Dear Viewers,

Whether because you know me or because you are interested at the same topics, I thank you for viewing my blogs since I started it a few weeks ago.

I would appreciate if you could leave me a comment or suggestion after viewing my post to let me know what you think about the same subject or how I am doing in writing. Even if you disagree with me, I still want to hear from you too.  Let’s make the Blog a D(ia)log too!

Warmest regards,

John, the blogger

Someone once said: the world is full of ideas (in this blog, the word “perception” is used for “idea” in the title). 

The question is then how many new ideas eventually became marketable products and what percentage of market products made profit? Maybe a better way to look at the issue is to ask the other side of the question: how many ideas/perceptions are needed to make one profitable product.

Scientists often come up with brilliant ideas/perceptions and eager to put his/her idea to work. Very often, even before putting hands on the first piece of material, they already see the product and (huge) profit at the end. However, what they often do not have good sense on what else are needed to complete the journal from a concept to a product and to a profit. As going down the path, they would likely find the product is further down the road and the projected profit, particularly personal wealth, is diminishing (depressing!), as more idea is needed and more people is joining in.

I am not here to discourage anyone to start the journal (myself is now contemplating a such idea), but just to say, we, as scientists by training, should know more about what are needed down the road and to have a realistic projection on products and profit (particularly about personal wealth) to keep us on the track.

Last week, I lost my mailbox key and had to call a locksmith to replace the lock and key for me. A young guy in his late 20’s showed up with his special “on-van-lab”. While chatting with him about being trained as a locksmith and opening his own business, he told me its not simple to be a locksmith company CEO, “you have to know how to be a salesman, deplomat, technician, accountant. You have also to know what’s new out here and what prices others offer”. This young man certainly knew more than me to put an idea/conception to product and to profit.

During 2009, we have seen several historical pharmaceutical merge and acquisitions. The first was Pfizer merged with Wyeth. Now Merck merged with Shering-Plough and the Roche’s purchase of Genentech. The total transaction reaches over hundred billions. At the same time, the newly merged pharmaceutical giants will leave tens of thousands scientists out of jobs. Although, the common business wisdom would think such merge would consolidate the market and increase the productivity, the question is bigger actually better?

An obvious benefit that the merged companies obtains is to remove redundancy in research and combine the research effort the results from both company. therefore the new company would spend less resources in moving the product to the market. However, such business view overlooked that fact that merger of two companies and two teams and two products into one would in short time slows down development of the product, very likely the most advanced product that the other company is acquiring. The buying company will also spend tremendous financial and management resources to conduct the merger and dealing with aftermath of such merger. The overall benefit of such merger may not be imminent and may not be as great as projected.

Larger company provides much more resources for product discover and development than any small company.  Nonetheless, to take advantage of suchrich resources and expertise within the corporate is not as simple as 1 plus 1. Instead, significant effort and resource from corporate and individuals are spent towards “smoothing” the monster machinery in order to make it function as it supposed to work. A rough estimate would put over 50% of time for any one working at a “network” environment is spent on meetings. Many of such meetings are redundant in some extent. In another word, the company needs to “waste” resource in order to use the resource.

Critics to large pharmas have been saying it for some times that larger the company is, less innovative it becomes. As the company grows bigger, bureaucratic system grows to make sure the company works in unison. Such system tries to “standardize” each aspect of operation and even human behaviors. Therefore, bureaucratic system, although essential to integration of the company, is anti-innovation by default. More protocols are established and enforced, lesser likely any new ideas can flourish.

Size is important,  but bigger is not always better.

Almost every other pharma RD conferences these days would invite a keynote speaker who would use statistic data to show that the productivity and efficiency of pharma R&D declines while cost increases.

People claiming that the pharma RD productivity are on the decline often calculate the productivityas the Outcome (# of new drugs)/Investment (R&D cost). Although, that seems an ultimate way to estimate the pharma RD productivity, it does not consider the fact that many drug targets under research today are novel as the results from the newly revealed human genome.  These targets hold the key to future drugs but may not give the quick return as analysts expected.  Just to make the situation even worse, study on these new targets often requires newer but more expensive technology with higher sensitivities. However, the question is: does that mean our productivity and efficiency are on the decline?

Many researchers would disagree with the conclusion, simply because they have witnessed the great increase of productivity and efficiency in the lab research from last 10-20 years. Works used to be completed in weeks, now can be done in days or hours. Large scale work, such as chemical library screening, that was not imaginable many years ago now can be carried out in a lab with just a few robots and readers. Our information and knowledge of human diseases are much richer and deeper. All these speak for an industry-wide increase of productivity and efficiency.  Although there is no statistic data, it is clear that the number of “products” as mesured by the number of compounds synthesized, number of assay datas, etc are continousely on the rise and the cost of generating these materials and information are on the decline. In another word, many scientists see the opposit picture thar the pharma R&D productivity and efficiency are indeed going up.

So, which would be the better way to estimate pharma R&D productivity and efficiency? In my 0pinion, the latter is a bette formula since it ties the investment with outcome that, if does not produce immediate drugs, will product future potential drugs. With my many years industrial experience, I don’t see much varition from lab to lab in terms of productivity and efficiency as technologies and information are spreading fast in the industry. However, there are huge differences in productivity and efficiency from company to company simply due to different infrastructures and managment styles. Companies with unnecessary management  layers and fragmented departments clearly suffer greatly in their productivity and efficiency.

For people who are interested to know how your company’s productivity and efficiency is doing, I’d like to offer a simple and empirical method that I would name  the “Bench Index” (BI) with a value between 0-1. BI calculates the fraction of FTE (from CEO to research assistant) time spends on bench work where the “products”, chemicals and assay data, are eventually produced. Based on this index, companies with more “Chiefs” than “Indians” will have lower BI (i.e. lower productivity).  Companies spend more time on “integration” and “communications (i.e. meetings)” will have lower BI (i.e. lower efficiency). On the other hand, based on this theory, higher cost is not a factor of concern if it also produces more “products” and will eventually leads to new drugs.

If you are interested, give it a try on your department or your company, it your company’s BI is between 0.3-0.5, you are probably doing fine regardless what others think.

Don’t ask me where I got the magic number.

The latest issue of <<Nature Drug Discovery>> (issue 8, 2009) published an Editorial by John Dixon et al., with a rather provocative subject. In contrast to the trends of large M&A’s among big Pharmas in a rush to become world’s largested integrated company that we have seen since eary this year, the authors virtually announced that such business model has failed. Instead, they suggested the pharmaceutical industry should go the opporsit diretion to become disintegrated “vertically” to increase efficiciency and productivity. According to the proposal, the pharma industry should be disintegrated into largely three pieces: discovery, development and marketing. Companies should be “specialized” on one but not all stages of drug R&D and look for partners or buyers to complete the process. There are a couple of fundamental reasons to support this model. First, VC market would more likely be able to support a company of smaller size with clear focus. Secondly, product from a company, either a drug candidate or a new technology, would have more chance to find its matching partner or buyer in an open market, than “asvocateing” internally for various reasons.  “Desintegration” is not a new idea, people questioning the productivity of large pharmas have been advocating for such model for some time. Some large pharms, such as GSK, are also expreiementing such idea by creating an “internally” disintegrated structure to promote more innovation. Whether a disintegrated pharma industry will be more productive remains to be proved. Meanwhile, thousands of new “start-up”s are doing exactly the same as the authors proposed: being specialized on one area and taking products to the market by collaboration or transactions. That has in fact created a “vetically disintegrated” industry alone with the integrated large pharms. Before closing this blog, it will be of interest to point out that, in a “vertically disintegrated” world, one will see more integration of drug discovery and service which is not seen in integrated companies. Smaller companies would maximize their “experties” by developing its own products while providing service to other non-competitive companies. Alone with that, there will be increasing need for CRO services.

Anti-aging research has on the raising recently. However, comparing with researches on other disease areas, such as cancer or cardiovascular diseases, researching on aging is less clearly defined and suffers from lacking defined molecular targets and mechanisms.  To start with, there is no clear definition for aging as a disease.

Is aging a disease? If the answer is yes, why everyone gets it? If the answer if not, why do we need to research and treat it?

Aging is definitly a naturely occuring process. Such process could have started when we are born and becomes dominated when we get old.  Is it enough to define aging a natural process than a disease? Not that soon.  Since we don’t know what a “natural aging process” is, we can not decide if the aging process that occured inside eveuryone’s body is “natural”.  The only way to determine if an aging process is natural is by comparising historical record. The human life expectancy has signifcantly increased in the last centry, from aroung 50 to 70. That means, if one lived upto 50 years old and died “naturally” 100 years ago, his aging process would be considered “natural” then. However, if he lives today, we would consider his death is “premature” and his aging process would be “un-natural”.  Since we do not know what is the maximum life expectancy of human being, if there is one, it would be safe to assume that everyone is living with an “accelerated” aging process. By that assumption, the “accelerated” aging process we are experiencing is not natural and is a disease. Such “accelerated” aging process should and could be treated.

That is not the end of the discussion yet. Very small percentation of people actually died naturally (that means no obvious disease found). Most of us will likely die from one or another disease. Therefore, there is a reason to assume that “aging process” is not a disease by itself  but a “condition” for diseases to occure.  If so, treatment for aging would be different from treating a well defined disease such as infection or cancer.

So, putting all the thoughts together, we might be able to give anti-aging research the following definition:

“Anti-aging research and treatment is to prevent and reverse accelerated aging process and to improve the health conditions against other diseases.”

Does that make any sense to you?

The flagship pharmaceutical CRO in China, Wuxi Pharmatechs, recently was selected by <Fast Company> as the #8 most innovative company in the world. It was ranked alone with companies such as Google and Apple, as well as the Obama Team. 

<Fast Company> did not give clear reasons why a CRO compnay was nominated for innovation. But it does mention at the end that Wuxi Pharm would become a serious competitor to its curently customers such as Pfizer. If that turned to be true, it would mean a fundamental transformation of business model for Wuxi Pharmatechs from a CRO to a pharmaceutical company.

Starting from only a short 8 years ago, Wuxi Pharm is now the largest and most reputable CRO in China and possibly the largest in Asian. I had personally have the opportunity to know the funder soon after the company was formed. In one occasion, he asked me if I think Wuxi Pharmatech would be ever successful. My answer to him was that SOMEONE would make it a successful business, because the whole world needs the service and China is the right place for such business.  It did not take long for Dr Ge Li proved to us that he was THE One. 

It will not surprise me if Wuxi Pharmatech one day makes such transformation. I have all my confidence in the vision and management skil of the funder himself and the team. If such time comes and condition matures, they will not be reluctant to take the step. Afterall, Wuxi Pharmtech is indeed an innovative one!

The latest research by French scientists on why our hiar growing gray as we getting older revealed that hydrogen peroxide may play a key role in the process. If that is the case, the graying process would be more like a “natural bleaching”. 

If one is looking for supporting evidence, he or she does not need to go too far. A Chinese herb named ”He Shou Wu” (polygonum multiflorum), literally meaning “black head” in Chinese, has long been used to prevent premature gray hair.  Laboratory studies by Chinese and Japanese scientists suggest that polygomum multiflorum could increase syntheiss of antioxidant Anthraquinone in cultured hair folics. Anthraquinone is a strong redox  agent. The fact that A derivative of anthraquinone (2-ethylanthraquinone) is used to produce hydrogen peroxide commercially suggests that it could be involved in life cycle of hydrogen peroxide synthesis and eleimation. If that is confirmed, we may find another link of traditional Chinese medicine with modern medicine.

Last week, two news hit the “cloning” world and both involved Chinese cloning scientists.

Last Friday, Dr Jerry Yang of UConn died after 10 years’ fighting against cancer. Jerry was credited for cloning the first live animal in US, the caw “Amy”.  His death was very unfortunated since his next goal was to clone human cells for medical treatment.

Just a few days before Jerry’s death, another breakthrough news hit the world. A Chinese professor Dr Li announced that his team had successfully cloned first set of human embryronic cells. Aming the 5 successful clones, 4 from adult skin cells and one from lymph cells of a patient suffering from Parkinson’s disease. Is this exactly what Jerry was dreaming of? 

Hum…may be it is still too early to say.

Immediately after the news broke out, comments rushed into internt. Many of them questioned the validity of the report. Some internet-searching went even further to question the education background of Dr Li. The atmosphere  reminds us a similar situation when the Korean scientist claimed successful cloning of wolf a few years ago 

So the question is: Is it a cloning of a human cell or a human “Fraud”?

No matter how evil the company management may be seen by emplyees that are laied off, the fact is company does not like layoffs either, let alone at such a significant level. Layoff is a painful process for both the emplyees and the company.

Although many think that the current wave of layoff is unfortunated, the question is will the business go through the similar cycles of “hire and layoff” again in the future? The answers probably not.

The solution forthe company to smooth the fratuation of emplyeement between business cycles is to outsource most of “technical” and “processing” work while keeping a relatively stable “core” team.

If that trend grows, we will see a significant “outsourcing” sction in every industry including high tech and biotech industry. People who work as the “core” team member of a company will be less affected by the business fractuation, while those work in the “outsourcing” section will be able to have a relatively stable job by serving broader clients population.

Would that be a win-win stuation?

These days with deepening recession, one likely wakes up with a news that so-and-so is plan to lay off hundrds to thousands employees.  Lay-off seems the first choice that company would think of when the business faces hardship.

It is partly true that when business goes down, the management could immediately see that many positions are no longer required and people at those positions would be better to let go.  That will bring the cost down to match the income. In another word, to make the balance sheet even.

But is that the best way to weather the hardship? Fortune just reported on 9 companies that have never had layoff –in  good or bad time (http://money.cnn.com/galleries/2009/fortune/0901/gallery.no_layoffs.fortune/index.html).

These companies do things differently, but there is a common feature of their management: they do treasure their workforce. Even if is not for the sake of employees, one CEO was cited to say that layoffs is “counterproductive,” since they “erode morale, create fear and reduce productivity.” What the CEO did not mention there was that rebuilding an experienced workforce when business takes off is not easy either.

The difference between these CEO’s and others? These CEO’s see the companies as long-term businesses, the others see business as a monthly balance sheet.