Full article reprinted from PharmAsia News Otober 26, 2009
While many multinational companies have taken a brick-and-mortar approach to R&D in emerging markets, Pfizer is betting that a virtual research network will give it the flexibility and access to talent it needs to succeed in China. Read on...
Full article reprinted from PharmAsia News Otober 26, 2009
Pfizer's president of global R&D, Martin Mackay, and Stephen Yang, who heads Pfizer's Asia R&D efforts, outline that strategy in a two-part interview. Two of the most important figures in Pfizer's worldwide research endeavors, Mackay and Yang were interviewed by Elsevier writers Ellen Licking and Wendy Diller. This is part one of the interview; part two will appear in an upcoming issue of PharmAsia News.
Pfizer Inc.'s recent drug research and development efforts in China have been shaped by two powerful drivers - the revolutionary changes within the company's enormous R&D organization as it integrates new products and technologies from its acquisition of Wyeth and the transformation of emerging markets, particularly China and India, into world-class pharmaceutical markets.
Like other major pharmaceutical players across the planet, Pfizer is betting heavily that external collaboration will play an increasing role in providing the company with innovative pipeline-filling products and improving R&D productivity. Pfizer is in the midst of a global experiment in which compounds discovered internally or externally are analyzed and tested by partners that may be based anywhere in the world.
Nowhere is its strategy more clearly illustrated than in China, where the emphasis is on building a network of relationships rather than expensive infrastructure (PharmAsia News, July 30, 2009). Figures about China's potential abound: its pharmacuetical market, currently estimated to be worth between $23 billion and $33 billion, depending on the source, and ranked as the globe's fifth largest, based on IMS Health estimates of 2008 sales, is projected to become the third largest drug market by 2013.
China's government has embarked on an ambitious and expensive health reform program, including a near-term plan to extend health insurance, now available only to select parts of the urban population, to far more people, roughly 80% to 90% by 2011 and 100% by 2020. Most important, the government is putting its money where its mouth is, by spending $124 billion over the next three years on the program, which will also expand the health care infrastructure and encourage innovation.
Pfizer and most multinational companies began waking up to China's potential several years ago, as intellectual property concerns and regulatory hurdles gradually declined. In 2005, the company opened the Shanghai Research Center, which currently has 350 employees who work on clinical trials data management.
Pfizer's strategy going forward, however, differs from some of its competitors' because it is betting heavily on building a virtual network of R&D alliances for a range of activities, including drug discovery, clinical trial data analysis, and training.
Other multinatiional drug players, including AstraZeneca PLC, Novartis AG, and GlaxoSmithKline PLC, have invested much more heavily in "bricks and mortar," or laboratory infrastructure, and even moved some key R&D projects to China.
Pfizer so far has stayed away from that kind of physical commitment, saying it appreciates the flexibility of virtual networks, but it isn't ruling out building labs in China in the future.
At the same time, Pfizer and others are in the midst of a sales force "buildup" as they scramble to seize the rich commercial opportunities increasingly available in China. As near-term pressure grows, especially in light of revenue shortfalls in Western markets, their commitment to R&D in the region is bound to come under scrutiny. Years may pass before Pfizer and its counterparts can confirm whether their R&D experiments in China are helping to overcome long-term productivity deficits - or are better positioned as modest, near-term efforts to bolster their standing with regional governments that set the rules of the marketplace.
From an internal perspective, Pfizer's past efforts to integrate big acquisitions - notably its purchase in 2002 of Pharmacia Corp. and, in 1999, of Warner-Lambert - were rough going. But the company thinks that by having a few people at the top set the agenda and manage the process, the integration can be swift and overcome previous mistakes.
Q: We wanted to drill more into what you're doing in emerging markets, particularly in China, and how that fits into your overall global R&D strategy.
Martin Mackay: It's predicated on a very simple premise, that in the greater world there are patients who need better health care, and that we can do something. I've traveled to China over the last few years, but this year we went to India and China just a few months apart, and had a chance to meet not just with companies and the like, but also hospitals. There's a great medical need out there, and stuff that we can do at Pfizer in terms of discovering and developing medicines.
Q: To what extent do you see your move into emerging markets as a long-term strategy as opposed to an opportunistic play?
Mackay: By far and away the former. An organization of our size can't decide that it's going to pounce on an opportunity and then two years from now, three years from now, pull back. We have over 350 Pfizer colleagues in R&D working in our Shanghai facility. You have to really go into it, eyes wide open, that this is a long-term strategic initiative. These patients aren't going to go away in two or three years. Clearly, however, there are short-term gains to be made; we run a business, and I think that's entirely appropriate.
Q: As you move work to emerging markets, what do you hope to get out of that the process?
Mackay: There are a number of reasons. In fact, I'll give a research example first, which I think is quite profound. We know about the R&D productivity issues, and we're trying to crack those problems in a number of ways, but something that Steve's doing in Shanghai is thinking about how can we do the R&D process differently. He's running a number of pilots, experiments, and programs in his own portfolio, which are a different way of running R&D. It's not to say that these will substitute for what we do now.
From an R&D perspective, one thing that I want to see out of these is new medicines. And those medicines will address the local needs, because we'll work in areas that are needed locally.
Q: The focus will be on diseases where there's a prevalence [in Asian countries]?
Mackay: That will be the focus - to be local. But to say "local" in China and Asia's pretty big. I'd be disappointed if that doesn't have an effect on our whole portfolio and patients worldwide.
Q: Is the goal to take some of what you're doing with this experiment in China and move it over here?
Mackay: Sure. The truth is, before we ran some of these pilots and experiments, we were already working with Chinese scientists. We have just terrific collaborations with leading academics. In the last few months I've spoken at Yale, Harvard, Cambridge University, England, and Peking University, China. I cannot tell the difference between the quality of the talent in those institutions.
Q: Okay, so let me just jump to how you're going about setting up these alliances, and tell me about some of the alliances you've picked.
Steve Yang: We are a science-driven, innovation-driven organization, so our foremost criterion is quality of science. Many of the scientists we collaborate with, in China, India, and Korea, actually were all trained and educated in the U.S. So, we either have known them in the past, or known that they are lab mates or thesis advisors of co-workers back in the US.
Number two is, of course, relevance. We're not NIH [National Institutes of Health] or NSF [National Science Foundation]. We want to fund and support and collaborate on research that is relevant to specific regional disease knowledge. That's why in Korea we focus on gastric cancer, also hepatic cell cancer. In China we have various programs that tap into both new technologies in therapeutics, as well as new target discoveries in multiple disease areas.
Thirdly, it takes two to tango. Not every academic researcher is eager to embrace industrial collaboration. Certain [principal investigators] have worked with industry in the past, and they just have a natural tendency to be willing and open to working with the industry.
Q: Are the kinds of agreements you're striking with Chinese academics different than the kinds of alliances you might strike here?
Yang: Not fundamentally. They have freedom to publish. A joint committee usually decides [on which alliances to initiate] and monitors the progress every quarter. It's quite a robust process, and one that's very similar to our larger collaborations with UCSF [University of California, San Francisco], with MGH [Massachusetts General Hospital], and Scripps [Scripps Research Institute], with many other research institutes in the U.S.
Q: If you're setting up these alliances because of the specific skill sets of these scientists, can you talk a little bit about what you're working on with them?
Yang: By and large, so far, most of our collaborators are biologists. They could be cell biologists, biochemists. We started with structural biology, which is a unique area of research. When I started in late 2006, we had four structural biology collaborations in China. Those are small seeds now blossoming into a much broader set of collaborations.
[We have relationships with] Peking University, with Tsinghua University, and with the Chinese Academy of Sciences. We now have a much broader set of collaborations, on formulation, potentially for biotherapeutics, protein analytics for peptides, and on new targets. Some of it actually has yet to be published. So, this really allows us to get into the door with those scientists much earlier.
Q: Have you gotten what you want from these collaborations, and how have you disseminated the information within Pfizer?
Yang: We have made good progress, because we are very rigorous. When we ask scientists to solve a structure in a year, it's very black and white. They either solve the structure or not.
So, in the case of the collaborations we have, that first wave of four collaborations has all been concluded, two almost within the first six months. The other two took a bit longer because of the complexity of the protein, but they have made sufficient progress. We've started a second wave and a third wave, some with the same lab, some with a different lab. We have over 20 academic collaborations in China and a growing number in Korea and India.
To disseminate information, we have a very effective system for reaching out to [our] chief scientific officers, who direct our research. Very recently, we made a deal with the Shanghai Institutes of Biological Sciences (SIBS). After we do a deal, we send out an email to all the CSOs saying we have this collaboration; Pfizer funds some of this, but on the other hand you also need to put your skin in the game if you are interested in participating.
So, if you go to the SIBS website, you can basically see a Chinese announcement of a call for proposals of the SIBS scientists in Asia. At the same time, our scientists, the CSOs, are also gathering the topics that we are interested in having collaborators solve.
We're not talking about a huge number of PIs. You match them with an individual disease research unit. We link them up through teleconferences and other mechanisms.
So, actually, the initial idea will quickly triage down to, let's say, three to five tangible projects, and then we will pursue those.
Q: Have you then given SIBS a certain sum of money to do this?
Yang: Yes, it's a half million dollars per year for a three-year period. Now, those monies are not just "write a blank check." Both sides jointly review the proposal to make sure it meets our quality standards. And we commit the money based on a specific proposal.
Q: Similar to what's also going on at QB3? [Note: As part of its quest to explore new approaches to R&D and, in particular, new ways of working with universities, Pfizer forged a deal in June 2008 with the California Institute for Quantitative Biosciences, which is known as QB3 because it represents three University of California campuses: San Francisco, San Diego, and Santa Cruz. The deal committed $9.5 million over three years to fund basic biological research, drug discovery, and development conducted by QB3 academics. The arrangement is unusual because, in exchange, under a master research agreement, the company gets first rights to option IP for any discoveries that result from the work, but won't have control over publication of results.]
Yang: Sure. We basically follow a very similar approach. That's the beauty of a global system. We find something that works well. We're just literally using the same system with some local adaptation to this particular alliance.
Q: Is it easier to do academic collaborations in China than here? Academic figures especially have been concerned about how much they won't get back [in a deal with a pharmaceutical company]. Also, how does tech transfer work in China?
Yang: It's easier in some aspects; it's more difficult from the other angles.
It's easier because most of the cutting-edge science in China is done in two, no more than three, major cities. That's Beijing and Shanghai, which are highly concentrated in clusters of research institutes. Of course, there are additional science centers beyond those coastal cities and major cities, but at least geographically, once you identify someone in each area, you can send a couple of scientists to visit. They can quite easily check things out.
More difficult is, of course, most Chinese universities and the Chinese Academy of Sciences don't have as well established tech transfer offices as we have experienced. That's both a blessing as well as a problem. We have to coach [the universities] on how to set up tech transfer, so that it's a transparent and open system, and both sides feel it's a fair and equal partnership.
Q: To what extent do the Chinese government's programs to support basic research enter into your interest in forming these collaborations, and have government programs had a role in shaping the way your network is evolving?
Yang: We certainly see this as very positive. The government has invested heavily in scientific infrastructure, in terms of buildings, scientific equipment, general training, and support. Shanghai and Beijing, of course, have benefited more significantly, but so have other places around the country. Now, we're actually moving to some of the inland cities, with similar efforts to improve the infrastructure. In terms of the "software," the government certainly also highlights the importance of intellectual property protection. So, on both fronts I think the context and the microenvironment for collaboration is actually very positive.
- Ellen Licking and Wendy Diller
Start your Free 30-day risk free trial to PharmAsia News Today!
