What Is Behind Pharma's Innovation Drought?

Derek Lowe

Greetings, and thanks to Megan for giving me a chance to double-blog with all of you. As many of you already know, my day job -- outside of all this lucrative blogging stuff - is in drug discovery. So while I'll confine my opinions on pharmacokinetic assays and fluorination reactions to my own site, my thoughts over here will often have connections to science,  technology, and medicine.

A very recent controversy in my field is worth bringing up here, actually. Last week, an unusual interview came to light with Chris Viehbacher, the CEO of Sanofi, one of the largest drug companies in the world. Now they (and all their competitors) have been feeling the sides of a vise squeezing in on them for some time now. The expenses of doing drug discovery have done nothing but go up, while our success rate has done little but go down. Meanwhile, of course, all our biggest assets are wasting ones; our patents expire, whether we have anything ready to replace them or not. Strenuous cost-cutting has been the result of all this, and there are thousands upon thousands of people like me who have been laid off over the past five to ten years. I've experienced the fun of this process at first hand, but was fortunate enough to find another position.

Sanofi has been slicing away with all the rest of them, closing research sites and laying  people off in all directions. In this new interview, Viehbacher outlined the strategy with startling frankness:

"What Sanofi is doing is reducing its own internal research capacity. The days when we locked all of our scientists up in a building and put them on a nice tree-lined campus are done. We will do less of our own research. We're not going to get out of research. We believe we do certain things well in research but we want to work with more outside companies, startup biotechs, with universities."

The interviewer asked him if the reason for all this was that it was cheaper to work this way, and the reply was:

"It is cheaper. But research and development is either a huge waste of money or too, too valuable. It's not really anything in between. You don't really do things because it's cheaper. The reality is the best people who have great ideas in science don't want to work for a big company. They want to create their own company. So, in other words, if you want to work with the best people, you're going to have go outside your own company and work with those people. . ."

There's room to wonder about these assertions, under the old rule that when someone says that it's not about the money, it's really about the money. But Viehbacher went on to say later that:

"Now big companies, and not just Big Pharma, big companies I believe, are not any good at doing innovation. There has to be some element of disruptive thinking to have innovation and I can tell you that big companies do everything to avoid any disruptive thinking in their companies."

Unfortunately, he's not really wrong about a lot of this. It really is harder to innovate in a large drug company (I can speak from personal experience). And Sanofi most certainly has been cutting away at its own research capacity, and they're not alone. But what didn't come through in the interview (as published, anyway) was all the usual corporate language about how our greatest asset is our people, we're confident that we can rise to the challenges, vision of the future, meeting our goals, culture of discovery, etc. Since 1989, I've been tapping my foot when CEOs go on like that, but I didn't realize how much I'd miss it until it went away.

You have to wonder what this interview did for morale in the remaining labs at Sanofi. If you were really innovative, the message seems to be, you wouldn't be working here, anyway. Scientific creativity depends a great deal on esprit, much more than you might think if you're not a scientist. That's especially true in a field like drug discovery, where the huge majority of things never quite make it. I've never worked on anything myself that's made it to market, for example. Viehbacher isn't providing a banner that anyone will feel like marching under.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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