Observations on trying to create a Pharma Vulnerability Index

Add this one to the list of futile attempts to make sense of the senseless.

I previously suggested following the announcement by AZ of the closure of their tiny Bangalore site, that perhaps we needed some way to predict which sites were next at different pharmas. Especially as cutting a site with less than 200 employees seemed a drop in the ocean. The bigger picture might be more important, identify which pharmas could no longer do it alone and need to merge or divest assets.

As with most projects, the idea was the easiest part, just create a spreadsheet of properties which is still kind of dynamic. I started to list the bigger pharmas, their sites and clinical pipelines etc. Pretty quickly I found that perhaps a good indicator of a company was its website. Some had their research sites well described and accessible (Lilly, Pfizer and BMS), gave their full phase I-Phase III to regulatory filing pipelines (Lilly, Pfizer, Novartis, Sanofi, GSK, Roche) while others did not and actually were not very accessible (names not listed here to avoid red faces). I tried to highlight companies which seemed to have large numbers of research sites and any that were already earmarked or targets for downsizing or swaps etc . In addition I added the 2012 or 2013 R&D budget and any announced job cuts from FiercePharma. I tried to note any focus on rare or neglected diseases, the latter may not be seen as good investments while the former are currently hot. Interestingly few of the big pharmas are really highlighting rare diseases other than those that are bought in like Sanofi.

In the process of this I found companies with Research sites in China (Abbvie, Novartis, GSK, J&J, Roche). As a rather biased (on my part) indicator of preclinical technical prowess I also captured whether any company had published on acoustic dispensing, because I feel this provides some insight of use of relatively new technology for screening (last decade). Only a few pharmas appear to have published on this.

Trying to create some scoring system out of this is tough and I think I still have to include a “gut feel” component. Lilly, BMS and Abbvie look to be in tricky spots with less in the late stage pipeline.

Things that shocked me were Novartis only having 6 phase I trials! The strength of AZ’s late stage pipeline which was similar to Novartis and yet AZ’s R&D budget for 2012 was $5.24bn vs $9.1bn for Novartis.

To expert analysts of these companies, my approach may seem rudimentary, but just the pharmas highlighted appear to have a total R&D budget of close to $70bn. so one has to wonder where is that money going? Could it be spent more wisely?

So my preliminary listing / ranking with a bit more data than last week is as follows:

1. Lilly – dire clinical pipeline and outside US R&D sites that seem vulnerable capped off with big R&D budget.

2. BMS – many US sites which seem ripe for consolidation and limited clinical pipeline .

3. Abbvie – probably should be higher on list, small budget and few molecules in clinical pipeline (did not list phase I and II)- could imagine merger with another big pharma company.

4. Sanofi – many French sites seems to be ripe for consolidation – which may impact US sites. Late clinical pipeline is weak compared to competition.

5. Merck and Novartis  – due to proposed swap of vaccine / and other assets which will likely have knock on effects – also Novartis needs help with early stage pipeline (crazy idea here – Lilly has a good phase I pipeline relatively speaking, so why not link up).

I guess I am being overly generous to those companies that had a seemingly disproportionate number of research sites (J&J, GSK) relative to other companies (Pfizer, AZ).

My recommendations for pharmas that want to be more accessible are: Put your pipelines fully upfront, what do you have to gain by hiding them especially phase I (J&J, Abbvie, Merck, AZ). List where your sites are and what they do. It must be awful to work at a company whose outward public website does not recognize their existence.

So as I mentioned previously I was previously employed by Lilly and Pfizer (over a decade ago) and currently have family members employed by Sanofi and Novartis but I have not discussed any of what I am writing with them (and they don’t read the blog anyway). I also have many friends and colleagues at big pharmas and its very uncomfortable to write this when you know there are thousands of careers and livelihoods behind each company. I have tried to write this in an unbiased fashion as possible.

I think its possible to update the spreadsheet so will be interesting to see how this progresses, I could of course add many more companies but then again there are only so many hours in the day. I welcome any suggestions or edits and of course this is not an indepth analysis so definitely do not use for investment purposes.




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  1. Maggie says:

    I warned him this would be tricky.
    -the wife

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