Pfizer: What It Will Look Like a Year from Now

The Wall Street Journal's Health Blog got a chance to ask the higher-ups at Pfizer (PFE) what their R&D will look like a year from now. Their (understandably) not too-in-depth answers are here: Decentralized research units, with some functions run company-wide, and this quote: "There are elements of drug discovery and development where you just need scale".

Well played! I wouldn't expect anything less. But are there elements of drug discovery and development where scale - massive, ponderous, hundreds-of-vice-presidents scale - actually hurts? I don't think you're going to hear that topic brought up very much at Pfizer, at least not out in the open. And let's not lump those two functions together: drug development benefits from a company's size a lot more than drug discovery does. Once you've gotten to a critical-mass level, sheer size (as far as I can see) does nothing to help productivity in drug discovery, and actually seems to damage it. As evidence for that statement, let me point to Pfizer's internal research record, as opposed to the stuff they've gone out and bought.

And what might be refreshing is an admission that big mergers - drag-on-for-months am-I-going-to-still-be-here mergers - come with an acute productivity penalty no matter what. I may have missed it, but I don't recall hearing anyone from Pfizer say anything like "Although we know that this is going to be a huge disruption, we think that in the end it'll be worth it". No, it always seems to be the Day One, hit-the-ground-running, now-the-synergy-starts stuff, which is just not in sync with reality.

Well, we can come back in a year and see what Pfizer's R&D operation really looks like. But I'll venture a guess: huge. Unwieldy. Not as productive as you'd think it should be. Still rearranging and getting smaller as the company tries to figure out how to make it all work. And looking over its shoulder for the next big acquisition. Anyone want to bet against any of those?

Comments

[ray69:]

I've said it before - sell, float or give away the research.
Dump most of marketing including reps.
Clear out the big boys
MILK the products and give the MEGA returns to the owners - the shareholders.

A sweet scenario that will run for years and years.

Oh! and try to get some of the zillions back from that dummy Bill Steer

Oct 20 11:57 AM

[BioGuy:]

Ha! Yes, we forget Mr. Steer. Such a funny and approachable guy.
Disruptions in drug development due to to mergers and reorganizations is greatly overlooked, especially by investors. Science based companies (biology, chemistry) are a whole different story than manufactured goods or even most other tech companies. You lose knowledge- both I.P. and "tribal"- you lose enthusiasm, morale. This is not trivial when your business essentially rests with the guy at the bench saying to himself "I have to figure out how to make this work."
You can always make a bolt, or a phone, or a new piece of software. Biology and chemistry don't always work. That molecule doesn't care what your timeline is, or what your quarterly earnings are. It's not business, it's science.

Zithromax spent a really long time in the hands of the chemists to get it right. It's a good antibiotic. Then Pfizer started having discussions in the early 90's about "how big should we get?" Then they dove head first into high through put screening (HTS) because the business guys wanted things to happen "faster". They spent a lot of money on it, for nothing. They bought a lot of other companies. Now they are incapable of inventing anything like Zithromax today- the molecule would die the second anyone said "it may need work to pass toxicology."
So, as inferred above, Pfizer is really just a manufacturer. Invest according to how close they pursue that strategy.

Oct 20 03:19 PM