Big Pharma, small ambition

Pfizer’s decision to close its UK research facility was born of an industry-wide angst about medical discovery.

Biopharmaceuticals giant Pfizer has just reported revenues, for 2010, of $67.8 billion, and a net profit of $8.3 billion, down four per cent on the previous year. Pfizer’s chief executive, Ian Read, announced that he wants to focus on disease areas ‘of greatest scientific, medical and commercial opportunity’ as well as ensuring a ‘realigned global R&D footprint’. This will involve what Read gracefully termed a ‘planned exit’ from the company’s labs in Sandwich, south-east England.

For the Pfizer plant’s 2,400 workers who will lose their jobs over the next two years, the news was devastating. The plant is a 140-hectare site, the largest American-owned drug research facility outside of the US, and Pfizer’s departure means the end of its attempts to develop drugs related to respiration and allergies.

For UK Prime Minister David Cameron, the news was ‘depressing’, and for John Denham, Labour’s shadow business secretary, it was ‘hugely worrying’. Denham felt that the closure of the site, hitting a ‘sunrise’ industry in which Britain would like to play a global role, exposed the Lib-Con coalition government’s lack of any strategy for growth.

And that’s precisely what the company’s decision to close the Sandwich labs does. While the company assured Cameron that its move did not reflect badly on British talent in life sciences, it clearly no longer feels that it is essential to operate in Britain. This confirms that British scientists and science policy lag behind what the world requires, and it highlights how nervousness about pioneering medical exploration now outweighs the search for profit.

The conventional wisdom about pharmaceutical giants

The official narrative about declining R&D on the part of pharmaceuticals giants is simple enough. Though a few firms (Novartis, Roche) have kept spending buoyant, every giant is now confronting a multi-billion dollar ‘patent cliff’ in which the exclusive, branded, money-spinning drugs of the past lose their patented status and go ‘generic’ – that is, they can be imitated and sold by anyone.

No wonder Andrew Witty, head of GlaxoSmithKline, now insists that money for R&D should be allocated ‘only to where the prospects for success are greatest’. As a result, GSK now sets about ‘externalising’ parts of early-stage scientific discovery, dismantling corporate infrastructure and ‘terminating development in areas with low financial and scientific return’.

The major drug companies say that all this externalisation of innovation is just a natural part of their evolution. As car manufacturers have outsourced specialist production to the East, the thinking goes, so maturing giants in pharmaceuticals should concentrate on marketing and relations with regulatory bodies. There will still be some drug development and manufacturing, but much less focus and investment on drugs discovery. So, to adopt new, open relations with outside innovators is just to stay up to date. As The Times (London) put it in the wake of Pfizer’s announcement: ‘If Big Pharma has decided that Big, at least applied to R&D, is no longer beautiful, preferring to outsource the work to smaller, more innovative concerns, then so be it. There are many such companies in Britain. The government should support them with the full panoply of grants and tax breaks at its disposal.’

Liberal critics of the drug industry also largely go along with this approach. The high profitability enjoyed by pharmaceutical corporations in the past, one critic argues, was founded on relieving but not curing the ‘ill-effects of affluence’ – depression, hypertension, acid stomachs and clogged arteries. Large drug firms, the writer adds, have had their reputation tarnished by regulators’ discovery of bad practice, and have turned their strategies away from research to marketing and mergers.

Behind the crisis: fear that new medicines bring risks

There is, in fact, nothing natural or evolutionary about the pharmaceutical giants’ lurch toward small laboratories outside the company. It also isn’t simply a fresh ruse aimed at higher profitability and generating greater shareholder value. Instead, this move reflects a widespread and deep cultural angst about discovery in medical science, going back 50 years, which has combined with an increasing sensitivity to risk-taking. The results are not pretty.

Up to the 1960s, pharmaceutical giants broadly engaged in the self-confident pursuit of major cures, despite the initial, inevitable but conquerable dangers surrounding clinical trials among patients. Following the 1962 Thalidomide tragedy, however, America’s Food and Drug Administration gained new powers over patient experiments, the advertising of and information surrounding drugs, their general distribution, and their efficacy. That same year, a teacher with a key role dealing with admissions to the UK’s Royal College of Physicians caused, as historian Jenny Hazelgrove puts it, ‘public alarm and bitter controversy among members of the medical profession’ by a forceful denunciation of questionable experiments conducted at Hammersmith hospital in London (1).

These regulatory changes to medical science were often for the better: the principle of patient consent became more firmly established and the documentation of medical trials improved. Even if prescription drugs were not always developed from advances in medical science, their development nevertheless moved forward – particularly after the completion of the draft sequence of the human genome in February 2001. Ever since the 1960s, however, fears about disastrous medical innovations have multiplied. Indeed, public suspicion is such that Big Pharma is now often ranked alongside the familiar villains of Big Oil, Big Tobacco, the Military Industrial Complex and banks as a sector whose very existence is reprehensible.

In January 2001, just months before 9/11 dramatically raised all-round public apprehensions of risk, the best-selling author John Le Carré published The Constant Gardener, a fierce attack on experiments with drugs in the Third World. Throughout the ensuing decade, polemic, litigation and regulation grew around Merck’s blockbuster drug Vioxx, which was withdrawn from the market in 2004 amid claims that it contributed to heart failure and strokes. Academic medicine, too, met increased regulation against conflicts of interest with drug companies. There followed an explosion of books – from The Truth About the Drug Companies: How They Deceive Us and What to do About it to The Guerrilla Guide to Big Pharma’s Experimentation on Our Children – directed against large producers of pharmaceuticals. Health panics multiplied around vaccinations and fears of infection from animals. Altogether, an atmosphere was set in which thoughtful, tenacious, long-term programmes of basic medical research, conducted by large firms, were – like conventional medicine itself – seen as fundamentally suspect when not dismissed as useless.

The agenda in society today is much more about nudging you to change your diet or your exercise than it is about having hopes that they will come up with wonder drugs. That agenda supplies the real, overarching and dominant context behind the drive, by big pharmaceutical companies such as Pfizer, to get out of research.

Let’s hear it for medical research!

Developing innovative new pharmaceutical products to boost the industry is a much tougher task today than trying to attain growth through marketing or mergers. It’s striking that both Pfizer and GSK have cut their R&D budgets and have tried to boost their share price by buying back billions of dollars of shares – a facile, decadent gambit long favoured in other industries. And yes, stringent regulators have dramatically raised the costs of drug development. In January, for example, GSK admitted that US legal charges around its faulty diabetes pill Avandia would amount, even after tax, to a whopping £1.8 billion.

Some, such as the The Times, may say that there are many small firms in the UK with which drugs giants can collaborate, but the truth is that the UK ‘lacks both the huge range of biotech companies in the US and the layer of more traditional medium-sized companies in continental Europe’. More fundamentally, ‘open’ collaboration with small firms could well prove more costly to organise than the internal coordination of staff researchers: financial arrangements with the new partners promise to be complicated at the very least. On top of that, British university medical research is being cut back, making partnership with professors trickier.

The minister for universities and science, David Willetts, and the business secretary, Vince Cable, have visited Sandwich to participate in a task force designed to preserve jobs there. No doubt they have good intentions. No doubt, too, the grants and tax breaks to help bring medical discoveries to market can very gradually be tweaked, the NHS be made less bureaucratic about the pursuit of clinical trials, and some life be put into the government’s Office for Life Sciences. Economics and organisation are important to the future of medical science in the UK.

But only a forthright politics of support for medical research and scientific innovation, and for the re-establishment of trust in medical researchers, can begin to create a climate in which work such as that which has gone on in Sandwich is seen as a durable priority, not a dispensable frill.

Finding and developing new drugs, and testing them on vulnerable patients, will always be a risky business. Everyone can regret job losses, but so far only a few are ready to argue that the benefits of medical research outweigh the dangers.

FOOTNOTES AND REFERENCES

(1) Take a Pill: The Drug Industry – Private and Public, Marxists in Medicine, Health Section of the Central London Students Branch of the Communist Party of Great Britain, October 1972.

(2) There’s Gold in them Thar Pills, by Alan Klass, Penguin Special, 1975.

(3) LaMattina is eloquent on the slowdown in pharma innovation , and even more interesting on M&A, a frequent substitute for corporate innovation, acquire, in the pharmaceutical industry, a decelerating dynamic all their own. As the industry has consolidated, so fewer players are around to go after each research task. Mergers mean the closure of whole sites, and, in paeans to new corporate formations, ‘the term “synergy”’, LaMattina caustically observes, ‘is a euphemism for downsizing’. M&A is also specially disruptive of pharmaceutical R&D pipelines and, indeed, whole R&D departments. Those departments form the crown jewels in each prospective partner’s firm, and are therefore the last to begin merger talks before formal approval by the US Federal Trade Commission. As a result, new programmes and staff recruits in R&D are, crucially, delayed by at least nine months, as rumours multiply, attempts are made to grab power, morale disintegrates, and headhunters circle like vultures.