Biotech Values

[DewDiligence]

Musings on pharma R&D productivity…

It’s curious to see PFE’s former R&D chief, John LaMattina, second-guessing the current CEO insofar as LaMattina was part of the problem, not the solution. LaMattina is barking up the wrong tree, IMO, by focusing on R&D expenditures as a percentage of sales.

A more consequential metric than R&D as a percentage of sales is the absolute amount of R&D by the pharma industry as a whole, which is now declining slowly after many years of increases (#msg-64637084). On this metric, there is apt to be an inverse relationship between quantity and quality for the reason cited by Genentech’s former CEO in #msg-16127025: there are only so many talented drug-discovery scientists to go around. Thus, it’s reasonable to presume that R&D productivity will increase if the aggregate amount of industry-wide R&D continues to be reduced.