With the company facing billions in lost sales, its research chief is set on doing things differently
During Martin Mackay's 12-year stint as a research executive at Pfizer, he felt suffocated by what he calls "a morass of committees." Megamergers with Warner-Lambert and Pharmacia had saddled the pharmaceutical giant with so many layers of superfluous managers that its researchers spent much of their time shuttling between meetings.
Now Mackay is exacting his revenge.When Pfizer named him president of research and development on Oct. 4, one of his first moves was to abolish all the committees he believed were blocking the path between good ideas and marketable drugs. What used to be as many as 14 layers of management between scientists and top executives have now been pared about in half.
Cutting red tape is a key element of Mackay's multifaceted plan to overhaul how the New York-based company goes about developing drugs—from generating ideas to managing the trials needed to get them on the market. It's a strategy he's been fine-tuning since longtime R&D chief John L. LaMattina announced his retirement in May.
At the time, Pfizer Chief Executive Jeffrey B. Kindler warned Mackay he was far from a shoo-in for the opening. While Kindler interviewed outside candidates, Mackay put together a plan for restoring Pfizer's product pipeline. Kindler was impressed. "I know it's a bit pompous," says Mackay. "I really knew what we needed to do differently."
Wall Street, however, has not been wowed. Pfizer's stock has fallen 7% since Mackay was named to his post. It doesn't help that he's associated with a legacy of blunders: He was part of the upper echelon in R&D when Pfizer moved ahead with torcetrapib, a cholesterol remedy, even though safety issues had emerged in early clinical studies. Pfizer dropped the drug late last year. "This was an opportunity to bring in someone from the outside who could breathe in some fresh air," gripes Jami Rubin, an analyst for Morgan Stanley (MS). "It's disappointing."
Now Mackay is shouldering the burden of coming up with blockbusters big enough to make up for the loss of Lipitor, the $13-billion-a-year cholesterol-fighter that's racing toward a 2011 patent expiration. The three major drugs Pfizer has launched recently—for pain, HIV, and smoking cessation—won't get it anywhere close to that goal. Together they'll probably bring in just $5 billion a year by the time Lipitor revenues start falling off a cliff.
Mackay believes his years on the inside have given him the background to tackle Pfizer's biggest challenge: figuring out why so many drug candidates that look great in early trials don't pan out when tested in large groups of people. Eight years ago, Pfizer began collecting details about its duds in "a wonderful database of failures," Mackay says. The company is now using that data to spot failures earlier in clinical trials.
Pfizer also is learning how to get potential successes to market faster. Last year the drugmaker shaved what would normally be a three-month trial of a rheumatoid arthritis drug down to just one month, because patients were responding better to the therapy than Pfizer scientists had anticipated. The company immediately started two six-month trials to help put the drug on a faster path to regulatory approval.
Liberating scientists from extraneous routines is the motivation for many of Mackay's reforms. He recently approached a group of researchers who for years had been producing both quarterly and monthly reports for executives about every drug in Pfizer's pipeline. Mackay never understood why they wasted so much time publishing two different versions of the same information. "I said to them, 'I don't care which you choose, but you're only doing one.'"
While Mackay tries to improve internal processes, Pfizer has hired an outsider to help bring in more ideas generated beyond its own walls. In October the company signed up biotech entrepreneur Corey Goodman as president of Pfizer's new innovation center in San Francisco. Good- man, a neuroscientist who co-founded biotech outfits Renovis (RNVS) and Exelixis (EXEL), will pursue licensing and co-development deals with small pharma and biotech companies. In some cases he will nurture startups in Pfizer's La Jolla (Calif.) incubator.
Pfizer, which ranks an anemic No.15 in the pharmaceutical industry in sales of biotech products, hopes to boost the percentage of biotech drugs in its pipeline from 8 to 20. But Goodman and Mackay will have to do a lot of convincing to get small companies to sign up with Pfizer rather than one of the many other drugmakers vying for deals.
In December, Pfizer went to great lengths to win over Adolor (ADLR), a biotech company developing pain medications. Pfizer and Adolor will co- develop two drugs. Adolor CEO Michael R. Dougherty says he was stunned when a dozen Pfizer scientists and executives showed up at his Exton (Pa.) office to make a presentation. "Usually we're the ones defending our program to a potential partner," Dougherty says. "But they were intent on convincing us."