Never Know. We've had an awful lot of big clinical failures the last few years in this business. (In fact, the fact that we've gotten better at eliminating some of the other causes of failure may well have led to an increase in late-stage disasters, taken as a percentage of the whole).
Drug stocks are traditionally supposed to be recession-proof, and today's announcements don't hurt that reputation. But what drug stocks are not is drug-proof. We still don't know which of our compounds will make it, or which ones will stay on the market once they have.
Well, for one thing, both these companies (like nearly everyone else in the drug business) have been cutting costs like mad for the past year or so (for which read, mostly, shedding staff and closing facilities). And that seems to have worked, insofar as you can trust the numbers, or anyone's numbers. But there's only so far that that can take you: eventually, that slicing blade hits some vital tissue. You can't go on shutting things down and laying off people year after year, obviously. So while both companies did a good job of hitting their numbers this time, it's worth noting that they did so in spite of sales figures that weren't as good as either of them had been hoping for. So how much of this is due to one-time cost savings, and how big a worry are those sales?
Both companies have some things to worry about: Merck's Gardasil vaccine for cervical cancer has been big, but not quite as big as they'd been planning for. Singulair (for asthma) seems to have plateaued. And Merck has patent-protection problems - they lost Fosamax (for osteoporosis) last year, and Cozaar (cardiovascular) goes off patent in another two years. Schering doesn't have anything looming, but both they and Merck both have the well-publicized troubles with their Vytorin cholesterol medication to deal with. And that's a bigger percentage of S-P's sales, so it's hurt their stock correspondingly more.
Of course, both of them have interesting things coming along in their drug pipelines, too. So that takes us right back to the usual model of drug company finance: get as much money as you can out of your existing medications (wasting assets, all of them), while frantically bringing up things to replace them. Overall, both Merck and Schering-Plough are in better shape than many of their competitors in both of these categories, but the motto that should be carved over the door of every research lab in the industry is You Never Know. We've had an awful lot of big clinical failures the last few years in this business. (In fact, the fact that we've gotten better at eliminating some of the other causes of failure may well have led to an increase in late-stage disasters, taken as a percentage of the whole).
Drug stocks are traditionally supposed to be recession-proof, and today's announcements don't hurt that reputation. But what drug stocks are not is drug-proof. We still don't know which of our compounds will make it, or which ones will stay on the market once they have.
Jan 29 2009, 6:00PM
Outsourced science: what next?
A lot of my kind of work gets outsourced these days. Ten years ago, the idea of having people in China or India do chemistry research for you seemed quite exotic, but it sure doesn't surprise anyone now. Just about everyone in the business, from Pfizer on down to some rather small companies, contracts out work. Most of what gets shipped out is bread-and-butter stuff, such as repetitively cranking out long series of analogs of lead compounds - the sort of thing that's described by the phrase "methyl - ethyl - butyl - futile".
And that means that we don't need as many chemistry researchers cranking those things out here, which realization is a cause for growing unrest and uneasiness in the labs. High-tech research has always seemed to be one of those things that stays here in the US, and people have started to wonder: if we start sending out for that, what's left?
And that means that we don't need as many chemistry researchers cranking those things out here, which realization is a cause for growing unrest and uneasiness in the labs. High-tech research has always seemed to be one of those things that stays here in the US, and people have started to wonder: if we start sending out for that, what's left?
Jan 27 2009, 2:20PM
The Drug Industry's Problem(s)
Those of us in the drug industry don't really know what to expect from the Obama administration (although we're pretty sure that we're probably not going to like a lot of what we're likely to get). But it's not like things were going wonderfully during the Bush years, either, to be honest. Decisions on Medicare pricing, liability law, reimportation and other issues can all have their effects, but none of them will change the underlying problems that have put the business where it is.
Jan 23 2009, 8:30AM
The marriage of Pfizer and Wyeth
The news this morning is that Pfizer is in talks to buy Wyeth, and apparently has been for some time. For those of us in the drug industry, this headline is a weird mixture of surprise and, well, total lack of surprise.
The "total lack" part comes, naturally, from Pfizer's history. This would be the biggest deal in the pharmaceutical industry since. . .well, since the last time Pfizer did this, swallowing Pharmacia-Upjohn in 2003. They've bought one large company after another (and several small ones), becoming the largest drug company in the world along the way. But there's a point that I've hammered on repeatedly: that as a research-driven company grows larger, everything scales except research productivity. We don't know how to increase that, sad to say. (Sudden apparent upswings are often due to luck, anyway, while always keeping in mind Pasteur's line about fortune favoring the prepared mind). So as your company gets bigger, you can deploy larger sales forces, run bigger clinical trials, and chew through the piles of regulatory paperwork more quickly--but all these will only avail you if you have drugs and drug candidates to put into the hopper.
Pfizer's put itself in the position of Lewis Carroll's Red Queen: they have to run as fast as they can to stay in one spot. Their patent on Lipitor, the world's most profitable prescription drug (which they got by buying Warner-Lambert), will be running out soon, and no one has ever tried to replace a compound that sells over ten billion dollars a year. Their internal attempts to find a huge hit as a replacement have mostly come to nothing, expensive and painful nothing. And not all their external deals have worked out, either - the Pharmacia takeover was largely done to get Celebrex, the Cox-2 drug that looked like a huge winner at the time. But that whole area blew up spectacularly with Merck's Vioxx troubles, in keeping with the unofficial motto of the whole drug industry: "Ya Never Know".
So the fear, among scientists like me, is that Pfizer is going to take another productive research organization, raid it for what it considers to be of immediate value, fire a lot of people, and then take the rest and do whatever it is they do to them to Pfizerize their productivity. And then in a few years, they'll do it again. But for now, believe me, other companies are breathing a bit easier. The python has decided to eat someone else. This is not anyone's idea of a sustainable business model. What one of those might look like will be the subject of some future posts. . .
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