How to Win Friends, Influence People, and Make NMEs

Wyeth has quadrupled its discovery output while holding resources steady. Its secret? Really no secret at all.
Aug 01, 2004

The headquarters of Wyeth Pharmaceuticals comprises 1.8 million square feet of office and lab space on a campus outside Philadelphia. Shown here (left to right) are: Robert Ruffolo, Jr.; Frank Walsh; Bernard Poussot; Gary Stiles, MD; and Joseph Mahady.

People can’t write a sentence about Wyeth without starting with 'diet drug,'" moans Joseph Mahady, president of Wyeth Pharmaceuticals' North American and global businesses. Yet he knows why the diet "cocktail" known as fen-phen—one part Pondimin (fenfluramine) or Redux (dexfenfluramine) and one part generic phentermine—gets attention: "Where else have you seen a $16 billion block taken from a company?" That's the amount drained from Wyeth during the last five years by fen-phen litigation—the costliest product liability tort ever to hit a single pharma. (See "Balloon Mortgage.") What's more, the ongoing lawsuits have raised a lingering cloud of uncertainty and suspicion that amplifies Wyeth's smallest mishap and obscures its genuine achievements.

Compound Interest
What has Wyeth done to close this episode? Cynics may note the company changed its name two years ago from American Home Products. But its makeover is profound. During the last decade, Wyeth has gone from a diversified company with consumer brands such as Chef Boyardee and Pam and a reputation for "inventing the dry pipeline" into a focused pharma confident enough to pledge to deliver an unprecedented two new molecular entities (NMEs) every year beginning in 2006 and "for many years thereafter," says CEO Robert Essner.

One reason for Wyeth's self-assurance: It successfully revamped how it does R&D. Drug research is notably iffy and expensive—roulette with million-dollar chips—but questions about managing innovation vex executives everywhere: How do you catch lightning in a bottle, keep scientists on schedule and under budget, wring more from less? Wyeth's answers may seem old fashioned but have actually never gone out of style.

Turning Heads Wyeth wants to be "one of the most innovative companies in the industry," says Bernard Poussot, president of Wyeth Pharmaceuticals. Chutzpah might not be the word this soft-spoken Frenchman would choose to describe its aspirations, but only a decade ago, Wyeth "made pots and pans, shoe polish, Jiffy Pop—a great company store—but was nobody's idea of a real research company," Mahady admits.

Over the years, it has divested its crop protection and home foods businesses, exited the generic market, and broadened its research capabilities. "We don't do just small molecules," says Frank Walsh, senior vice-president and head of discovery. "We do biopharmaceuticals, and in another division, vaccines." Wyeth still makes consumer products and has a veterinary unit, Fort Dodge Animal Health. But the pharmaceutical division accounts for 75 percent of sales.

The ninth largest pharma with $12.6 billion in 2003 pharmaceutical sales, Wyeth is often rumored to be shopping or targeted for acquisition. But, Poussot says, "size is not really an obsession for us."

Adding by Subtracting
Wyeth is expert at neuroscience, vaccines, cardiovascular and metabolic disease, inflammation, oncology, and women's health. It has five blockbusters in the market: antidepressant Effexor XR (venlafaxine), Enbrel (etanercept) for rheumatoid arthritis, Protonix (pantroprazole) for heartburn, pediatric pneumonia vaccine Prevnar, and hormone replacement therapy Premarin (conjugated estrogens).

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