Sanofi CEO Viehbacher on Stirring Innovation in the Era of R&D Cutbacks

1/17/12Follow @xconomy

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the word collaboration, it’s not a benign term. You have to recognize you need someone else’s help and expertise, and therefore you have to give up something. It will require a certain amount of trust and confidence among the players in the ecosystem that hasn’t necessarily existed before. But I think it could make the ecosystem stronger.

On Sanofi’s approach to diversification of revenue streams, and R&D, as it loses patent protection on aging blockbusters:

You’ve got two different camps in this industry. There is the camp that says ‘We’re R&D based, it’s all we do, we’re sticking to our knitting, let’s bet the ranch on this.’ I’m not prepared to do that.

I want to have a company that has a sustainable growth profile, and that’s why we’ve invested in growth platforms like vaccines, consumer health, animal health. These are areas that don’t have a lot of patent expiry. That provides the sustainability we need to get better P/E ratios, and more investor confidence.

R&D is still a core part of the business, but I’m not betting the future of the company on whether a molecule comes out tomorrow or comes out a year later or two years later. That does two things for us. It allows us to get off the treadmill of having to have a certain number of projects. This whole need of “I need so many blockbusters to launch this year, and that means I need so many in Phase 3, and so many in Phase 2, and so many in Phase 1, and so many candidates.’ After a while, that becomes an industrial process, and that’s where people have started to make compromised decisions, because they need those numbers. We can focus on really strong, quality assets. And we can afford to invest in earlier stage projects.

I don’t need anything more in my pipeline to achieve our growth rate of 5 percent a year between now and 2015, which will put us close to the top of the industry. I don’t need to do later-stage deals. We can now invest in really strong science. We can figure out, who do we want to work with, who’s really good, what are the structures to do that?

We’re still spending 5 billion euros, or about $6.5 billion in R&D. We are reducing our fixed costs, closing research facilities in Bridgewater, NJ, and proposing to downsize European facilities. It’s not about getting out of R&D, it’s about how to invest differently. Our belief is that you want to invest with the right people. How can you say the right people are always going to be working for you? With a lot of the right people today, their dream isn’t to work for Big Pharma.

The model has been that we have these big research facilities, which we augment by some outside collaborations. Now we are saying that outside collaborations are a fundamental way that we want to gain access to innovation.

On the quality of the science Sanofi is seeing is seeing in the early stages of new drug development:

I have been a skeptic of R&D for at least 15 years. I’ve had so many projects you just fall in love with that fail. You can become pretty skeptical. I’m actually feeling more excited about R&D now than at any other point in my career. I think it’s because of where the science is going. We are increasingly getting biomarkers. The understanding of genomic data, the causes of disease, the number of targets out there keep growing. And companies are being more choosy about what they will invest in.

What’s been in the pipeline to date has been stuff we were doing in 2000-2001. Now the things we started doing in 2007-2008 have had to meet much more rigorous criteria to advance. Plus, the marketplace requires medicines now to be clearly better than anything else that’s already out there. So we have cleaned out all the ‘me-toos’.

On whether the FDA is serious about changing its processes, and putting more emphasis on speeding up the path to regulatory approval of new medicines:

I believe [FDA commissioner] Margaret Hamburg feels very passionate about it. It still has to actually occur, but the intent is there. And there’s an openness to working with both BIO and PHRMA, as well as other stakeholders, to make it happen. The FDA is actually acknowledging that their role is clearly to monitor safety, but also to make sure patients have access to innovative new medicines. That’s not something you heard for a few years—it had swung completely toward safety. So I think that’s been extremely important.

The new rule on combination approvals for oncology—in which a combination can be approved even if the individual components on their own don’t demonstrate efficacy—opens up whole new areas of research. There’s still some room to move on adaptive clinical trial design, but I think Margaret Hamburg wants to make sure the agency is doing its part to protect public health but also ensure that innovation is going to bring new cures.

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