Stewart Lyman at Lyman BioPharma Consulting LLC suggests steps to keep research programmes going strong in the face of layoffs, restructuring and reduced budgets
These are very challenging times in the biotechnology and pharmaceutical industry. Significant pain is being felt across the industry on both financial and research fronts. Biotech companies have been folding across America, with 16 companies vanishing since the beginning of 2009. Job losses in Big Pharma have been huge, since Big Layoffs must accompany Big Mergers to get to the requisite Big Savings. As a result, it is been estimated that Merck will be axing 16,000 jobs after acquiring Schering- Plough, Pfizer around 19,500 after buying Wyeth, and Roche about 1,500 jobs after purchasing the rest of Genentech. Interestingly, Merck, Schering-Plough and Wyeth shed a combined 18,900 jobs last year in advance of the mergers and acquisitions. Layoffs, however, were not confined to those companies playing the acquisition game. To stay competitive, Eli Lilly is slashing 5,500 jobs this year, Johnson and Johnson about 8,000, and GlaxoSmithKline around 6,000 positions. Other companies got ahead of the curve and had large job cuts last year, including UCB (2,000 positions axed in 2008), AstraZeneca (1,400 jobs), and Abbott (1,000 positions). Clearly, this is not the best time to be an industry scientist, or to be looking for a job in the pharmaceutical and biotech industries.
The reasons behind these layoffs have been chronicled before. Blame them on patent expirations of key drugs, the worldwide financial recession brought on by the collapse of the US mortgage industry, or a combination of these and other factors. On the financial side, new capital is hard to come by, thus many companies without marketed products are taking difficult steps (layoffs) to conserve their remaining funds for as long as possible. ‘Don’t run out of cash’ has become the mantra of the day. For companies that do have marketed drugs, it is not the need for new capital but the upcoming loss of revenue due to patent expirations that are driving the reductions in force. At both types of organisations, it is the researchers who are usually among the first groups to be cut, since they populate the part of the organisation that is farthest away from the goal line of revenue production.
On the scientific side of the equation, the euphoria generated by the decoding of the human genome (and the sequencing of other species’ genomes) has given way to the substantial challenge of unravelling the associated biology. Despite numerous technical advances and a huge amount of wishful thinking, insights into the complexities of biology are notoriously difficult to turn into actual drugs. Experiments can be performed today that generate data on the expression levels of thousands of genes in response to a chemical agent or growth factor. As a result, scientists suffer from information overload, unable to process their own or published data fully, and without sufficient time to analyse its meaning.
I have a prediction about future drug submissions: the approval rates for new drugs (or, more specifically, new chemical entities) will lag behind historical numbers. This opinion is based on the current financial constraints in the industry, the convolutions of biological knowledge, and the fact that much of the easy work lays behind us. Recent trends illustrate that drugs have already entered, and will continue to enter the clinic before they are well understood and well vetted. Put another way, scientific discoveries are rushed along, driven by the time constraints of investors who wish to see a return on their investments as soon as possible. Their goal is not to develop new and novel medicines; it is to make money. The processes of developing new drugs and making money, like matter and antimatter, do not always occupy the same space and same time in a productive manner.
All of this raises the question: how do you keep a research programme going in the face of layoffs, restructuring and fractured budgets? Cutting back on your internal research programmes does not mean that you have to abandon your research programmes completely. Some programmes will be cut, and others will face a downsizing of the number of people trying to move the science forward. The need to narrow the clinical focus to a few key areas will be paramount. So what can I suggest to keep a research programme going with fewer staff and reduced resources? The answer, in a word, is collaboration.
THE SOLUTION: COLLABORATION
The financial crisis facing researchers in the pharmaceutical industry has actually been a boon to researchers in academia, at least in the US. Over $10 billion has been committed to basic research and development grants across the nation, with a directive to spend the money now. Billions more dollars will fund purchases of research equipment and the building of new research facilities. Now is the time to set up key collaborations with researchers who are at the forefront of the scientific or medical arenas where you hope to make progress with your drugs. At some idealised time in the past, your organisation would have had all of the internal resources needed to research and develop the discoveries that your talented scientists made or your company acquired. The unfortunate new reality is that financial constraints, patent expirations, market considerations and manufacturing concerns will force you to focus your efforts on only the most promising drug candidates. How will you be able to choose among them and pick out the best? One approach is to use research collaborations to generate sufficient data to help you vet your selection of lead drug candidates for development. If your collaborators are well chosen and productive, these relationships can help lead you to develop increased revenues in the years to come.
WHAT ARE THE TOP FIVE BENEFITS OF ESTABLISHING COLLABORATIONS WITH ACADEMIC RESEARCHERS?
Boost Basic Research Programmes at Little Cost
If you have exciting new molecules whose biology you are trying to understand, you should be able to line up experienced academic researchers to help. They can provide unique animal disease models, developmental biology studies, basic biochemistry or immunology experiments, and a host of other research techniques. You can get all of this for the cost of putting some paperwork in place (to protect intellectual property) and the shipping of reagents to researchers. In turn, the data you receive from these collaborations can speed up your development decisions. The faster you learn about the biological activities of your molecules, the easier it is to decide which ones to set aside, and which are the most promising to take into clinical trials. The patents you receive on your molecules have a very limited lifetime, so rapid decisions on clinical utility have a clear economic benefit. Strong collaborations accelerate the acquisition of key data, so informed decisions come sooner and time-to-market shrinks.
Reveal New Clinical Indications
The diversity of experimental animal models that can be tapped into via collaborations enhances the probability of discovering new molecular functions, or conversely, revealing potential development, dosage or safety issues. Sildenafil citrate (Viagra®) was originally being developed as a cardiac medication and is now used to treat erectile dysfunction; minoxidil (Rogaine®) was originally developed to treat hypertension and is now used to treat hair loss; and bimatoprost (Latisse®), now used to enhance eyelash growth, was created and is still used for treating glaucoma under the trade name Lumigan®. Having a broader understanding of a molecule’s biological activities allows for better insight of your development options.
With clinical trial success so difficult to achieve, having a second or third indication tremendously increases your chances of eventual regulatory approval. Consider etanercept (Enbrel®), which failed in its initial trials for sepsis during the mid 1990s. Rheumatoid arthritis was originally only an alternate indication for this drug, with academic collaborators providing some of the key animal model data supporting this use. Clinical trial data replicated these findings, and after approval for this new indication (and several others), Enbrel® went on to become the largest selling biologic in the world (2008 sales of $7.4 billion).
Increase the Value of your Company via New Intellectual Property Obtained through Patent Filings
Effective collaboration management can identify new and potentially valuable discoveries made by your research partners. This information, when disseminated to your company’s patent attorneys, should result in the filing of additional patents on these discoveries. Furthermore, close communication with your collaborators should put you in a position to protect patentability before it is lost by public disclosure. Having additional patent protection should increase the intrinsic value of your company. Another way that collaborations can enhance the value of your company is by lowering your cost of goods. Imagine that you have already had the good fortune to have an excellent protein drug on the market. This particular protein is manufactured, as many drugs are today, using mammalian cell expression technologies. This process is both expensive and laborious. You might like to test out some other manufacturing methods, such as microbial or plant cell expression systems, but your staff lack both the expertise and equipment. Rather than set up these expression systems on a small scale internally and re-invent the wheel, you can engage collaborators who can readily make your protein in yeast, bacteria or plant cells. You can then test their products with your in-house bioassays and determine if the proteins made using these alternative technologies will yield a less expensive way to make your drug. As another example, if your drug is a monoclonal antibody, you could collaborate with a lab that makes antibodies in other organisms (chickens, yeast, rabbits or camels), or produces different types of antibody fragments. Patent extensions via a new manufacturing process may also result from this approach.
Publish Scientific Papers to Enhance the Reputation of your Researchers and Company
These manuscripts serve to illustrate your scientific leadership and heighten awareness of your pipeline molecules progressing through development. These papers can also help you raise money if you are a startup company, because venture capitalists and investment bankers regard publications in good journals as evidence of your scientific credibility. Sharing the reagents that often lead to these publications can help build goodwill with the academic community as well. Your publications in top-tier journals can also help you to recruit top scientific talent. Ambitious young scientists completing their postdoctoral assignments always try to attach themselves to scientific leaders. Publications with collaborators, as well as talks that your staff are invited to give at scientific meetings, will raise your profile and make recruiting topnotch talent easier when financial constraints ease. In addition, your collaborators will often recommend your company to their younger colleagues searching for positions. Finally, collaborations with academics can attract new opportunities. As a leader in your field, outside investigators may approach your company about helping them with new projects. This can lead to licensing opportunities that will not be available to your competitors. However, it is not only your scientific reputation that attracts new investigators: it is likely that they will have checked with colleagues (often your collaborators) and will have heard that you have a reputation for fairness in addition to scientific excellence.
Build Relationships that Speed Clinical Progress
Basic research collaborations that are set up with clinical leaders in a field are likely to lead, if the drug looks promising, to clinical studies conducted by these same experts. Progress from preclinical to clinical research accelerates due to these key investigators’ reputations, the greater resources that they can tap into, and the quality of their work. Moreover, the need for you to educate the scientific community about your molecule decreases, because your collaborator(s) will help do that for you. A strong collaboration programme can establish productive and long lasting relationships with outstanding investigators and institutions worldwide.
As I have outlined above, there are compelling benefits to extending research capabilities through academic collaborations. Keep in mind, however, that careful management of these collaborations is required in order to reap the benefits outlined above. Collaborations are often entered into with the best of intentions, but they can fail and produce bad feelings on both sides when efforts to maintain the relationship are not put forth. The key is to be honest and straightforward with your collaborators about what you are doing and why. Treat your collaborators with respect, and they will show themselves to be an extremely valuable asset to help your company succeed in these tough financial times.