The Soul of Biotech

Last week, I watched Big Bucks, Big Pharma, which is more or less what SiCKO would have been if Michael Moore had focused on pharmaceutical marketing, although BBBP’s criticisms are much more well-reasoned and well-researched. In fact, many of its facts are more or less right, although I question some of the business interpretations.

For example, one of the talking heads questions the pharma industry’s claims that R&D is what drives up the cost of medicine, rather than marketing, whose budget is often larger than that of R&D. He asks how that claim can be true if a drug company spends more on marketing than R&D each year.

What is missing from his position is an ROI analysis. Compare:

• A $1 million promotion that delivers $3 million this year with a 95% probability.

• A $1 billion drug development budget that delivers $5 billion spread out over the next fifteen to twenty years with a 30% probability.

Which is better? Well, it depends on the priorities of the company to raise cash now versus planning for the future. When measuring the near-term budget, the marketing option seems to cost almost nothing, because it pays back so quickly. On the other hand, if you only marketed drugs and didn’t develop anything in-house — well, you’d be Pfizer. Balancing the portfolio of projects across R&D and marketing is a major challenge for any company. Too little sales and marketing, and you can’t turn the lights on. Too little R&D, and you have to keep spending money buying other companies just to get their compounds.

Danny Halperin is a second-year graduate student in Molecular & Cellular Pathology at the University of California at Los Angeles, working in the laboratory of Dr. Peter Tontonoz. Before attending UCLA, Danny spent four years at Amgen in Clinical Immunology supporting pre-clinical and clinical development of biologics. Danny and I sat down over Thai food in Santa Monica on Thursday evening to talk through the relationship between academic and industry research, the promise of pharmacogenomics, and building a healthy R&D culture. This is the first in a series of interviews.

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