February typically features Valentine's Day and its corequisite romances, flowers, and the full spectrum of pink and red gifts and decorations. This year was no exception. With financial forecasts in the red, several major pharmaceutical companies shared a number of pink slips with their R&D divisions.
Pfizer was one of the more noteworthy cases, cutting thousands of R&D jobs from allergy, tissue repair, and regenerative medicine divisions. GSK and AstraZeneca are making similar moves, and sanofi-aventis announced dozens of cuts aimed at moving the focus of their research toward biologics. At the same time, biotech acquisitions flood the pages of trade journals—Roche, AstraZeneca, and Merck acquiring Genentech, MedImmune, and Schering-Plough, respectively—and that's just the big ones.
But what are these massive companies doing with their remodeled research divisions? In a recent issue of Chemical and Engineering News, Roche's head of pharmaceutical research, Jean-Jaques Garaud, asserted that "not trying to understand the key issues of the biology of disease is not a sustainable approach." Merck's vp of R&D, Richard Tillyer, stated, "the most significant change is that we have pulled together into a single organization discovery science and preclinical development."
Even so, bills must be paid via commercialization—a condition that ultimately favors focusing resources on profitable targets and pretested ideas over long shots. As usual, research problems are not soluble without solvency.
Insoluble Without Solvency
The economics of the situation do seem to put the responsibilities of basic and orphan drug research into the hands of universities and government institutions, funded either by public dollars or nonprofits. Robert Kneller's study in the November 2010 issue of Nature Reviews—Drug Discovery notes that universities (through licensed technologies) accounted for ~48% of approved orphan drugs (1998 to 2007)—the other 52% shared between pharmaceutical and biotech companies.
As a fraction of their total drug output, however, university-licensed tech had far greater focus on orphan drugs. And, incentives or not, orphan drugs and basic research are not necessarily fast money.
Of the 25 most-profitable licenses reported by the University of California's Office of Technology Transfer (OTT), the three discoveries more recent than 2000 were engineered cultivars of a strawberry, a mandarin orange, and another strawberry.
Fruity sources of funding aside, the vast majority of the top 25 were biotechnology from the 80's (the top five being disclosed no earlier than 1989). These included basic tools such as firefly luciferase and yeast expression vectors but also the hepatitis B vaccine and EGFR antibodies. The NIH's OTT has a similarly impressive list of licensed accomplishments including several anticancer and anti-HIV compounds, research tools, and basic discoveries.
Latent Patents and Risky Business
Discoveries at research institutions are often funded through partnerships and grants, serving both the interests of corporate sponsors and the public, all while advancing the cause of basic research. It is neither necessary nor sufficient for private biotechs to shoulder the responsibility of basic research. In fact, the numerous successes of licensing publicly funded research demonstrate that profit-risky work can be completed and risk shared as a collaborative, stepwise effort.
Streamlining this process may very well be part of the industry's general cost-cutting trend of contracting out or spinning off entire research divisions while building a portfolio of promising technologies through licensing and acquisitions. The Patent Reform Act of 2011, now called the America Invents Act, will likely further encourage corporate-institutional collaborations with the change from "first-to-invent" to "first-to-file."
Current methods of institutional technology transfer, where inventions are not disclosed or patented until prospective licensees are lined up, will become more of a liability under the new rules—a good reason to establish links to industry as the basic research is ongoing.
These changes might also favor higher volumes of smaller-scope patents, which in turn favors companies with significant legal resources. We might even see the biotech equivalent of Bell Labs or Xerox PARC—a corporate idea generator and basic research zone—become part of the research renaissance of these giants. It's a fascinating concept, but it's up in the air whether these funding shake-ups will favor extensive webs of external collaborations or assortments of self-contained, task-oriented internal research research groups.
In any case, the shifting terrain of funding, regulation, and intellectual property will likely continue to favor potentially lucrative projects. But factors such as publications, reputations, and grants also tilt the scales in academia, industry, and government.
Across all of these realms, scientific inquiry and technological innovation depend on the answer to one all-important compound question: Is there someone interested in doing the research, and can that person convince others to help foot the bill?