Small is beautiful for GSK drug discovery

New GlaxoSmithKline chief executive Andrew Witty is restructuring the firm’s drug discovery, setting up small, highly focussed research teams that will have to bid for funding.

It hasn’t taken long for Witty, who took over from Jean-Pierre Garnier as chief executive in May 2008, to change the way the company’s research is organised. Back in 2001, the company dismantled its traditional research structure, replacing it with several Centres for Excellence in Drug Discovery, or CEDDs, in which its research teams could operate more like entrepreneurial biotech companies. Now, the teams are being split up into even smaller units, which will compete with each other for funding.

The company’s research efforts are in eight areas: biopharmaceuticals; immuno-inflammation; infectious disease; neuroscience; metabolic pathways; oncology; ophthalmolog; and respiratory. And within these CEDDs, it is setting up smaller drug performance units, or DPUs. Each will focus on a single biological pathway, and will comprise anywhere from five to 80 scientists. 

These DPUs will have to convince a new global Discovery Investment Board that their ideas should be funded. The DPUs’ performance and value creation will be set against three-year business plans as a part of this. Its board is made up of senior GSK R&D executives, plus a number of ’outsiders’ such as venture capitalists and former biotech chief executives. ’We’re trying to drive a more ruthless, well-informed and objective approach to capital allocation decisions in discovery,’ says Witty.

Witty says he believes drug discovery is best optimised through research by small, focused teams. ’Building on the success of our CEDDs, we have now pushed our organisational design further to increase product flow and value,’ he said. And this means launching more products, which together will increase revenues, rather than relying on the occasional big-selling blockbuster. 

Blockbuster breakaway

The pharma industry has become increasingly dependent on its blockbusters, but they are increasingly hard to come by, as the ’easy’ targets in big markets have already been hit, and regulators are loath to approve further drugs in already crowded fields that do not offer important therapeutic benefits. And payers would rather cough up for cheap generics than expensive new medicines; this is why GSK is now speaking to those running big government reimbursement agencies to find out whether they are likely to pay for a particular new drug before a lot of cash is spent on development.

GSK is trying to break away from this blockbuster dependence by launching more, smaller-selling drugs, and believes the new research model will help it achieve this. Witty likens the blockbuster model to finding a needle in a haystack - and having to find another needle as the patent on the first needle runs out. ’We’re not going to bank on finding that needle,’ he said. ’I know this company can discover and launch a handful of new drugs a year. And every now and again we will discover a needle, and when that happens, we will make the most of it - a shift from a blockbuster-dependent world to a blockbuster-capable world. We’re going to plan for what we know we can deliver, and make the most of the great surprise.’

However, identifying new blockbusters is still key to increasing revenues, according to analysts. ’The new chief executive’s strategic vision aimed at increasing efficiency and exploiting a broader range of opportunities seems sensible,’ say analysts at Deutsche Bank. ’We feel that GSK’s ability to continue to grow pharma revenues longer term will drive the stock price, and this still relies to a great extent on launching new blockbusters in the US. Greater R&D productivity from a more entrepreneurial, efficient approach will likely take years to have a measurable impact on revenues,’ they add.

Emerging markets

Meanwhile, in another attempt to broaden its portfolio, GSK has entered into a marketing arrangement with South African generics company Aspen. The aim is to take advantage of a predicted rapid growth in branded pharma products in emerging countries, without the cost of a full takeover. 

Aspen and its partners have, between them, a portfolio of more than 450 molecules and 1200 products. GSK is to register and seek approval for these products in markets where they are not already licensed, and pay royalties to Aspen, who will continue to sell them in those countries where they are already available, predominantly in sub-Saharan Africa.

Witty claims the deal shows the company’s intention to increase sales in emerging markets where growth in both population and economic prosperity is fuelling demand for branded drugs. ’This collaboration gives us access to a renewable, high quality and competitively priced source of branded pharmaceuticals in high-demand therapeutic areas,’ he claimed.

Sarah Houlton

Enjoy this story? Spread the word using the ’tools’ menu on the left.