Assigning Credit and Blame to Biopharma R&D Chiefs


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shift the balance in their R&D efforts more towards protein based drugs. The rationale for this is clear: recombinant protein drugs accounted for 4 of the top 5 best selling drugs in 2012, and the final rules for gaining FDA approval of generic versions of these drugs (called biosimilars) in the U.S. have still not been released.

What legacy did Perlmutter leave behind at Amgen? According to Forbes he oversaw the launch of 8 drugs during his 11 years there. A separate bio of Perlmutter, however, indicates that he was “responsible for the registration of 10 significant new drugs”. Parsing these numbers can be tricky, and it’s unclear to me exactly how these calculations were done. Amgen’s website lists only 9 currently marketed products. So if 8 or 10 drugs were added to the Amgen lineup during Perlmutter’s reign, why are there only 9 being sold now? Let’s review the current Amgen drug portfolio in detail to figure this out:

—Amgen was selling three of these drugs—epoetin alfa (Epogen), filgrastim (Neupogen), and pegfilgrastim (Neulasta)—which all achieved blockbuster status prior to Perlmutter joining the company.

—Another blockbuster, darbepoetin alfa (Aranesp), won FDA approval in September 2001, eight months after Perlmutter joined Amgen.

—Another four of Amgen’s marketed products were fully or partially obtained via the acquisition of Immunex in 2002. Etanercept (Enbrel) (yet another blockbuster) has been on the market since November 1998. Seattle-based Immunex and Fremont, CA-based Abgenix had been jointly developing panitumumab (Vectibix) since July of 2000; it won FDA approval in September 2006. Both Amgen and Immunex had active bone biology research programs since the mid 90s. Their combined efforts led to the creation of Amgen’s drug denosumab, which is sold for two different clinical conditions (as Prolia, which won FDA approval in June 2010 for postmenopausal osteoporosis, and as Xgeva, which came on the market in November 2010 for the prevention of bone fractures in cancer patients).

—Amgen acquired the rights in 1996 from NPS Pharmaceuticals to cinacalcet (Sensipar), a drug for secondary hyperparathyroidism. It won FDA approval in March 2004.

—Romiplostim (Nplate) won FDA approved in August 2008 for a rare platelet disorder. Amgen had originally acquired the rights to thrombopoietin in 1995 from Novo Nordisk (whose Zymogenetics group won the race to clone this molecule). Nplate was developed as an alternative when difficulties arose in the clinical development of thrombopoietin itself.

By my count, Amgen is currently selling five or six drugs (depending on how you count denosumab) that were approved on Perlmutter’s watch. Work on most of them either began before his arrival or arrived via acquisitions. So what happened to the other FDA approved molecules that are no longer being sold? Amgen unloaded the poor selling drugs ancestrim (Stemgen, which I don’t think ever sought FDA approval in the U.S. but was sold in Canada, Australia, and New Zealand), palifermin (Kepivance; FDA approved in December 2004), and anakinra (Kineret; approved in November 2001) to Biovitrum of Sweden in 2008. Combined sales of the three drugs in 2007 were a less-than-stellar $70 million. Amgen also won approval of interferon alfacon-1 (Infergen) in 1997, but the rights to this were out licensed to InterMune in June 2001.

A look at Amgen’s current pipeline shows 14 Phase III trials (although most of these are clinical extensions of already marketed drugs; only six represent novel agents, two of which are also in Phase II for other indications). Similarly, they have 13 drugs in Phase II trials (representing 7 new agents), and 19 new drugs in Phase I. Sean Harper, Amgen’s new executive vice president of R&D (and former company chief medical officer), expressed confidence that many of these pipeline drugs will be approved. Could you imagine him sharing any other viewpoint with the media? Time will tell as to what pipeline revisions he makes going forward.

Given their short tenures, the best opportunity for R&D chiefs to achieve success appears to reside in acquisitions. It’s the only way to quickly make a mark in an industry burdened with such a lengthy product development cycle. Perlmutter’s Amgen tenure is likely to be remembered for the numerous deals that took place on his watch, including the acquisitions of Immunex (2002), Tularik (2004), Abgenix (2005), Avidia (2006), Ilypsa (2007), Alantos Pharmaceuticals (2007), and BioVex (2011). He may have also have helped lay the groundwork for companies acquired after he announced his planned departure, including Micromet (2012), Kai Pharmaceuticals (2012), and Decode Genetics (2012). Without acquisitions you are mostly finishing off the work of your predecessor, leaving your successor to complete the projects you started. Judging success within this paradigm would be a very difficult exercise indeed.

Achievements in biopharma can be measured in a number of different ways, and we know that corporate accomplishments are greatly influenced by the performance of CEOs and other corporate bigwigs. Xconomy’s Wade Roush nicely summarized Princeton psychologist Daniel Kahneman’s description of outcome bias as a “tendency to reward or blame decision makers for the performance of their organizations, even though the correlation between leadership quality and corporate performance is generally low.” Outcome bias seems to be well in play in assigning credit or blame to drug pipeline results.

The bottom line on who gets most of the credit or blame in biopharma R&D ultimately comes down to the bottom line of the company’s financial statement. Stock analysts don’t really care how many drugs are approved under your watch or how many have been added to the pipeline by the time you depart. Profitability is the name of the game. Investors want to know: Did company revenues increase during your time on the job? Financial returns are the net result of a large number of events, including drug launches (and withdrawals), acquisitions, spinoffs, dividend payments, stock buybacks, lawsuits, settlements, etc. In Peter Kim’s case, Merck’s revenues went from $47.7 billion in 2001 to $47.3 billion in 2012. With Roger Perlmutter, Amgen’s revenues rose from $4 billion in 2001 to $17.3 billion in 2012. Care to hazard a guess as to which of these two guys is considered more successful?

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Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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2 responses to “Assigning Credit and Blame to Biopharma R&D Chiefs”

  1. Kyle SerikawaKyle Serikawa says:

    Stewart, nice commentary on the problems of short term incentives versus long term thinking, and the difficulty of assessing leadership quality in an industry that has such a long development cycle and that is subject to so much random variation. I’m reminded of a similar example in Leonard Mlodinow’s “The Drunkard’s Walk,” discussing how studio heads also are often assessed on current successes of movies even when those movies were greenlighted and developed under a previous studio head’s tenure.

    I think an interesting question, given the low correlation between leadership quality (however that is measured) and performance, is how much effort organizations should be putting toward finding, assessing and hiring quality at the top. If, let’s say, the difference between the best CEO and the worst only affects probability of success by 5% due to the host of uncontrollable factors influencing drug development (I’m making that figure up. I’d love to know how to calculate that more accurately), how do companies factor that into their job search?

  2. Stewart LymanStewart Lyman says:

    For those of you who want to track Roger Perlmutter’s transformation of Merck’s R&D group, check out the update at