Culture’s Drag on Big Pharma

Thursday, January 17, 2008

Last night I attended a program sponsored by BioArbor, our local biotech industry group. The speaker was Dr. Gus Watanabe, former head of Eli Lilly’s R&D, and the talk was advertised as “The Future of Big Pharma R&D: Moving from FIPCO to FIPNET.” I’m always up for learning new acronyms. He started off by painting the same grim picture of Big Pharma’s R&D performance over the past ten years. Bottom line -- not very good. It seems like everyone’s pipeline is pretty thin and the days of the blockbuster drug is over. And then he shared some comparable data regarding some biotechs that he is involved with and showed a dramatic difference in the length of drug discovery between the smaller biotechs and the larger pharma companies.

So he asked, why is biotech so much more efficient that Big Pharma? The reason for him is primarily cultural. He pointed out that in biotech there is less bureaucracy, quicker decision-making, and less distraction. In Big Pharma, very talented scientists can spend a lot of their time on committees and consultations with other business units that may not be directly related to drug discovery. He pointed out that in most Big Pharma companies, scientists spend about 1/3 to 1/2 their time doing drug discovery work, whereas in biotech companies, they can spend most of their time in the lab.

He sees no reason why the trend to outsourcing drug discovery work to biotechs won’t continue and will probably accelerate. He expects this outsourcing to spread to other Big Pharma functions, leaving sales and marketing, large drug studies, and regulatory (among others) as their core business units.

So to let you in on the acronym of the day, Dr. Watanabe sees Big Pharma moving from a model of “Fully Integrated Pharmaceutical Company” (FIPCO) to a “Fully Integrated Pharmaceutical Network” (FIPNET). Just think about all the implications from an organization development perspective.