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Piramal, Exelixis And Novo Nordisk Research Woes Spell Doom For Drug Discovery Scientists

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Recent advances in the understanding of the cause of human diseases have resulted in this era being referred to as the golden age of medical research. Indeed, from the standpoint of drug discovery, never has there been a time when disease targets were more plentiful, targets which appear to be strongly correlated with specific diseases through genetic analyses. The biopharmaceutical industry has been active in capitalizing on these insights and responding with new drugs to treat heart disease, diabetes, hepatitis C, cystic fibrosis, and a variety of rare diseases.

Yet, the biopharmaceutical industry, at a time when it would be expected to “double down” its investment in drug research, has instead been scaling back. This retrenchment has been due to a variety of factors, not the least of which has been the consolidation of the industry. Three recent examples, however, show how tenuous drug discovery research is these days despite the breakthroughs being made.

Piramal, a multinational Indian company, recently announced it was closing its drug discovery labs in Mumbai to focus on other aspects of its healthcare business. Approximately 200 scientists will be affected by this decision. Piramal had begun these efforts more than a decade ago and, based on ClinicalTrials.gov, has four drugs in early development: two in metabolic diseases (P-7435 and P-11187) and two in oncology (P-1446 and P-7170). However, as other Indian companies have found, the investment needed and the hurdles that have to be overcome to discover and develop a new medicine can be overwhelming. Piramal’s vice-chair, Swati Piramal, provided the rationale for these actions.

“I am basically a scientist and I love the business of science, but I am also answerable to the investors. So I had to take a decision that is most strategic from the investor point of view, which is to review the high cost and long gestation early-stage discovery business.”

The “business of science” claimed another victim this week – Exelixis . This biotech company had a lot riding on a prostate cancer clinical trial (known as “COMET-1”), for its drug, cabozantinib. This drug is already approved for patients with a rare form of thyroid cancer, but Exelixis had hoped that cabozantinib would be even more successful in treating prostate cancer. Unfortunately, cabozantinib failed to meet its phase 3 goal in extending prostate cancer patients’ lives. Concomitant with announcing these results, Exelixis announced that 70% of its workforce was being let go. This amounts to 160 people, many of whom are scientists. With this restructuring, Exelixis has just enough cash to finish a study with cabozantinib in kidney cancer.

These types of events don’t occur just in small companies. Novo Nordisk , a Danish company known best for its diabetes drugs and growth hormone therapies, had over $15 billion in revenues in 2013. However, it too has scaled back. Novo Nordisk had been studying its interleukin-20 modulator, NN8226, in rheumatoid arthritis (RA). Unfortunately, this drug failed a key proof-of-concept study in patients. As a result, Novo Nordisk not only halted the development of NN8226, but also exited inflammatory R&D entirely and halted development of another RA drug, a drug for lupus, and two for Crohn’s disease.

Three different types of companies, on three different continents have all gone through the same travails. Yet, what’s happened at Piramal, Exelixis, and Novo Nordisk happens all too often in this industry. Companies face tough decisions and decide to cut research programs in order to meet financial goals. These cuts are even more pronounced when major mergers occur, and many are worried about the potential impact on R&D should Pfizer and AstraZeneca actually come to a merger agreement. You can’t fault company management in making these cuts. People forget that the biopharmaceutical industry has to provide a return-on-investment (ROI) to shareholders in order to survive. In each case described, the company decided to halt certain research programs in order to spur its ROI.

This de-emphasis of early research, however, is troubling. At a time when there is great potential in drug discovery, what is needed is greater focus on research, not less. It would be nice to see CEOs take a long term view and make this a bigger priority despite the views of industry naysayers.