Nov. 30 (Bloomberg) -- Six months ago, Roberto Solari talked eagerly about his research into the mechanisms that govern asthma. Now he must let someone else finish the job.
Solari, who until last month headed one of GlaxoSmithKline Plc’s targeted research units, is one of the casualties of the company’s new approach to drug discovery.
Glaxo is conducting one of the industry’s boldest experiments, changing the way it looks for new medicines to emulate biotech companies and spur innovation. The U.K.’s largest drugmaker has broken up research into competitive teams and put scientists back at the center of the process. But freedom carries a price: researchers who don’t adapt must go.
Talent was “buried in the ocean” under the old system, says Moncef Slaoui, Glaxo’s head of research and development and one of the architects of the overhaul. Scientists now “live or die with their project.”
This month, London-based Glaxo completed the first appraisal of its new model. The company is now deciding which teams deserve more funding and which ones don’t. The conclusions will probably be made public in February when Glaxo reports full-year earnings, according to Janet Morgan, a spokeswoman.
The transformation, three years in the making, is Glaxo’s response to the biggest challenge facing pharmaceutical companies: a lack of innovation, which has curbed growth and forced mergers such as Pfizer Inc.’s $68 billion purchase of rival Wyeth in 2009.
Sink or Swim
“Everyone in the industry is watching,” said Navid Malik, an analyst with Merchant Securities Ltd. in London. “It’s the most dramatic R&D reorganization out there.”
Chief Executive Officer Andrew Witty turned up the dial on an overhaul initiated by his predecessor after he took over in 2008, dividing six disease-focused research centers into smaller teams known as Discovery Performance Units.
The teams, or DPUs, compete for funds bestowed every three years after a review. Those that fail to meet their targets may get disbanded.
Solari, an unassuming 55-year-old scientist of Italian origin, is still working at the company and no longer heads the team, Morgan said. She declined to comment on the reasons for the change. So did Solari.
The biologist has left Glaxo once. He walked away in 1999, turned off by an industrialized approach to research he felt stifled creativity. He returned in 2007 after Glaxo had gone through the first step of its overhaul, intrigued by the company’s attempt to empower scientists.
‘To Bed With a Project’
“If I thought I was coming back to a sausage factory, I wouldn’t have,” Solari said in an interview in May, before he found out he would lose his position. “I love drug discovery. In the past in big pharma we haven’t had that degree of focus.” He declined to be interviewed again after the change.
After the DPUs were born, some scientists went from working on 10 projects to just managing one or two, according to Slaoui. Solari oversaw 120 employees before the change and 35 after.
Researchers “wake up in the morning and go to bed” with their project, Slaoui said in an interview on April 6, speaking from inside the glass compound that houses Glaxo’s headquarters on the outskirts of London. Most “grew up as leaders in a remarkable way” while some struggled, he says.
Glaxo has gained 10 percent in the past year. That compares with a 1.4 percent increase for the Bloomberg index that tracks the performance of 17 European drugmakers.
Dave Allen, who joined Glaxo in 1981 and oversees six DPUs, says the reorganization meant taking the drugmaker’s corporate structure, reminiscent of a triangle, and turning it on its head, meaning the focus shifted from a few people at the top to the many scientists who populated the pyramid’s bottom.
Biggest Machine, Biggest Hammer
“Instead of a centralized, command-and-control organization, which is what big pharmas were -- the more senior you were in your job title, the more people you controlled -- we’ve tried to return to something that says the unit that discovers the drug is the important thing,” he said.
Allen says he remembers discussions dating as far back as the early 2000s with former Glaxo R&D head Tachi Yamada and Slaoui, who succeeded him in 2006, on the importance of scientists in the drug-discovery process.
The old Glaxo “was arrogant,” says Robin Carr, who heads a DPU looking at ways to treat lung damage. “It had the biggest machine and the biggest hammer and it (thought it) could just grind out success.”
Best of Both Worlds
A dearth of new medicines is putting the industry under pressure. The average value of new drugs approved in the last five years fell 25 percent from the previous five-year period, analysts at EvaluatePharma Ltd. estimate. Drugmakers face loss of exclusivity on products with more than $170 billion of sales through 2016, according to Bloomberg Industries research. Next year should see the greatest impact, with drugs having almost $50 billion in revenue potentially facing competition.
Three years into the experiment, insiders say some things have clearly changed. With less time and fewer resources at hand, research teams have cut the time between when a drug candidate is picked and the first clinical tests. They also rely less on animals, opting to use human tissue wherever possible to avoid the surprises that sometimes come with switching species.
The new system “gives me a much better handle on exactly why we are bothering to do a lot of the work we are doing,” says Malcolm Begg, an investigator scientist. Begg says what he likes best of his new life is the fact that he knows everybody by name and needs “no help desk” to get in touch with other Glaxo researchers about his project.
The idea nurtured by Witty, Slaoui and Patrick Vallance, Glaxo’s head of medicines discovery and development, is to have the focus of a biotech within the resources of a large company.
No Bear Pit
One challenge is to find the right balance between competition and collaboration.
“We need cross-pollination,” says Alison Ford, a biology team leader at the Allergic Inflammation DPU, Solari’s former group. “We work for GSK, we don’t want to put walls up.”
Glaxo has been hunting for ways to encourage teams to cooperate, according to Vallance. One example, he says, is to give credit for inventing a molecule that gets picked up by another one of the company’s 38 DPUs.
“We need to keep working on that because I think 38 silos is a disaster,” he said in a May 13 interview. “It’s not what we got, it’s not what I want. It’s not a sort of bear pit with everyone fighting each other.”
One way teams work together is in sharing the organs of dead people. Vikki Barrett helps coordinate the use of human lung tissue among three DPUs once the organs arrive in Stevenage, the sprawling fortress that houses part of Glaxo’s research a half-hour train ride from London.
Barrett, a senior scientist at the same unit as Ford, some days carries a “bug phone” attached to her belt. The device can buzz anytime to alert her that a lung has become available, even from across the Atlantic.
“It rang at 5 a.m. this morning,” Barrett says with a sigh. Decisions on whether the organs meet the right criteria must be made quickly because the tissue begins to die as soon as it’s removed from a body. The lungs get shipped over within 48 hours, most of them from the U.S., she says.
The DPU system “works better for me,” Barrett says. Before, “I had six different things coming at me. Now I only have one and can concentrate on that.”
The new model is “an experiment” bound to get adjusted over time, says Slaoui. Some DPU heads changed even before the review.
“One or two we’ve stepped down, they didn’t quite meet expectations,” Vallance said. “One of them is doing a brilliant job in another capacity now and may well find himself stepping back up again.”
Rival drugmakers aren’t waiting for the results. They’ve poached at least one DPU head, Peter Lebowitz, according to Vallance. Lebowitz, whose DPU studied cancer, is now at rival Johnson & Johnson. Another former DPU head, Jinzi Wu, left to help found Ascletis, which looks into cancer and infectious diseases.
“There are other companies beginning to sniff around,” says Vallance. “Venture capital firms are looking. It tells you you got something right.’”
One thing that may emerge from the review: even though some teams may die others could be born, according to Vallance. Glaxo posted a message on its internal network this year, urging anyone with a new idea for a DPU to come forward.
“Your chance to influence the direction of discovery activities has arrived!” the message read. Glaxo said it received more than 50 responses good enough to be considered.
CEO Witty is upbeat about the outlook for Glaxo’s research. During an Oct. 26 conference call, he said the company “has the potential, depending on the data flow available,” to submit 10 new drugs to regulators by the end of next year.
“That’s a lot,” says Merchant Securities’s Malik. “Of those 10, several could be blockbusters. It shows clearly something is going in the right direction.”
Not everyone is convinced. Researchers deserve to be evaluated when their product reaches a milestone, rather than at arbitrary times, given that new drugs take about 10 years to develop, says Mads Krogsgaard Thomsen, the chief science officer for Danish drugmaker Novo Nordisk A/S.
“R&D doesn’t work this way,” Thomsen says. “You have to make long-haul choices on products and strategy, not abrupt decisions on how to allocate funds.”
Three years may not be enough to develop a new drug but it’s “a long-enough time to judge whether something is on track to deliver,” counters Vallance.
He points to two early indicators of success: The number of experimental treatments developed within the company is lower, suggesting people are now making tough decisions earlier in the process, and an internal survey shows a drop in the number of researchers seeking jobs elsewhere. Glaxo declined to give numbers or elaborate on the jobs survey.
Most DPU reviews began in June and July, when team managers faced a panel that included Slaoui and Vallance and defended their achievements. Late last month another round of meetings started, with DPU leaders seeking funding and setting targets for the next three years.
Robin Carr, the DPU head and a friend of Solari’s who persuaded him to return in 2007 over a few pints of English bitter, says the first part of his own review involved “a lot of debate” on the targets achieved so far.
Slaoui, Vallance and the others “knew quite a lot of what they were going to hear already, they had tracked it, monitored it, made comments over the last three years,” Carr said in a telephone interview on July 27. The meeting “went very well.”
Ford, Barrett and Begg were more apprehensive. “This is new for all of us,” Ford said. “You are worried about everybody. That’s the thing about the DPU. You own it more, so you’re worried about the future of your science.”
All three scientists worked with Solari to develop drugs that change the way asthma is treated by altering its course -- not damping symptoms. The DPU’s work will carry on, Glaxo said.
When good drugs are discovered, “there is always some spark, some moment, some individual who made that telling intellectual input, or someone who had a great idea,” Solari said. “Individual intellects can really make a difference, instead of just the big engine cranking out stuff.”
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