Mergers and spending cuts damaging drug research
pharmafile | August 3, 2011 | News story | Research and Development, Sales and Marketing | LaMattina, Pfizer, research productivity
Big pharma’s policy of mergers and swingeing cuts is having a devastating effect on drug research, says a former Pfizer R&D executive.
John LaMattina left Pfizer in 2007 after serving as its head of R&D for five years, and is now a senior partner in a venture capital firm PureTech.
Writing in Nature Reviews Drug Discovery, LaMattina says pharma’s dramatic decline in productivity is not a result of challenging science, or excessive regulation, but rather from big pharma’s love of ‘mega mergers’ and accompanying cuts to research budgets.
“Mergers and acquisitions in the pharmaceutical industry might have had a reasonable short-term business rationale, their impact on the R&D of the organisations involved has been devastating,” he says.
LaMattina points to the high level of productivity in the 1990s, where 31 drugs were approved by the FDA on average each year throughout the decade, with one year – 1996 – seeing 54 drug approvals.
Compare this, he says, to the 2000s, where only 24 drugs were approved on average during the decade.
There could be a number of reasons for this, including the multiple entries for a single drug (such as statins), but LaMattina believes that productivity was simply higher in the 90s because there were more R&D-led firms with broader and better-funded pipelines.
“Any of the drugs that were approved in 1996 originated from companies that no longer exist; indeed, out of the 42 members of the [US lobby group] PhRMA in 1988, only 11 (or less than a quarter) remain today,” he says.
Pfizer
LaMattina singled out his former employer for criticism, and attacked its targets to reduce R&D spending as a proportion of revenue.
Before 1999, Pfizer had never made a major acquisition, LaMattina says, but over the next decade, it acquired three large companies: Warner-Lambert in 2000, Pharmacia in 2003 and Wyeth in 2009, with a number of other ‘bolt on’ acquisitions on top of these.
“Over this time frame, to meet its business objectives (a euphemism for raising its stock price), Pfizer closed numerous research sites in the US, including those at Kalamazoo, Michigan (formerly a site for Upjohn), Ann Arbor, Michigan (formerly a site for Warner-Lambert) and Skokie, Illinois (formerly a site for Searle).”
He also points to the recent decision to close its main European R&D site in Sandwich, Kent, which has seen the loss of around 2,000 highly trained scientists.
He says these losses are lamentable as these sites employed thousands of scientists, and saw the discovery of many major drugs, including Lipitor, Norvasc and Viagra.
But it is not just Pfizer making these decisions, he says, as it is becoming a typical pattern across the pharma industry.
Cutting the R&D budget
It is becoming a common policy post-merger for the larger company to cut off early stage trials and reduce the research budget, which LaMattina believes is putting the future of both R&D and new drug approvals in jeopardy.
Looking again at Pfizer, he points to the company’s decision to reduce research funding from its peak of $9.4 billion in 2010, down to just $6.5 – $7 billion by 2012.
“Thus, at a time when our understanding of the basis of diseases continues to increase substantially, the ability to exploit this information in the private sector is being compromised.
“It is hard to envision that R&D output, as measured by new drug approvals, will improve in the coming years based on this reduced investment,” he concludes.
Ben Adams
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