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Robert R. Ruffolo, Jr., Ph.D., D.Sc.(h), D.Eng.(h) President, Research & Development Wyeth Pharmaceuticals Senior Vice President Wyeth (Corporation) Directors.

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Presentation on theme: "Robert R. Ruffolo, Jr., Ph.D., D.Sc.(h), D.Eng.(h) President, Research & Development Wyeth Pharmaceuticals Senior Vice President Wyeth (Corporation) Directors."— Presentation transcript:

1 Robert R. Ruffolo, Jr., Ph.D., D.Sc.(h), D.Eng.(h) President, Research & Development Wyeth Pharmaceuticals Senior Vice President Wyeth (Corporation) Directors of Graduate Studies in Pharmacology Salt Lake City, Utah July 25, 2007 Training Needs for the Pharmaceutical Industry in the 21st Century

2 Brief Overview of the Pharmaceutical Industry

3 What is the Pharmaceutical Industry? It is the most technically complex, costly, risky and regulated industry in the world Attrition rates Development times R&D Investment Costs Risk – Consolidation Regulation

4 How Can We Assess Risk In The Pharmaceutical Industry? Odds of Bringing a Product to the Market Time and Costs associated with R&D Required R&D Investment Company Survival Regulatory Burden

5 Some Realities of Pharmaceutical R&D R&D costs have grown dramatically; disproportionately to R&D budgets or output. The result is decreased R&D productivity. R&D Inflation is >12%; R&D Budget increases have been between 3-6% The Regulatory climate is growing more unfavorable and uncertain. Regulatory and patient expectations for safety may be unrealistic and approaching the unachievable. Unrealistic safety expectations have exposed the Industry to unprecedented levels of product liability. Innovative new drugs will likely take longer to develop as the Industry focuses on even higher levels of innovation. The good news: There is more innovation in R&D than ever before.

6 Stages of R&D: A Long, Expensive and Risky Process Discovery (2-10 years) Pre-clinical Testing Laboratory and animal testing Phase healthy volunteers used to determine safety and dosage Phase patient volunteers used to look for efficacy (POC) and side effects Phase 3 3,000-5,000 patient volunteers used to monitor adverse reactions to long-term use FDA Review/ Approval Additional Post-marketing Testing Source: PhRMA, based on data from Center for the Study of Drug Development, Tufts University Years Compound Success Rates by Stage >10,000 Screened 250 Enter Preclinical Testing 10 Enter Clinical Testing 1 Approved by the FDA

7 Clinical Development Cycle Times are Increasing Source: Centre for Medicines Research (CMR) 1.4 (62) 1.6 (58) 1.3 (64) 1.5 (65) 1.2 (64) 1.1 (69) 1.0 (76) 3.8 (17) 2.6 (15) 3.0 (16) 2.1 (28) 2.0 (23) 1.7 (29) 1.9 (46) 3.5 (6) 2.3 (13) 2.1 (20) 2.4 (22) 2.1 (18) 2.2 (27) 2.5 (36) 1.6 (7) 1.2 (14) 1.4 (13) 1.0 (17) 0.8 (21) 0.9 (17) 0.8 (29) Duration in years Phase 1Phase 2Phase 3Phase R Original Patent Term – 20 years Years Patent Application Filed NDA/BLA Approved Pediatric Drug Patent Certification Patent IssuedIND Effective NDA/BLA Filed PTR* Period to Recoup Investment

8 The Evolving Healthcare Technology Arena Description of disease processes Empirical intervention Disease homogeneity Uniform patient populations Reactive medicine (post-symptoms) Causal molecular pathology Rational intervention directed to specific molecular pathology Disease heterogeneity and different progression/prognosis Patient heterogeneity and individual risk profiles Proactive disease management based on risk assessment (targeted care) This is leading to more innovative drugs in company pipelines

9 Innovation Comes With a Price: Higher Attrition, Longer Timelines and Higher Costs IND filings with FDA (%) More novel Less novel NDA filings with FDA (%) More novel Less novel Source:BCG industry compound database; BCG analysis

10 More Novel Drugs: Higher Attrition Rates and Longer Development and Approval Times Source: BCG industry compound database; BCG analysis Attrition Rates by Novelty Status Development Times by Novelty Status Less novel % Current status of INDs filed 1996 – Less novel Months Average cycle time for NDAs submitted 1996 – 2003 and approved FDA approved Failed Still in Development Development time Approval time More novel

11 Costs of Discovering and Developing a New Drug are Staggering Source: Bain drug economics model, 2003 Launch Phase III/File Phase II Phase I Preclinical Discovery Historic average $1.1B $1.7B $2.0B Change in Average Cost to Develop Successful Drugs Over Time

12 Pharmaceutical R&D Requires the Highest Level of Investment in the World; A Measure of Risk Source: PhRMA, 2001, Based on Data from PhRMA Annual Survey and Standard & Poor’s Compustat, a Division of McGraw-Hill 17.0% Domestic R&D Industrial Sector Comparison: 10.5% 8.4% 7.8% 5.3% 4.7% 3.9% 1.2% 3.9% 0.73% 3.8% Computer Software & Services Office Equipment & Services Automotive Telecommunications Leisure Time Products Aerospace & Defense Metals & Mining Paper & Forest Products All Industries Electrical & Electronics

13 The Pharmaceutical Industry Outspends the NIH on Biomedical Research PhRMA NIH Ref: PhRMA, “What Goes Into the Cost of Prescription Drugs?” & AAAS, OMB Data FY2006

14 The Pharmaceutical Industry is the Source for Most New Drugs Source: DiMasi et al., J Health Econ, 2003;22:

15 Journal of Health Economics, Vol. 13, 1994, pp Most Drugs Do Not Make Money: Only 3 in 10 Medicines Return Development Costs Present Values by Decile Average R&D Cost Dollars (Millions) After-tax Present Value

16 Industry Consolidation; A Measure of Risk We May Look Highly Profitable, But What Is The Reality? Companies Merge Because They Are In Trouble Another Measure of Risk

17 The Outlook for our Sales and Earnings is Not Bright Source:IMS, FDA, Lehman Brothers, BCG analysis ‘03‘05‘07‘ yr avg. growth % Sales Growth for Big Pharma Right now, our Industry is less profitable than most others

18 Growing Regulatory Conservatism: Application of the “Precautionary Principle” “The Committee’s decided to ban further research until it can be proven your ‘wheel’ poses no threat to the environment, society or public health”

19 Regulatory Burden on The Pharmaceutical Industry is Increasing at an Alarming Rate Increasing Review Times Increasing Safety, cGCP and cGMP Requirements Worldwide; to unnecessary levels that do not increase public safety Lack of Harmonization among Regulatory Agencies in the US, Europe, & Japan - Despite ICH Different Standards of Medicine in the US, Europe, and Japan Complicate Clinical Trials Increasing Post Approval Commitments

20 Training Needs of the Pharmaceutical Industry

21 Communication Skills are Paramount Written  Publications, Publications, Publications - It’s necessary to become an opinion leader - Recognition in the scientific community is crucial  Feasibility Study Proposals (equivalent to NIH Grants; except longer) - Why should we fund your idea as opposed to somebody else’s? Verbal  Public Presentations  Internal Presentations  The Power of Persuasion - Many scientists have good ideas, but we have only a limited amount of money Team and Leadership Skills

22 Scientific Breadth and Depth Our resource needs change constantly, and our scientists must be able to change with our needs (or we need to replace them, a traumatic and expensive process) Use your time in Graduate School to take as many courses as possible; don’t avoid the physical sciences, mathematics and statistics Learn as many skills as possible; avoid the temptation to become too highly specialized; there’s time for that later The broader a scientist’s background, and the more rounded the skill sets, the more valuable the scientist is in the long run Avoid the mistake of becoming an expert in a technique or technology; they become obsolete quickly Be conscious of the “technology wasteland” Learn how to write and communicate science verbally!

23 Understand the Pharmaceutical Industry; The Myths and Stereotypes May Not be True We are not all stupid and rejects from Academia We do publish (and if you work for me, it is publish or perish). If you don’t want to publish, then stay in academia We don’t just do “mindless screening” We don’t make a “ton of money” You CAN go to meetings/congresses You CAN follow your own research interests We are not in Industry to escape “grant writing”; we write feasibility studies, which are worse The science is just as good You do receive scientific direction But there IS scientific freedom (vs Academia?) You can’t get in without a post-doc We do science for profit (and to help humankind and to earn our salaries and pay our bills (just like academia; Professors don’t work for free either, and universities charge overhead to pay bills) The Pharmaceutical Industry does not live off the science of Academia; Actually the Industry is the largest source of funds for Biomedical Research in the World

24 Understand the Pharmaceutical Industry; The Myths and Stereotypes May Not be True We are not all stupid and rejects from Academia We do publish (and if you work for me, it is publish or perish). If you don’t want to publish, then stay in academia We don’t just do “mindless screening” We don’t make a “ton of money” You CAN go to meetings/congresses You CAN follow your own research interests We are not in Industry to escape “grant writing”; we write feasibility studies, which are worse The science is just as good You do receive scientific direction But there IS scientific freedom (vs Academia?) You can’t get in without a post-doc We do science for profit (and to help humankind and to earn our salaries and pay our bills (just like academia; Professors don’t work for free either, and universities charge overhead to pay bills) The Pharmaceutical Industry does not live off the science of Academia; Actually the Industry is the largest source of funds for Biomedical Research in the World You only have to work half-a-day, but 1 day = 24 hours!* *Stolen from Dr. H. Wolf, Pharmacology 870, 1974

25 There are More Similarities Between Academia and Industry Than Differences Science is our foundation Innovation is key Work begins with the identification of a new molecular target Scientific credentials matter; a lot! Consistent productivity is essential (and a requirement of continued employment; the equivalent of tenure) Industry doesn’t have enough money either to fund all of the research it wants or needs either We work on mostly the same molecular targets as in academia

26 What’s Life Like in the Pharmaceutical Industry? It’s a hard life The hours are long; it’s not 9 to 5 Science is more directed Scientists are held accountable Greater reliance on a “team approach” to science; but individual research matters a great deal Industry is not where you go “to retire” Failure is the norm; one needs to be able to cope with failure Change is the norm; one must become comfortable with change Competition is keen for research money and jobs The most common complaint I hear from scientists who move from Academia to Industry is “I never knew how hard the work was, and I never had to work THIS hard before” HOWEVER, very few scientists who move from Academia to Industry ever move back

27 Personality Matters Too! But Many Scientists Do Not Inherently Have The Traits Necessary To Work In A More Structured Environment Than Academia

28 Key Findings from “Managing the Innovator” by ISR - Scientists: Typically like their immediate supervisors Suspicious of “upper management” Feel un-empowered Uncomfortable in taking direction Criticize their performance appraisals Are highly dissatisfied with their compensation Feel less secure in their jobs Believe that they cannot challenge Company norms They identify themselves as scientists; not as company employees Feel limited opportunities for career development Have a very high degree of stress on the job Are typically the most dissatisfied employees in any company

29 Personality Matters Too! What We Look For Ambitious Team payer Driven Ability to work independently AND with others Risk-taker Comfort with change and uncertainty Ability to deal with stress Ability to cope with failure Managing conflict Looks for ways to make things work, and not for reasons why things will not work Ability to take direction Motivation (science vs money)

30 Post-Docs: You Need One (or More) To Get In The Door One Post-Doc is OK, two is better, and beginning to become the norm Take advantage of your post-doctoral fellowship(s) and explore your new environment, not just your own project Collaborate with others; try to develop team skills Develop additional scientific and people skills Work hard; you should have nothing else to worry about during a post-doc Have fun; it’s the last real freedom you’ll ever have whether you work in Academia or Industry

31 What Can You Expect When You Enter Industry At The PhD “Entry Level” A comparable salary to academia (sorry) A laboratory with one or two “associate staff” (technicians) A boss (who you might or might not like; but they can change quickly) Somebody like me who spends approximately $2 million/year on you (so you need produce consistently) Some new equipment; equivalent of “seed money” Some freedom to work on your own ideas, and on some existing programs; DO BOTH! Budget problems A unique opportunity to combine basic and applied research

32 What Kind of Research Will I Do in Industry? If you work in Discovery, basically the same kind of research you would do in Academia Basic research in areas of your own interests and collaboration on research projects of others Do I publish on “My Research” and do “Company Research” separately?; No, they are one and the same thing Make sure you publish enough to “get tenure”. If you can’t make it in Academia, then people like me won’t want you either But, unlike Academia, there are many other opportunities if you find that research is not you true calling (Clinical, Operations, Project Management, Corporate, Marketing, etc)

33 Can I Get Fired From Industry? You bet you can; and much easier than from Academia There have been massive lay-offs in R&D throughout the Pharmaceutical Industry as a result of consolidation and decreasing sales Some R&D groups set “tenure requirements” that are similar to Academia. If you’re not good enough to get tenure in Academia, why would we want you? One of the main reasons that I have let people go is because of the failure to publish or failure to align with the direction of R&D Abuse of research animals Falsification of data Violation of company policies Sexual, gender, race etc harassment/bias/discrimination Willful misconduct Insubordination; Industry is a little bit more like the military, and rules and appropriate behavior/conduct matter

34 Summary The Pharmaceutical Industry is not for everyone; but I love it It’s a hard place to work, and becoming harder every day Our risks, costs and degree of regulation are extremely high The work is challenging, and often frustrating, but sometimes highly rewarding Communication is key Breadth and depth in training are critical We depend on the motivation and innovation of our scientists, and their individual as well as team approachs to research We have the resources and scale to do things that cannot be done by Academia or Government And we make new medicines; there’s no better feeling than to be part of the discovery and/or development of a new drug


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