Glaxo’s Witty Tries To Be Clever
6 CommentsBy Ed Silverman // July 23rd, 2008 // 7:53 am
The ceo is trying to take the drugmaker in new directions with a pair of initiatives involving branded generics and a plan to create a start-up atmosphere for Glaxo scientists.
In the first move, Glaxo has signed a deal with South Africa’s Aspen Pharmacare to market low-cost branded, but unpatended drugs and register the meds in markets where these have not been approved. Aspen, meanwhile, will continue to sell the drugs in sub-Saharan Africa and elsewhere. The profit-sharing arrangement is part of a drive to expand in emerging markets. Here is the press release.
Another effort involves splitting researchers into small teams that will compete for $1 billion in annual funding from a panel called the Drug Discovery Investment Board that will include a venture capitalist and a biotech ceo. Instead of annual budget requests, the teams will apply as if they were start-ups seeking three years of support, with applications assessed by the board.
“This will be analogous to a university spin-out going to a venture capitalist, and having to answer the questions of whether their strategy stacks up with the market place and is the team the right one to deliver,” Glaxo ceo Andrew Witty tells The Financial Times after discussing his new priorities and today’s earnings release with investors.
“What we’re trying to drive is a much more ruthless, a much more well-informed and objective approach to how we make capital llocation decisions and drug discovery,” Witty says. “I believe that will give us a much better return down the road.”
Nathan
This is just a bizzare concept to me. Compete for funding? The average project (conception to early clinic) is 5-8 years. How are early stage projects going to be run? Why have a venture capitalist involved? Is he/she supposed to somehow have better insite into what projects are likely to fail?
The CEDDS were a failure from what I have heard — I don’t see how this will be any different….
Christopher
Great idea provided the groups have initial funding. Most university spin-outs are backed by the uni before proposing the spin-out. In GSK’s case I assume that baseline support will be there until some lead candidates are identified. Presumably at that point the researchers will make their case.
I like the idea of VC and biotech people on the review board (Lion’s Den for drugs). In order for the researchers to know nmarket trends and ascertain that their proposal is in line with commercial needs they are going to have to get commercial input. Most researchers I know - early stage ones at that - would not be adept at forecasting market needs. So adding commercial input earlier means becoming even more like the companies they are trying to emulate as opposed to the department in mega pharma they are currently.
Great initiative deserves success.
(Name changed to avoid confusion with the other Chris who works in pharma)
Bubba
I’d like to see a reality TV program made out from the funding meetings.
Jeffrey Clark, CEO of Beaker.com - The Online Community for Life Sciences Professionals
Personally, I think this is fascinating. It’s a big Pharma CEO thinking outside the box relative to the traditional methods of managing his R&D spend…which based upon the pipeline has not been working so well.
Will it work? There are too many questions. The first is how can Discovery Researchers predict the future of a market, a patient population and the competition from other researchers 5-10 years out? With that as the timeframe for results, it’s a challenge for them to make realistic, achievable forecasts to justify their vision.
Still, it feeds competition & real justification into an R&D budget allocation process that is genuinely needed to get most big pharmaceutical companies out of the R&D rut they’ve been stuck in for years.
david
Frankly, if I’m a pharma researcher and I’ve got to decide between GSK and some start-up or little biotech, given that GSK is using the same funding rules as the start-up or little biotechs, I’d go with the latter–the reward is going to be much much greater. Why bother going to GSK then? There’s no draw.
Bob Freeman
I question the value of venture capitalists’ input. Strategic planning for most people is nothing more than defining the future on an extrapolation from trends; rather than the more robut scenario-based planning. This means that independent drivers of a number of alternative futures will not be fully identified and their interactions ignored. Unfortunately, companies will rely on the standard list of suspects (consulting firms) who will sell their definition of the future and decisions will be made on imperfect information at best.
Remember the consensus estimate from about 15 years ago that with the growth of managed care most companies would need only 400 or so sales reps?