December 02, 2013
Dawn Van Dam, General Manager of Cambridge Healthtech Associates: The decline in revenue
caused by the patent cliffs, has resulted in the pharma giants slashing their research and development
budgets. The resulting slowdown in innovation has left the future looking
In an interview with the
Vice President and Chief Medical Officer at one of the world’s leading
international research institutes, I discussed the inability of big
pharmaceutical companies to effectively discover and bring new drugs to the
market, and the consequent issues that this causes in the industry. We came to the
conclusion that if big pharmaceutical companies do not improve their pipeline
of compounds, research and
development will continue to decline in a vicious cycle.
Not too long ago, the
pharmaceutical industry was in a stage of rapid innovation. But this seems to
have changed as big pharmaceutical companies are now struggling with drug
discovery for several reasons, as outlined below.
All large companies
eventually reach a point where their history creates a foundation of
bureaucracy that tends to prevent innovation. In established organizations, the
avoidance of risk is more important than the need to develop something new -- since
there is already a history of success and financial stability.
Even though startups or
smaller organizations have fewer resources to allocate to research and development,
these businesses traditionally have more successful innovation than large
companies. This is often because scientists are more passionate and hungry to
succeed in smaller organizations. Success in smaller organizations is measured
by the ability to ‘stay alive’, which often goes beyond the ability to follow
the rules of a large bureaucracy. The future of the small company depends on
the success of the individual and vice versa. Therefore, there is a greater
incentive for employees to work harder and longer hours, and to innovate along
This realization, combined
with a decrease in overall funding, has led to financial cuts in research and development
programs in the industry. In the past few years, big pharmaceutical companies
have made severe budgetary cuts. According to an article by the Royal
Society of Chemistry, published in 2010, Pfizer, GSK and AstraZeneca were
all looking to decrease their research and development budgets by at least $1 billion in the
next few years. AstraZeneca alone had planned to cut roughly 1,800 research and development
positions, leaving many talented drug development scientist without a job. Unfortunately,
there are not many places for these people to go.
does not translate well to other industries. And, within the industry, generic
firms do not need these scientists, and small pharmaceutical companies do not
have the resources to employ more scientists. A few of these scientists will go
on to start their own companies, but even these will most likely stall when
additional funding is needed. Some scientists will go back to school for a
medical or business degree, while others may leave the industry completely.
In our discussion, the
Vice President and Chief Medical Officer discussed the fact that, generally
speaking, big pharmaceutical companies do not have very good drug pipelines,
with many of their prominent moneymakers coming off patent. During the
interview, this person suggested that once this happens, “it will become
virtually impossible to get something through the first proof of concept, to a
study in man.” Although there are plenty of people innovative enough to drive research and development,
the discovery process is bottlenecked by a lack of financing, and the
scientists capable of innovation are not in the position to make new
discoveries due to bureaucracies or other constraints.
The industry is trying
many solutions to identify the “light at the end of the tunnel.” For example, with
advancements in genomics and sequencing,
and the addition of sophisticated bioinformatics, everyone is hoping to turn
this field full of opportunities into commercial success.
By bringing together
leading professionals in the life sciences, Cambridge Healthtech AssociatesTM (CHATM) believes that online communities, such as the Drug Safety
Executive Council (DSECTM) community,
will provide a platform for collaboration and discussion of ideas. Our goal is
to bring conversation and solutions to prominent issues in the industry, like
the one discussed here.
We welcome your feedback and comments – join us
in this important discussion.