|Speaking of Pfizer, here's an article from the FT site:|
FRONT PAGE - COMPANIES & MARKETS: Pfizer to reorganise for Dollars 4.5bn R&D push
Financial Times; Nov 20, 2000
By ADRIAN MICHAELS and DAVID PILLING
Pfizer, which recently swallowed Warner-Lambert to become the world's biggest drugs group, has created a new structure to cope with the unprecedented Dollars 4.5bn it will funnel into research and development next year.
The US pharmaceuticals company will do initial research in about eight separate discovery sites but will run development, where drugs are tested on human volunteers, from a new site in New London, Connecticut.
The structure is similar to that being planned by Glaxo-SmithKline, which will have the second-biggest R&D budget if the merger of Glaxo Wellcome and SmithKline Beecham is given antitrust clearance, possibly next month.
GlaxoSmithKline will take the idea one stage further by designating each site, to be called centres for excellence in drug discovery, as competing profit centres. They will buy and sell services from the central organisation.
"We've had to evolve a different organisational structure," said Henry McKinnell, the Pfizer president who takes over as chief executive in January and who oversaw the integration with Warner-Lambert.
"On the discovery side, we want to maintain the excitement of a small discovery outfit," he said. "But on the development side, where economy of scale really matters, we will run a global effort. One is decentralised, the other is centralised."
Mr McKinnell said having Dollars 4.5bn to spend, at least Dollars 2bn more than arch-rival Merck, brought big advantages as well as organisational challenges.
"The advantage we have is to make our technology available across a much wider base," he said, referring to the investments Pfizer has made on equipment to interpret the human genome.
Companies with much smaller R&D budgets would struggle in the post-genomics environment, he said. "Clearly you can't operate a competitive organisation with Dollars 500m."
Mr McKinnell said he would implement a 100-day plan when he took over, aimed at capitalising on the company's new - and long-coveted - status as the industry's number one.
Copyright: The Financial Times Limited
So he thinks you need north of $500m to run a "competitive organisation." (A delicate editing point here - should that be organization? A similar issue arises when US newspapers refer to the "British Labor Party.")
There is of course the viewpoint that the big bucks will win, particularly in the post-genomics era. It's a battle of "industrial strength" research with fancy high-throughput screening and full access to all the genome databases vs. the biotechs' smarts and flexibility. Don't forget that people like SKB have been poring over the HGSI data since 1993.
But then again there's the data point I have from a friend at a fairly recent IPO that's been selling services to both pharmas and biotechs. His view: "Good luck trying to get a phone call returned from a pharma after lunch on a Friday..."