LaMattina Spurs R&D Investment Debate
Former Pfizer R&D head John LaMattina created a minor stir yesterday with comments he made to Reuters suggesting his old employer might one day regret its deep research cuts. The Reuters story touched off a dialogue on Twitter amongst reporters, pharma industry watchers, and LaMattina himself about the whether Pfizer—and more generally, big pharma—could justify their historical levels of R&D spending based on a rather pitiful return on investment. After all, shouldn’t pharma try to exercise some fiscal restraint given the slowdown in new drug approvals, not to mention how few of the new drugs that reach the market actually originated in their labs? Many seemed to agree with the sentiment from biotech executive @Michael_Gilman: “It’s not how much you got, it’s how you use it.”
Still, its hard not to wonder whether there’s a middle ground to be reached in the industry’s cuts. LaMattina notes that Pfizer’s cuts will bring its percentage of R&D spending for 2012 down to 10 to 11% of its expected revenue for the year. That’s a rather precipitous drop from the 20% of sales drug firms used to reinvest into their research engines.
Forbes reporter Matt Herper (@MatthewHerper) asked LaMattina whether it would be wiser to come up with solutions to the productivity problem before returning to those historical levels of R&D investment: “Isn't there something to the idea, I think of it as Viehbacher's [CEO of Sanofi], that one should at least cut spend until one finds a fix?”
Another valid point. LaMattina (@John_LaMattina) countered with: “Fully agree with demanding more evidence; that's why you need to do both; that's why you need a strong R&D budget.”
Pharma certainly is experimenting with fixes to its productivity problem. Pfizer, for example, is banking on its new academic network to accelerate translational medicine, and do so more cheaply. The company also announced today that it would spin-off or sell its animal health and nutrition assets, a move designed to shift its focus back to its prescription medicines business. Meanwhile, GlaxoSmithKline, Sanofi, and AstraZeneca have all revamped the structure of their research organizations to empower scientists to do more of the decision-making, their way of trying to replicate, internally, both the incentives and pressures that scientists at a biotech feel to justify investment in their programs. (teaser: for more on those efforts, see Monday's issue of C&EN)
The problem seems to be that its going to be years for the industry to fully understand whether all these experiments are worthwhile. Clearly, companies need to do something to get better at R&D. But as LaMattina points out in the Reuters article, there’s also a risk of figuring out too late that cutting spending so deeply was a mistake.
So what do you think readers? Is there a middle ground? Or is cutting to the bone the way to go?