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Wednesday, July 29, 2009

Viehbacher on R&D: Smaller Teams "Not Enough"

I couldn't help thinking Sanofi Aventis CEO Chris Viehbacher was having a bit of a dig at his old employer, GlaxoSmithKline, this morning. Check out this response to yours truly's question, after the 2Q results announcement, about what the French group is doing to re-invigorate its R&D: "If you think that just by creating a smaller team you make them more biotech-like....well, that's not enough, in my experience," he said.


Surely the veiled (or not-so-veiled) reference here is to the biotech-imitating drug performance unit structure at GSK, announced last year by CEO Andrew Witty (who, remember, nabbed the top-job off Viehbacher)? It's hard to imagine what other "experience" Viehbacher might be referring to--he joined GSK in 1988 after a stint at PwC.

"I don’t think [the R&D solution] is anything to do with structure. No one has found the answer yet, I don’t believe," he continued. (Ok, he's right there.) "We need to find a different way," Viehbacher continued.

What is that different way? Well, we won't know for sure until the third quarter, when the company plans to say more about how it's turning around its 13,000-strong R&D organization. From today's comments, though, expect a much more porous interface with academia and external partners (yes, big change there), less rigid (or perhaps no) budget and instead a more "grant-like" funding set up, and lots of stuff about culture, governance, and flexible processes.

For all of today's poo-pooing of structures, these are changing, though. In a June 2009 release announcing a new R&D model--and declaring the ambitious goal of becoming "the most effective R&D organization in the pharmaceutical industry by 2013" (take that, Glaxo!)--Sanofi Aventis talked about "grouping researchers in more productive structures", and strengthening “exploratory structures” that work in close collaboration with outside entities, and deploying reactive “entrepreneurial units” to encourage the emergence of innovation. The French group has already begun consolidating scientists at the same locations to foster intimacy (and, let's face it, to save costs).

Viehbacher's point, though, is that structural changes "should follow your vision," they should be the means rather than the ends. Doubtless GSK agrees with that, and, to be fair, this company's R&D experiment is just as much about cultural, process and governance change as it is about structure.

Indeed, for all Viehbacher's talk of a"'new way" (and I'd call it that, too, if I was running my own ship and wanted to stand out) there are more similarities between GSK's and Sanofi's (and indeed other Big Pharmas') R&D re-invigoration efforts than contrasts . Externalization, flexibility, entrepreneurial culture, increased accountability, more appropriate reward structures....you get the picture.

Given Viehbacher's 2013 goal, though, of course there's a race on to see who can find the best R&D model--driven perhaps as much by old rivalries as Big Pharmas' compelling need to sort out the innovation engine before everything goes OTC or generic.

Reassuringly, Viehbacher did today keep referring back to innovation as the heart of the company (although they and others, as we well know, are now officially "global diversified health care companies", not "innovation-driven R&D-based companies"). He also asserted that core pharmaceuticals would "always be more than half the company," despite--you guessed it--planned expansions in OTC and generics.

Image by Flickr user Nebbish1 and used under a creative commons license

6 comments:

Anonymous said...

It seems to me that if any other industry had such a dismal success rate there would certainly be a harder look at the cause of failure than organizational. Restructuring is fine when you are optimizing a process, but when the system is as broken as pharma discovery this is like rearranging the deck chairs on the Titanic. Here's a question to ask, has all the time, effort, money, and personnel invested in genomics and the the other high throughput programs returned anything? Is there a lesson in that? There has certainly been a lot of data collected, but very little knowledge. What about going back to good old physiology (I know I date myself, I don't think it is even taught anymore)?
Nobel prize winner in physiology or medicine Sir James Black said a pharmacological compound must address a physiological question. What physiological question is answered when the whole premise of going after a new "disease target" is that some low abundance RNA (usually of unknown function) is induced in a particular tissue (that may, or may not be relevant to the disease pathogenesis)? Surely we can be more intelligent than that!
I believe the data in the industry show that it is time to move away from the very expensive and time consuming "research" approach of the past 10 years, since genome sequencing and gene-chips interfered with thought and reason, and stop using "scientists" as monkeys banging on a keyboard to discover drugs.

Anonymous said...

Unfortunately, innovation is about bending and breaking rules. Pharma scientists (especially BP scientists, and especially especially BP managers) are selected on the basis of doing the "right", uncontroversial things, going to the right schools and knowing the right people. All these things actively weed out innovators (the nails that stand out quickly get hammered down).

Astonishing levels of CYA and group think don't help either.

All in all, not a recipe for innovation

rickwo said...

I agree with much of what the two previous posters have said, especially regarding the mistakes that have been made based on the assumption that deluges of non-integrated data (a.k.a. "-omics" and "informatics") constitutes knowledge or a basis for "reinventing" drug discovery. I'm not saying these technologies are useless (they aren't), but we did invest too much faith in them while excluding other approaches, including most notably historically proven ones.

The industry has spent 30 years repudiating established approaches to drug discovery research in favor of exclusive adoption of mechanism-based this or genomic-based that or rational something else because it was more profitable to do so. Nowadays the prior expertise is disappearing as its practitioners are dying or moving on to something else and pharma companies are being run exclusively by people with no R&D background whatsoever. Altogether, these will make it difficult to recapture the productivity that this industry once had 30 years ago, before we started trying to make it "faster, better, cheaper". It will be difficult for the industry to understand the importance of this because their profitability depends on their not understanding it.

Actually, I think GSK's model is interesting NOT because it attempts to do something new and shiny and biotech-like, but because it seems to incorporate elements of an older drug discovery team approach in which a critical mass of highly motivated researchers passionately dedicated to discovering new medicines were co-localized and empowered to do what they did best, not what someone from McKinsey told their management they should do. It's an ironic object lesson, because that's exactly what existed at Burroughs Wellcome before all the consolidation started that led to GSK.

Anonymous said...

Indeed the last comment is dishearteningly accurate. Small biotechs follow through with product development projects at critical junctures, because they have all their eggs in the basket and they have no choice. Big pharma, and many big biotech, make critical decisions based too heavily on market research with too little respect for scientific research and merit. Good research gets stalled and pulverised into submission or stagnation by quarterly prioritizing and budget nonsense to meet short term goals. They also design research "not to fail" so that products remain marketable at the expense of answering the true scientific questions. That does not breed innovation. If you avoid the scientific question because the answer might cause "market harm" then you are puting a wrench in the innovation engine. Small biotechs are highly prone to failure and outright collapse. That tenuousness may ironically be the secret to their success. If big pharma treats their research funding a bit more sacredly, they may see more innovation, but you too often have to reallocate peter's budget to offset paul's performance which was overforecast in the first place, but all kinds of operational funds were already committed to non-scientific pseudo innovations and business needs based on the optimistic forecast. Big pharma has an obesity problem and it isn't just their inability to develop obestity drugs.

Anonymous said...

According to Gary Pisano (Science Business, HBS Press 2006), biotechs are no more successful than pharma.....

Nancy P. said...

I was a CSO of a small biotech that had a pharma partner enter when we were in late clinicals. The product went on to FDA approval and the market during the course of the relationship. We were inundated with middle managers there to "manage" the project. It seemed to me that continuing to work on a project was preferable to trying to reach a critical juncture; that they personally couldn't fail if things were still in progress. They wanted never to be personally responsible for an outcome.
These same people were the ones most apt to paint the small biotech crew as renegade, naive no nothings (actually told to my face) even though we did indeed succeed in bringing a first-in-class therapeutic to the marketplace, primarily on our efforts, not theirs. Their views were merely self-aggrandizing.

That said, we also worked with some fantastic pharma people during the course of the relationship - people in various functions and levels of authority who truly "got it". They shared our commitment, drive, and openness for innovation.They felt responsible.

If you'll permit my being Clintonesque, "It's the people stupid."

I think that pharma needs to look at who's left at the company first! In theory, they should have kept the best people but what do they consider best?

Just about any structure will fail if the right people aren't there in both leadership and staff roles. As someone commented, biotech hasn't been so productive either so it's not a matter or structure or size as much as one of attitude.

The lack of productive outpuit in biotech is sometimes chalked up to hard to reign in visionaries that get easily bored with the nitty gritty. But the most productive aren't that at all, they have the same characteristics as the pharma gems (perhaps with a little more stomach for risk).

A structure that enables the gems to do what they need to, when they need to could be golden. Trying to accomplish behavior modification by moving pawns around is likely to be a very costly and futile effort if they don't first take a close look at who they are counting on in the first place.