Should a Scientist Run Your Drug Company?

There's an interesting article that showed up in the Financial Times about the leadership of drug companies. Specifically, the number of them that are run by scientists (always lower than you would have thought) is dropping even further.

Only one large western pharmaceutical company will be run by a scientist (John Lechleiter of Lilly) following completion of the current round of acquisitions, in spite of the growing need for strengthened innovation to develop new medicines. . .

The changes reflect a shift for the scientists who once dominated senior pharmaceuticals positions to give way to executives with backgrounds in marketing, legal or other more general business backgrounds.

The evolution mirrors growing legal and marketing expertise required to operate in the US, which remains the world’s largest medicines market, although its recent sluggish growth and renewed demand for greater innovation and science-based assessment of drugs may suggest different skills will be required in future.

I wonder, though, how many of the background assumptions here are true. I don't think that the large drug companies have been dominated by scientific leadership for some time. This (to me) isn't a recent shift, although it may well have accelerated. And we've gotten into discussions around here a couple of times (most recently on the news of Lechleiter's appointment) about whether you even want a scientist in the top job. Opinions, to put it mildly, are divided on how much difference that makes, and (if it does) which way you'd rather go.

My take, for what it's worth, is that scientific training can be desirable in a drug company CEO, but it's not sufficient, or always even necessary. The skills needed don't overlap as much as you might think between science and management, even in a company that makes its living from science. The problem is, I don't think that the particular skills associated with law and MBA degrees are sufficient, either. Being good at running a large organization is a rather rare quality. And it's not always easy to recognize: some companies have issues (good ones or bad!) that will swamp most of the signals you might try to get about the qualities of their CEO.

Comments

[redbaron:]

'The problem is, I don't think that the particular skills associated with law and MBA degrees are sufficient, either.'

Agreed!

Although not completely necessary, I like to see some basic Experience in the industry the CEO is running. Too many CEO's have no knowledge or experience in the company or it's products.

IMHO

Apr 08 07:28 AM

[Chemnomics:]

I remember the travesty of Eastman Kodak getting into the pharma industry. That was a classic example of photographic management that did not understand the pharma industry. They mistakenly thought that you should be able to use photographic chemicals as drugs and just as easily put them in little yellow boxes (like film, remember film?). IMHO, you definitely need science knowledge to understand the business of science. Now more than ever, the pharma industry needs a scientific visionary to lead it out of its research morass. And your right, that type of person is a rare find...........

Apr 08 08:18 AM

[jimmy Turano:]

I DON'T THINK SO. AND AFTER WHAT HAS GONE ON IN WALL STREET THESE PAST 8 MONTHS, IT IS EVIDENT TO ME, THAT THE 'SEC' BETTER START DEFINING SHAREHOLDERS ADVOCATE MORE OFTEN. MANY BIOTECH COMPANIES MANAGEMENT GETS AWAY WITH WAY TOO MUCH AND NEVER GET INVESTIGATED OR PROSECUTED EITHER.
IT HAS BEEN LIKE DODGE CITY FOR MOST CORRUPT BIOTECH MANAGEMENT FOR DECADES NOW.
IMAGINE COMPANIES EXISTING FOR DECADES, MANAGEMENT GETTING PAID, SOME HAVE NO PRODUCTS,
THE WORST BALANCE SHEET, HORRENDOUS DEBT, AND YET THEY CONTINUOUSLY BLITZ THE MEDIA WITH NEWS ANNOUNCEMENT, WHICH SEEMS TO PACIFY INVESTORS GREATLY.
PEOPLE WHO WANT TO RUN A COMPANY SHOULD HAVE A BACKGROUND CHECK, AGREE TO ANY LIE DECTOR TESTS BY THE 'SEC' AND PLACE EACH YEAR A SHAREHOLDER IN THE BOARD OF DIRECTORS TO KEEP THEM HONEST.
HYPE, RESEARCH FIRMS IN THEIR POCKET, INSIDER TRADING BEFORE BAD NES COMES OUT, HAS TO BE STOPPED!

Apr 08 08:35 AM

[nezumigen:]

You (and the FT) are missing the point. The abject failure of big pharma speaks to a bigger issue than leadership. Large complex organizations are inherently ill equipped to drive innovation, develop quickly or make efficient decisions. Sure, if you've got long patent life, then you can squeeze out returns through marketing expertise. But the looming 2011 patent cliff will put the last nail in the coffin of the big pharma model. The mammal small biotechs, led by scientific expertise will survive to invent the next model for drug discovery and development after the dinosaurs go extinct.

Apr 08 10:32 AM

[Milliaw Ozzaib:]

While I don't think a scientist necessarily has the business chops to run a pharma company, SOME knowledge is necessary. I worked at one firm where the division head (MARKETING), steadfastly refused to learn even the rudiments of the science behind the products we were selling (chromatography supplies, HPLC columns, etc.), and hence couldn't understand why the research staff wanted to develop certain new products. (No one else is selling that, so where is the market?) As a result, products which were 90% developed were allowed to languish until the competition caught (and surpassed) us. We pissed away leads of sometimes a decade,and became a "me too' company, and not a lead innovator.

In addition, these same managers now over estimate what the now shrunken and neglected research division can deliver, and chronically over promise delivery dates to senior management. Since the senior management assigns expected profit targets from the projected release dates, not the actual release date, the division is currently behind the eight ball. As a large part of our manager's compensation is in bonuses for reaching her targets, she'll short everything, and reduce staff to meet her numbers. she's setting up a destructive feedback loop, which will some day get her canned, but not before the division is gutted. Since the division is the company's current cash cow, it will put the entire company at risk.

This is just one of the companies where I've seen the process, unique only to the degree of rot. I am so tired of MBAs who revel in their scientific ignorance.

M. Ozzaib

Apr 08 11:12 AM

[Jgutmanmd:]

What happened to the basic concept of being of service, and knowing what patients that have a particular illness need?
Pharma in general has been "creating" diseases so they can sell their drugs: Classic example is Gastro-esophageal reflux. My grandfather and likely yours would take bicarbonate, burp once and it was gone, Now we have NEXIUM and others...
A scientist at the top or an MBA at the top does not make a difference. The difference is first to be of service in integrity, tehn the money will come naturally. Money first and service second is a guaranteed formula for failure!

Apr 08 12:24 PM

[Tom B:]

"and likely yours would take bicarbonate, burp once and it was gone," Hope your grandpa didn't have high blood pressure from all that sodium.


On Apr 08 12:24 PM Jgutmanmd wrote:

> What happened to the basic concept of being of service, and knowing
> what patients that have a particular illness need?
> Pharma in general has been "creating" diseases so they can sell their
> drugs: Classic example is Gastro-esophageal reflux. My grandfather
> and likely yours would take bicarbonate, burp once and it was gone,
> Now we have NEXIUM and others...
> A scientist at the top or an MBA at the top does not make a difference.
> The difference is first to be of service in integrity, tehn the money
> will come naturally. Money first and service second is a guaranteed
> formula for failure!
>

Apr 09 10:03 AM

[Tom B:]

Let us generate a mission statement: we make drugs to make people better. It's not the same as other industries; it's more like medicine. Imagine a hospital saying "we are going to cut all doctors at this particular facility to save money" (like Big Pharma cutting out whole research sites). It would save money, but it would NOT serve the patient. This is life-and-death we are talking about here! Research "creates health"; bad management merely "creates wealth"-- and ONLY in the short term. Drug TV commercials may spur sales, but they don't "create health"-- only new treatments for diseases can do that.

I think non-scientists CAN do a good job managing Pharma, if they can simply learn that 1) research takes time 2) Pharma is a public service. You won't die if you don't have an iPod; you MIGHT die if you don't get your nitroglycerine.

Apr 09 10:12 AM

[drbob66:]

I left MRK in 2007 voluntarily because they're losing focus on the science. I just found out the other day that they recently laid off one of my colleagues (well, many of them, actually...but, in particular, the researcher who discovered Januvia). How's that for gratitude? "Thanks for discovering a billion-dollar drug for us...we'll escort you off site now." Meanwhile, they still retained a number of managerial bozos who, IMO, contributed little to nothing toward achieving their stated mission. THIS is what happens when you have bureaucrats running pharma companies.

Will MRK survive and grow after their "restructuring"? I have no idea...I sold the vast majority of my stock a few years ago, and haven't looked back. I'd rather invest in a well-managed company.

Apr 14 10:41 AM