Pfizer's plans to adopt a lean, mean biotech approach to R&D gets a cautious thumbs up from Frank Lichtenberg, a Courtney Brown professor of business at Columbia Business School. In a case study for BusinessWeek, Lichtenberg notes that Pfizer invested $35 billion in drug development between 2004 and 2007 and introduced only four major therapies.
"The recent record suggests that they really do need to try a different approach," Lichtenberg says. And he adds that it seems "appropriate" that Pfizer is shifting to a biotech R&D model with smaller groups responsible for advancing new therapies. If Pfizer chose to outsource the work, researchers could lose sight of an experimental therapy's market potential, leading the drug giant to more drugs that are technologically superior but weak earners.
Putting the biotech strategy to work in-house, adds the professor, gives Pfizer a chance to tap all of its marketing prowess while adopting a more efficient R&D model. Pfizer has thrown a wild card into the business strategy, though, with its deal to buy Wyeth. The history of megamergers like that--such as GlaxoWellcome's merger with SmithKline Beecham--point to an even worse R&D track record.
Last point: No one gets to find out how it all works out for some years to come. Drug R&D is expensive and a long time coming.
- read the case study in BusinessWeek