Biotech Values

[DewDiligence]

This tidbit from today’s DNA CC rings true:

One analyst asked why DNA projects that R&D will be only 18% of sales in 2007 vs a percentage of sales in the low 20s a few years ago. One obvious answer is that DNA’s absolute sales have grown immensely during the past few years so that the new, lower percentage of sales represents a very much larger absolute layout for R&D.

But CEO Arthur Levinson gave an even better answer: there are only so many good scientists available for hire and DNA does not want to dilute its talent pool by hiring mediocre people.

I found this non-politically-correct assertion to be a refreshing admission that there are huge differences in productivity between scientists (as there are, of course, between individuals in other vocations). People say that DNA has been lucky to be so successful in the past few years. Well, luck did play a role to some degree—but so did skillful hiring.

Turning to the well-documented problems of Big Pharma in the R&D arena, Levinson has stated that these companies have failed in large measure because they hired some of the mediocre scientists whom DNA passed on.