Interactive Case Study

The Issue: More Effective Pharmaceutical Research


When Pfizer CEO Jeffrey B. Kindler first tried to recruit Corey Goodman to lead the company's San Francisco-based Biotherapeutics and Bioinnovations Center in the summer of 2007, the pharmaceutical industry was struggling to develop drugs efficiently—and so was Pfizer (PFE). In the previous decade, the proportion of drugs developed by the pharmaceutical industry that actually made it to market had dropped from 10% to a mere 5%. In 2007, Pfizer's profits plummeted to $8 billion, down from $19 billion, a 58% drop from 2006. Pfizer needed to get more drugs for patients into the marketplace to bring in more revenues—and fast.

Kindler challenged Goodman to figure out how better to develop major new drugs. Goodman believed Pfizer could achieve superior results by creating an environment that would nurture the type of innovative spirit that exists in biotech companies. The only trouble was that Goodman needed to instill entrepreneurial spirit inside a pharmaceutical Goliath. This would require a radical shake-up.

Pfizer became even bigger when it acquired rival Wyeth for $68 billion in January. But Goodman remains persuaded that Pfizer has no better option than to conduct research in smaller teams that resemble those at biotech startups. Transforming into more of a biotech is "the right model for Pfizer and for the industry," he insists.

The old research assembly lineWhile Pfizer's attempted metamorphosis is little more than a year old, Goodman says he's beginning to see signs of progress in his division. "The degree of productivity is high. It's higher than what you've seen in the pharmaceutical industry. We're very excited about some of the new drugs. And the best is yet to come," he says.

The changes necessary for the transition to get this far have been dramatic. Before Goodman joined Pfizer, researchers in his center were part of a very large research and development group that left them limited ownership of their discoveries. Researchers would hand their early research over to others when their drugs were first tested in humans. After a drug went through clinical trials, it was handed off to yet another group.

When Goodman took control of research at Pfizer's Biotherapeutics and Bioinnovations Center, he broke his researchers into more focused teams. At the same time, he made scientists accountable for overseeing drug candidates when they went into clinical trials. Goodman believes scientists should be conscious of whether or not their discoveries work in humans. "People have more accountability and more ownership if they're working in small groups," he says. "It allows you to keep your eye on innovation and drug discovery."

Marketers are following suitRecently, Pfizer reorganized its entire research group and even its business units around the same principle as Goodman's center. Groups that market drugs have been broken into smaller business units, each of which is focused on certain types of patients and diseases. They're involved with drugs from the beginning of pivotal clinical trials and they work with doctors to figure out what patents need. The hope is that their increased involvement will help Pfizer identify which types of drugs address the greatest medical needs and the largest market opportunities.

Goodman acknowledges that Pfizer is far from reaching its ultimate goal of having an entrepreneurial biotech research culture. And some aspects of the restructuring have been painful. In January, Pfizer announced plans to lay off 800 of its approximately 10,000 researchers. "We've got to save costs and get more drugs to the market," says Goodman. "We have to be smarter about how we do that."
Emily_thornton
Thornton is a senior writer for BusinessWeek.

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