Lilly, Sanofi CEOs call for a radical change in R&D thinking

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Eli Lilly CEO John Lechleiter took up a favorite topic of his during a speech in London, highlighting the problems that bedevil the R&D field and offering some ideas on how they can be fixed. "Our industry is taking too long, we're spending too much, and we're producing far too little," he said, a criticism that Lilly investors have been making for some time now.

"Ironically, the crisis in our innovation model comes at a time when we have vastly more scientific knowledge and data than ever before," Lechleiter said. "But unless we change the way we do research, we won't translate this knowledge into advance." In specific, he says, pharma companies like Lilly need to be more entrepreneurial and globally networked. That means turning to partners for molecules, funding, and expertise while learning how to share investment, risk, and reward, along with greater efficiencies. And it requires some active assistance from regulators.

"Even as we rebuild our R&D engine, we must build an environment where pharmaceutical innovation can thrive," he said. "As pressures on health care systems around the world continue to grow, we will continue to make the case that innovation is imperative, and to advocate for reforms that promote innovation rather than penalize it."

Those are all fine ideas, but there's been little hard evidence that Lilly has come close to actually turning the corner on its R&D woes. Lilly's late-stage pipeline has been the source of almost constant embarrassment in recent months as Lechleiter remains one of the only big pharma CEOs to insist on relying on its in-house R&D empire to deliver new products to take the place of blockbusters confronting an onslaught of generic competition. For companies like Sanofi, Pfizer, Roche and Merck, big R&D problems have been met with big buyouts and a frenzy of new deals. Their second step has included a major restructuring of the R&D ops that has failed to deliver.

"You really have to put your portfolio through the R&D equivalent of a bank stress test," asserted Sanofi CEO Chris Viehbacher in an interview with Forbes' Matthew Herper. "Most companies have not really been as tough as they should be in figuring out what products should be in there. And then you go back and look at your fixed costs. Once you have too many R&D facilities you essentially have to keep your money in those facilities. If there's not a lot coming out of it and you want to bet on a new team it becomes pretty difficult - because you already have all these teams."

- check out the release on Lechleiter's speech
- read Herper's interview with Viehbacher

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