Kevin Hrusovsky, CEO, Caliper
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Companies also won't have as much scale per experimental set. Since the size of the patient population for today's therapeutics
is getting smaller, there needs to be new ways to efficiently run these trials. We also need to get much better at creating
tests that are much more predictive of the human. There's been a lot of excitement over in vitro testing because the costs
are so low and throughput is so high. We need to do in vitro better, and we need to bring throughput to the in vivo model.
Iink Pfizer's plan takes reasonable steps to deal with some of these industry issues. Particularly, the firm's intention to
continue to invest significantly in R&D, reduce internal manufacturing, and improve the focus and efficiency of its marketing
efforts should help realign the firm to better address current industry challenges."
Impact Output
To reduce costs, large organizations can do two things. First, they can rationalize the scope of the disease areas that they
go after. That certainly helps to cut costs because you stop activities in those areas that you choose not to be in. The second
thing you need to do is to rationalize your operating model, and really figure out what is core to R&D and what's not core.
For the things that are not core, you need to find someone else to do it better, faster, cheaper. We think there's an opportunity
for removing five-to-eight percent of the overall R&D costs.
Arjun Bedi, partner, Accenture
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On the output side, companies should look externally more aggressively, broadening that external funnel almost two-or-three-fold.
You have to change your organizational model to accommodate the fact that a lot of your innovation is coming from the outside
versus the present model, where 90 percent or more is sourced internally. Companies can also focus their efforts on shifting
the attrition curve. Finally, pharma must inject operational discipline into the R&D process.
Resist Shareholder Pressure
One of the things I've seen pretty consistently over the last 10-15 years is that pipelines seem to be driven by short-term
vision. That view leads to things like mergers and acquisitions in the hopes that the combined pipeline will be stronger than
the individual pipelines. The problem is that the combined R&D capabilities aren't any better. On top of that, once these
mergers occur, it takes between one and two years to integrate the early-stage discovery functions.
If I were running Pfizer—or a top-five pharmaceutical company—I'd resist the shareholder pressure to try to address my near-term
pipeline issues and instead try to create a more realistic strategy for a 10-year plan to generate medium-stage pipeline products
by emphasizing internal R&D.
Ken Carter, CEO Avalon Pharmaceuticals
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Large companies also have trouble being innovative because it takes longer to communicate internally. So one of my beliefs
is that the more efficiently large companies can interface with small entrepreneurial companies, the better it is for the
long-term prospects of the pipeline.
Rethink, Resize
It's always hard to tell whether a cutback is just a cutback or a deep, rational rethinking of the right model. And I think
the industry needs to move more in the direction of rethinking the model.
Gary Pisano, professor, Harvard Business School
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Certainly on the R&D side, there's a lot that has to change. I think innovation matters at the end of the day. I think the
model that doesn't work is when companies say, we're not terribly innovative but we can win this game through brute sales
and marketing. Ultimately the winners in this business long-term are the ones who can be really effective at research and
development. Unfortunately, it's certainly not a thing that you can do overnight. So in the meantime, you have to resize yourself.
And I think that's part of what you're seeing at Pfizer.
The traditional approach is having armies of detail people calling on doctors and trying to convince them to prescribe. That's
an expensive way to sell. Sales points are also changing; it's more about getting the managed care organization to accept
the drug—the payer is the customer. That requires fewer sales people.
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