Mar 29, 2012
The Pfizer research facility lies at the end of a long cul-de-sac just beyond the Alewife T station in North Cambridge. The road winds past laboratory buildings peppered with industrial loading docks and warehouses fed by freight train tracks. The blue Pfizer logo is everywhere.
I’m here to meet with Jose Carlos Gutierrez Ramos, the Senior Vice President for Research and Development of Biotherapeutics. The biotherapeutics division—one of four R&D divisions at Pfizer alongside vaccines, oncology, and pharmatherapeutics—discovers and develops drugs for chronic diseases such as autoimmune and respiratory disorders, as well as orphan and genetic diseases. In addition, the division provides biologics—injectable molecules like antibodies, enzymes and peptides—to the entire company.
Biologics will play an enormous role in the future of the pharmaceutical industry, both for their novel functions and for the higher prices they command. The Pharmaceutical Manufacturers Organization, PhRMA, estimates that 900 new biologic drugs are currently in development, for everything from cancer to cardiovascular disease to autoimmune disorders (What to Watch: Biologic Medicines in Development 10/12/2011). Jose Carlos works at the forefront of this technological wave, and much of Pfizer’s success depends on his department’s success.
The topic of our discussion is innovation in pharma. It’s a theme that has been on the lips of everyone in the industry. Revenues are shrinking as expiring patents for brand name drugs allow cheaper generic versions to flood the marketplace, and the cost of bringing drugs to market spirals ever-upwards.
Pfizer feels this pressure acutely. Its standard-bearer, Lipitor, went off patent at the end of 2011, taking with it a healthy chunk of ten billion in annual sales. Spurred by the loss of the highest-grossing drug of all time, innovation is front and center at the pharmaceutical giant. CEO Ian Read has implemented a major initiative to strengthen innovation in core R&D.
But what does this mean? What is innovation in the context of the world’s largest pharmaceutical company? What if the problems go beyond Pfizer? If they’re systemic or endemic, are they surmountable? And how?
Big Pharma is often overlooked in conversations about healthcare entrepreneurship in favor of the small biotech, the venture capitalist and the entrepreneur. Yet the business models for these three would wither without a healthy pharma sector. Who would be the deep-pocketed suitor to purchase a fledgling company or license a technology if not pharma? If the only exit strategy were success in the market—an admittedly dicey proposition—would there even be a biotech industry?
In this multi-part series of articles, we explore innovation in Big Pharma and how Pfizer is trying to remake itself into a nimble, innovative, creative company poised for continued success in the business of making medicines.
Jose Carlos is soft-spoken yet direct, with dark hair graying at the temples and a slight, melodic Spanish accent. His tone, urgent yet calm, conveys both the seriousness of the challenge and his confidence before it. The confidence is bred from experience. After his scientific training, Jose Carlos spent five years on the faculty at Harvard Medical School then took on scientific leadership roles at Millennium and Avidia, a small biotech that was acquired by Amgen in 2006. Following the acquisition he ran Amgen’s Mountain View site, then moved to GlaxoSmithKline to direct a revolution in their drug discovery organization. Two years ago he arrived at Pfizer.
He jumps right in when I ask him about innovation. “You hear ‘Pharma is in trouble’,” he tells me, “but the fact is, biomedicine isn’t very successful.” What Pfizer is trying to do goes beyond strengthening the company’s bottom line, he says. “We are Big Pharma, but the substrate of this division, by personnel as well as by history, is very much one of entrepreneurship. So we feel we are in a unique position to generate something in which the three key pillars—pharma, biotech, and academia—work together in a new fabric of biomedicine.”
I ask him to explain this “new fabric” of biomedicine, and he dives into a vivid depiction of the interdependent, symbiotic relationship between pharma, biotech, and academia. Each has strengths, each has weaknesses, and none can survive alone.
“On the one hand, you have academia,” Jose Carlos starts. “I’m on the board of trustees of several institutions, including Harvard Medical School and others. In Boston we have the best hospitals in the country doing the best research in the country, and yet the translation of that into benefits for patients is slow and inconsistent.
“And you have biotech where, of course, great ideas are being incubated. But the short term pressure from investors is so big that at times, and not uncommonly, the true human experiment is shortchanged. Because the science takes longer that you expected, or you have to invest a little bit more than you planned, some of the original concepts get somehow shortchanged before they get to the clinic. That is in addition to a very tight funding environment caused by the current economy.
“Then you have pharma that has low productivity, bureaucracy, etc. Do you know that from the moment of a key finding—something published in Science, Nature, or Cell; a cluster of publications; something that feels important—to the moment a pharmaceutical company picks up the ball usually takes 5-10 years? Not to make a drug, but just to take notice!”
So is vertical integration dead? Is it possible for one company to do it all?
“The goal is not for Pfizer to do everything,” he replies, “because that’s what we tried, frankly, Pfizer and other companies, by building these big research facilities and trying to bring people in. I don’t want to bring people in. Our goal is not to do the jobs of academia and biotech.
“Instead, our goal is to provide the environment—I don’t want to use the word ecosystem—that allows each of the constituents to do its best. Traditionally, none of the three thought about the whole. They were thinking only about themselves. We, too, were thinking about ourselves.
“But we have embarked on a mission to try to rewire these three components—academia, biotech, and us—to get everyone doing their best. I want to enable the best physician scientists in academia to do their best towards getting a particular idea to the clinic. We don’t have the short term pressure in a given program that a biotech has, or that an academic might face for a grant renewal.
“We believe that Pfizer, given our size, our overview of biomedicine, and the things we bring to the table, can be the catalyst for this rewiring. Other pharmaceutical companies can too, but certainly at Pfizer we take responsibility to provide the connectivity and innovation necessary to move it forward.”
It is a daunting challenge. In a new age of shrinking revenue and drying pipeline, Pfizer senses that the traditional means of drug discovery will be insufficient. The goals of academia, biotech, and pharma were once in conflict but now must be aligned. Innovation is required, and the only viable solution is to reshape the relationships so that individual strengths are complemented.
In part II of this series, we explore some new ways Pfizer is trying to interact with academia to better harness the inventiveness of individual investigators. In part III we examine a rethought relationship between Big Pharma, biotech, and venture capitalists that aims to rebalance the risk/reward axis so that all parties win. Big changes are disruptive, and in part IV we observe the effect these initiatives have on Pfizer and on other pharma companies, and what a new, more innovative pharma sector might look like.