Ex-Pfizer R&D chief: Big Pharma mergers, cutbacks badly damaged drug research

John LaMattina doesn't have much to say in favor of Pfizer's business strategy over recent years. In a piece for Nature, the former Pfizer ($PFE) R&D chief marshals his arguments against the Big Pharma mergers which have radically altered the R&D landscape in recent years. Not only are the newly combined companies slashing research spending, he says, they're eliminating entire divisions. And the downsizing has had a dramatic effect on productivity, reducing the number of new approvals compared to the far better days seen in the ‘90s, when more companies with fatter pipelines scrambled to compete on a long list of diseases.

LaMattina's prime example: Pfizer. Following several big acquisitions Pfizer quickly moved to shutter R&D ops in Michigan and Illinois and now has its sights set on the big facility at Sandwich in the U.K. As Pfizer underscored in its second quarter results, the company is slashing R&D spending from a high of $9.4 billion in 2010 to $6.5 billion to $7 billion in 2012, a figure which should shrink its cost of R&D from 20% of revenue to a mere 11%. And this is the worst time to be scaling down.

"Thus, at a time when our understanding of the basis of diseases continues to increase substantially, the ability to exploit this information in the private sector is being compromised," writes LaMattina, now a senior partner at Puretech. "It is hard to envision that R&D output, as measured by new drug approvals, will improve in the coming years based on this reduced investment."

Post-merger, R&D projects slow down, he argues, particularly for the early-stage work as mergers concentrate initially on late-stage prospects. Hit with multiple mergers, he says, the work can be severely hampered. And the impact on individual researchers is hard to fully appreciate.

 Notes LaMattina: "Industry consolidation has resulted in less competition and less investment in R&D. At a time when there is a major need for new treatments for conditions such as Alzheimer's disease, drug-resistant infections and diabetes, such a trend is alarming."  

- here's the full column from Nature Reviews Drug Discovery