Pharma New Math: Harvard+MIT>Yale

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The Pharma industry has no lack of leaders whose creative vision extends only to the backside of the company walking directly in front of them. Consider the latest corporate substitute for originality, the belief that location and proximity are the major variables controlling the quality and productivity of pharma R&D. Several pharma companies have decided that the best way to boost their R&D output is to be physically located in the same city, the same building if possible, as the academic researchers now deemed the primary sources of worthy research. JNJ is opening ‘Innovation Centers’ in San Francisco, Boston, London, and China (city yet to be selected). Novartis closed its Basel R&D center, and moved its research to Boston/Cambridge. Sanofi closed its NJ research center, and had shifted those operations to France, though some of them have also migrated to Boston/Cambridge, home of Sanofi’s subsidiary Genzyme. Roche closed down its NJ research centre, AstraZeneca closed down almost all of its CNS research, maintaining a core group in Boston and a smaller one in the UK.

Perhaps the most extreme example is Pfizer, now mothballing its giant campus on the water in Groton, CT, moving to Boston/Cambridge. They are likely to tear down an 850,000 square foot research building in CT because they can’t think of anything to do with it, even as they sign a lease to share space with MIT in a building-under-construction in Cambridge. To put this in perspective: Pfizer is spending hundreds of millions of dollars to move from coastal New England, 50 miles from Yale, to another location in coastal New England, where they will be in the same building as MIT, a few miles from Harvard. Harvard+MIT>Yale. Basic math. This should make a huge difference for their pipeline.

In a world where virtual connections and networking have become increasingly engrained in the culture, the magical thinking behind the concept that one must literally rub elbows with collaborators in order to be productive would be charmingly rustic and retro if it was not so deluded and expensive. It is only a couple steps removed from the beliefs of some primitive tribes that ingesting portions of a vanquished adversary is a way to incorporate their strength and, both literally and figuratively, heart.

These coastal locations are all nice places to live and work, but these companies are missing the point. In their hope that they can somehow absorb academic creativity while keeping developmental risk at bay–leaving that ‘owned’ by the academics–they avoid dealing with the short-sighted, bean-counting mentality that has become rife in Big Pharma upper management. This has spawned the risk-averse pennypinching, interspersed with massive and ill-starred bets, that has left many of these companies preoccupied with superfluous housekeeping details, and employees immersed in the fear that, if they fail, their’s will be the next job cut. Moving next door to a university is not daring, it’s a pre-emptive move to avoid the blame for failure by making sure there are convenient, and inexpensive, scapegoats available. If Big Pharma wants to change its inhouse productivity for the better, their attitude towards creativity and risk is the ‘cultural’ reality they need to modify. If they just want to keep tabs on their alliances, they should try Skype.

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