Yesterday seemed like report on problems in big pharma R&D day -- with three separate stories in Fierce Biotech outlining issues in big pharma that were resuliting in layoffs and restructuring in many cases. Big pharma R&D has been suffering with poor productivity for years now. Poor productivity coupled with loss of big sellers to patent expirations has put enormous pressure on the R&D organizatios of several big companies -- Merck, Lilly and AZ leap immediately to mind but there are others too. Let's review yesterday's news but also pick up yet another story from Fierce Biotech today that is covering the biggest profile failures in phase III this year -- it is no surprise that Merck, Lilly and AZ is on that list too!
In yesterday's news, a key analyst, Bernstein's Tim Anderson, who has backed Merck for years, made a decision to downgrade Merck based on his skepticism that their pipeline is far from healthy. And he noted that Merck's merger with Schering-Plough a half dozen years ago had resulted in little if anything in new products. He projects even with changes that the company will need years to get back on track -- so their announced cost cutting of $2.5 B (about 1/2 in R&D) did little to cheer him. This is problematic as Merck's CEO Frasier has consistently hung his hat on Merck's pipeline of internal projects to save the day. See Fierce.
Sanofi announced that it was planning to make further cuts in its R&D center in Toulouse. Sanofi has continued to try to cut jobs in France as it tries to restructure itself and in particular its R&D group. CEO Viehbacher characterized the Toulouse group as anachronistic with an inward focus and little outside collaboration characteristic of bustling biotech hubs. He further indicated that Sanofi spent more on R&D than most of its peers but got its products to market in times that were 20% longer. That's another reason they bought Genzyme with its better track record on that front (no so good with mfg of late though). See Fierce.
Finally, the other Merck, Merck KGaA coming off the heels a few years ago of a big MS drug failure is looking for partners to help it with the costs of clinical trials. This would include other pharma companies as well as private equity partners potentially. Merck is willing to give up some of the revnues to lay off risk and get someone else to pick up some of the $200 to $800 M costs of running phase III trials. Its a way of trying to stretch its $1.5 B annual research budget and to start getting some successes to bolster its flagging brand. See Fierce.
As for the phase III failures this year, Fierce Biotech selected the following 5 for its list of Top crashes year to date:
- Merck - Tredaptive - failed for treatment of high cholesterol
- Lilly - Ramucirumab - failed for treatment of breat cancer
- AstraZeneca - Fostamatinib/onglyza - failed treatment for RA/cardiovascular disease
- Roche/pRed - Aleglitazar - failed for diabetes therapy
- ChemoCentryx/GSK - Vercirnon - failed for Crohn's disease
This list shows that even the biggest among the industry are still suffering devastating setbacks in phase III for drugs they all hoped would be megablockbusters. To the Merck, Lilly, AZ triumverate it is especially bitter as all are struggling mightily with very poor R&D pipeline performance and the recent setbacks are emptying the pantry of the current pipeline of drugs that were being counted on to save the day. The situation is less bleak for Roche and GSK as they have had successes more recently and also have fuller pipelines of other products to devote their attention to -- however small partners like a Chemocentryx will have trouble surviving a blow of this magnitude. It shows in stark fashion that drug R&D is far from fixed and that getting drugs successfully to market is still a high risk-reward game.
Posted by Bruce Lehr Oct 15th 2013.