What the top R and D managers from 4 big Pharma companies were talking about, yes they have a bit more of a cushion than Wall Street, but the failure rates and dollars invested don’t seem to be coming together too well either, from the Wall Street Health Blog.  When you add it up, just these 4 were talking about around 20 billion in R and D costs.  One item in particular mentioned is the “me toos”, which don’t have the entire investment as building one from scratch.  Pfizer has been rumored of late with additional layoffs next month.  BD 

But that’s not saying much, as we learned when we heard four R&D chiefs shoot the breeze this afternoon. By our calculation, there was more than $20 billion of R&D spending* talking about the high rates of failure in drug research.

Steven Paul (Mr. $3.5 billion at Lilly) said that industry wide only 25% of experimental drugs in phase II make it to phase III. “And that’s bad,” he said, in case anyone wasn’t sure. Attrition in phase III is still lousy at 50%, Paul said. To be clear, he was only talking about stats for novel drugs, or NMEs–not line extensions. Still, the bottom line is that Big Pharma’s business model “won’t work” if these high failure rates continue, he said.

Martin Mackay (Mr. $8.1 billion at Pfizer) seconded Paul’s view, adding that the failure of drugs in phase III is a relatively recent development for Pfizer. Mackay called phase II the “battleground” for big improvements in research productivity. Determining efficacy in those mid-stage studies remains a challenge. To complicate things, internal funding of R&D is coming under pressure. When asked if Pfizer’s spending on research will increase next year, Mackay answered quickly and emphatically: “No.”

Mikael Dolsten (Mr. $3.3 billion at Wyeth) said the smart set will spend more time in phase II on studies that do a better job figuring out how well a drug works before moving it along to phase III or killing it. “How clinically meaningful is the new drug,” is the question to answer, he said. Not an easy one to resolve early on, everybody agreed.

Paul Stoffels (Mr. $5.3 billion at J&J) pointed out that some of the biggest blockbuster drugs have been me-toos that were the second or third try at a drug in a class. (Think Zocor vs. Mevacor.) The research challenges multiply as scientists focus on newer targets that aren’t as well understood as those that led to statins or SSRIs. The market has changed too and tends to reward latecomers to a disease category much less than before.

* R&D figures from 2007

http://blogs.wsj.com/health/2008/09/24/big-pharma-rd-things-are-tough-all-over/

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