As Pete Loftus explained last night (with Jonathan Rockoff’s able assist), in addition to “globalizing” its research footprint hubs (opening in London and Shangai), Whitehouse Station is now largely following the Pfizer model. That model looks to partner with outsiders, usually once a new drug candidate or biologic shows some significant study promise. And that model requires an executive team with humility — the genuine humility to accept that they aren’t always the sharpest tools in the shed — especially in select new disease state approaches. [I’ll reserve judgment on that probability, as I am now completely certain Mr. Frazier is able to check his ego at the door — but I am unsure about the next two layers below his.]
The renewed external R&D “partnering” focus — i.e., relying on the brain power of the global science crowd — as opposed to still believing the last century notion that “all the peas grown at home are the best,” is fairly new to Merck. [And, at least as to legacy Schering-Plough, many would have also accused it of “planting peas, and expecting to harvest. . . pumpkins.”]
So — Merck moves to its rivals’ model (and largely the same one Dr. Perlmutter engineered at Amgen over the prior decade), leaving I think only Eli Lilly as a believer in the “home-made (internal) science is the best science” model. It is true that buying or licensing others’ compounds, protiens and inventions means having to share some of the upside, but it correlatively means Merck doesn’t have to absorb all of the downside on each project, either. And that makes for a very sound strategic financial play. Here’s a bit of the very cogent John Carroll commentary, published just this morning, over at FierceBiotech — he’s right — do go read it all:
. . . .When Merck announced back at the beginning of October that it was triggering a massive shakeup of its R&D operations after a 7-year blockbuster drought, the pharma giant left out any pesky details on just what the final picture of the new, slimmed down organization would look like. . . .
In Merck’s case the “for sale” sign is going up on experimental therapies for glaucoma and antipsychotics, and a male fertility drug.
Perhaps most compelling is the Journal’s roster of new execs being lured into Merck by new R&D chief Roger Perlmutter, who had been squeezed out at Amgen. The Journal notes that Merck hired Amgen’s former head of external R&D, Iain Dukes, with Roy Baynes replacing a retiring Barry Gertz as head of global clinical development.
Innovation hubs, narrowing and focusing R&D while spinning out assets that no longer fit the new structure, bringing in new talent with a long record, are all now standard features of Big Pharma restructuring. For Merck it is a radical departure from its insulated past. . . .
And of course, I must note that we always said that the legacy Schering-Plough Saphris®/Secrest®(asenapine) anti-psychotic program pushed by Fast Fred Hassan was the classic case of planting peas and expecting to harvest pumpkins. Thanks for that assist, Salmon.
We shall watch and see how this all unfolds, but I’d certainly look for lots more of the smaller, more vibrant research shops — in and around Boston, London and the Bay Area — to get early “venture stake/strategic partner” funding (and transfers of technological “know-how” backing) from Whitehouse Station. I’d be particularly looking at cholesterol management, and oncology, among others.