Patent Cliff or not, changes in
the pharma world are undeniable, if not unavoidable. Nearly every Big Pharma
player has been affected by the cliff in some way—or, more generally
speaking—affected by the unsustainability of the conservative R&D business
model.
So what are the new individual
strategies emerging from the debris of a seemingly crumbling industry?
There are the obvious, general trends:
the gold rush to Pharmerging markets, the apparently ubiquitous diversification
into generics, biologics and consumer healthcare, the panic buying of small
biotechs, and, naturally, the mass downsizing, fragmentation and
near-extermination of the bulky, unproductive in-house R&D.
But under a certain microscopic
vision one can find a diversity of strategies entirely uncharacteristic of the
pharmaceutical industry, which is perhaps a clear sign of a much-anticipated
awakening from a deep, comfortable slumber. Most importantly: it seems that
steadily, albeit as of yet involuntarily, the industry is shifting towards a
more serendipitous and perhaps a more “open-source” innovation model, which in
our opinion is one sure way of economizing and innovating across the whole
pharma sector.
Over the next few weeks
Bioassociate will be embarking on a series of articles covering the obvious and
the not-so-obvious changes emerging in the business models of Big Pharma and
Small Biotech alike. Follow us on Blogger for a glimpse of an altogether new,
more efficient pharma future.
PART 1: THE
CASE OF THE COLLAPSED R&D DEPARTMENT
Where did the R&D department
go? What happens to the counts of skilled and informed staff, the ongoing
projects, and the precious clinical data, and how can immense potential be
extracted from them post-closure?
Over the last 5 years, Big Pharma
was plagued by colossal redundancies which have amounted to over 60,000 since
2009 (fig. 1). For the most part, this has affected giant marketing departments
of expiring drugs, but R&D workers have certainly seen better days.
Figure 1.
Big Pharma job cuts announced during the patent cliff, 2009-onwards
Company
|
Announced
job cuts
|
Merck (including Schering-Plough and Serono)
|
13,500
|
Pfizer (including Wyeth)
|
13,000
|
AstraZeneca
|
7,600
|
Bayer
|
6,540
|
Johnson & Johnson
|
5,000
|
Takeda
|
2,800
|
Amgen
|
2,600
|
Novartis
|
2,500
|
Abbott
|
1,900
|
Sanofi-Aventis
|
700
|
Total
|
56,340
|
Note: not all Big Pharma redundancies are represented
The issue with letting go of
thousands of employees armed with immense skill and confidential knowledge is
obvious: aside from essentially forsaking an investment (in terms of skill and resources),
conglomerates are also leaving virtual knowledge portals open for competitors
to exploit. According to statistics, ex-employees aren’t likely to respect
confidentiality either, as a recent IT survey found that nearly half of
employees admitted they would walk away with confidential data if fired.
Considering
the famously secretive nature of the industry, and, most importantly,
considering the vast potential still remaining amongst collapsed R&D
departments, one can certainly see the incentive for downsizing pharma to keep in
touch with alumni.
Recently Merck Serono, having made
the decision to axe its Swiss Serono HQ, has agreed to fund a €30 million
“Entrepreneur Partnership Program”—an opportunity for former staff to spin out
of Serono’s ashes.
Essentially hitting two birds
with one stone—extracting potential from un-finished projects with a reduced price
tag, and maintaining relationships with former employees, Merck has already funded
its first spin-off: Prexton Therapeutics was formed around Merck’s discontinued
portfolio in the field of Parkinson’s disease, and will be headed by one of
Merck’s former senior and most experienced scientists.
This type of behaviour in the
industry is supportive of the emerging trend for Big Pharma to pick up
later-stage, clinical, rather than pre-clinical pipelines—as companies have
figured out they can essentially skip out on the most costly and annoying step
in the drug development process.
Where do the rest of Big Pharma veterans
go? Statistics say as much as 40 to 50% assimilate
into the smaller biotech sector,
while the rest get intensely head-hunted by the bludgeoning CRO industry: they
hardly need to be re-trained, and will most likely be providing services to
their very own previous employers. Quintiles has readily offered to adopt 100
ex-Merck staffers, while in a “Big Brother”-esque deal similar to Merck’s, Lilly voluntarily
transferred 26 of its drug-discovery workers to the CRO Advion BioServices—a
longtime provider to Lilly—to continue existing projects there.
WATCH THIS SPACE FOR PART 2
NEXT WEEK: THE NEW BIG PHARMA BUSINESS MODEL..
