Is Biotech Running GSK?

"Smaller, biotech-like units" have been the name of the game at GlaxoSmithKline ever since the CEDDs (Centers of Excellence for Drug Discovery), round one, were announced post-merger in 2000.

Fast-forward eight years and now it's not just biotech's size that's influencing the pharma giant. These days biotech CEOs are showing GSK pod-chiefs how to run an R&D business--and, since earlier this week, one is running part of GSK himself.

Christoph Westphal, former-CEO of Sirtris, which GSK acquired for $720 million in April (one of our Deals of the Year Nominees), will now head up the externally-focused CEDD (or CEEDD), along with Sirtris' VP Corporate Development Michelle Dipp. While remaining at Sirtris' premises, Westphal will "challenge the norm and stretch us to consider new ways of working" in drug discovery, according to GSK's head of Discovery Patrick Vallance.

The idea is that Westphal’s experience founding, running and investing in biotech will help the CEEDD attract promising assets into GSK’s pipeline via alliances and partnerships.

Westphal’s appointment isn’t the first of incoming CEO Andrew Witty’s attempts to infuse the group with biotech-like management, accountability and creativity. Ian Tomlinson, former CEO of Domantis (which GSK acquired in 2007 to beef up its next-generation biologics capabilities) is a senior R&D exec at the Big Pharma. And earlier this year, Witty invited Actelion CEO Jean-Paul Clozel to talk to GSK CEDD heads about how biotech manages research—and give them a few lessons from one of Europe’s few biotech success stories. (Actelion has since signed a deal with GSK on sleep drug almorexant.)

The moves make sense. GSK’s CEDDs are supposed to be run as more or less autonomous units with their own P&L responsibility, but structure alone doesn’t create a mindset. Thus far the CEDDs haven’t exactly revolutionized Glaxo’s pipeline, even though several other Big Pharma, including Roche and Pfizer are trying similar things. “The challenge is to make the CEDD heads entrepreneurial,” comments one analyst--and to incent them to perform, or else.

Witty’s June announcement of the latest CEDD-like iteration, 50-person-strong Drug Performance Units focused on specific biological pathways and competing internally for resources, sends a clear message: We’re no longer just pretending to be like biotech, cushioned within a comfortable, cash-rich bureaucracy. We are a series of biotechs.

And as is abundantly clear out in the real biotech world, there ain’t many safety nets about.

jacket image by flickr user ckount used under a creative commons license

New CMO Means Business For GSK

No new CEO in our industry has done more to shake up his organization than GlaxoSmithKline's Andrew Witty (except perhaps Severin Schwan of Roche with his bid for Genentech--but that's another story).

Earlier this spring he created high level positions devoted to corporate strategy and emerging markets and the formation of a new $500 million corporate venture fund. Just days after rumors concerning also-ran Chris Viehbacher's departure were confirmed comes news that Witty's lured Ellen Strahlman, MD, away from Pfizer, where she served as VP Licensing and Worldwide Business Development, to the role as GSK's chief medical officer.

As the press release announcing Strahlman's appointment helpfully points out:

"the Chief Medical Officer is the most senior physician leader of the company with primary responsibility for matters of patient safety, general medical governance, ethics and integrity, medical information, and investigation involving human subjects relating to any GSK products in development or on the market."

Which is what makes Strahlman's appointment so interesting. Yes, she's a well respected physician--an ophthalmologist by training. And since she once served as CMO and Global Head of R&D for Bausch and Lomb, so she's no stranger to the duties a CMO title brings with it. But her most recent stint at Pfizer, where she was at least partly responsible for spin-outs and outlicensing, means she comes with a business focus that's atypical of most of the industry's CMOs.

And Strahlman's background is by no means unique in the boardroom at GSK. When you look at who occupies the top spots at this pharma, a number of them have deep biz dev experience. Among them: Russell Greig, head of the new GSK Venture Fund, who was GSK's senior VP of world-wide business development before becoming president of Pharmaceuticals, International; David Redfern, the company's new strategy guru, who has held stints at GSK as SVP Corporate Strategy and Development and SVP of Northern Europe; and Moncef Slaoui, who was SVP world-wide business development for GSK before becoming chairman of the R&D program.

And that leads this IN VIVO Blogger to wonder...With so many top brass at GSK--including now the CMO--trained to look for products outside GSK's own pharm system, what's the importance of internal R&D to GSK?

It's a fair question. GSK has never shied from inking big deals to fill its late stage pipeline drought. In recent months that's meant tie-ups with Valeant for their Phase III anticonvulsant, Actelion for their Phase III insomnia drug, and Cellzome for their Kinobead technology and kinase inhibitor discovery/early development. And in attempt to spur innovation within GSK's walls, Witty announced in July a reorganization of the CEDDs into discovery performance units that will compete for internal financial resources much the way biotech start-ups vie for VC funding.

“Externalising R&D enables GSK to capture scientific diversity and balance expenditure and risk in drug development. In the future, we believe that up to 50% of GSK’s drug discovery could be sourced from outside the company,” Witty said in a press release announcing the new strategic priorities.

No one is suggesting that Witty wants to jettison GSK's internal R&D--at least for now. But the structural changes that have already been announced and this most recent appointment of Strahlman to CMO suggest that more and more business as usual at GSK will also come with an external focus.

While You Were Watching the Upsets

This weekend we were in Cardiff for the Rugby World Cup quarterfinal between France and New Zealand, which saw France upsetting the favorites. Earlier in the day defending champs England upset heavily-favored Australia, setting up a very surprising all-Europe semifinal next weekend. Suckers for a lost cause, we managed to keep tabs on the Phils into the wee hours, and showed our support on the streets of Cardiff amongst the hordes of Kiwi and French fans (see below--it's a jungle out there).

So what'd we miss?

• The repercussions of the failure of Merck's HIV vaccine are being felt across the entire field, points out the Philadelphia Inquirer.
  
• Roche isn't raising its offer for Ventana, the company said this weekend, but it remains convinced Ventana shareholders will see the light.
  
• And the winner is ... Andrew Witty. GSK's head of Europe appointed CEO-designate, will replace JP Garnier in May 2008.

gotta support the team

GSK's War of Succession

It's GlaxoSmithKline's turn to find a new chief executive, after incumbent JP Garnier retires next May. Apparently there's no shortage of internal candidates: three senior executives are battling for the position, according to the UK's Daily Telegraph.

Like a roman emperor--or, a more contemporary analogy, The Apprentice's Donald Trump--JP has chosen to watch the three wannabes fight it out in the corporate ring over the next year.

David Stout, president of global pharmaceuticals, is tasked with re-thinking supply-chain management. Chris Viehbacher, head of US pharmaceuticals, must work out how to improve GSK's public image, and Andrew Witty, Viehbacher's European counterpart, needs to sort out marketing; he's testing "new selling models" in a dozen world markets, according to an insider.

They’re big tasks, requested on top of the day job. But it’s a big reward, too—not just the kudos of running one of the largest drug firms (and, according to analysts, one with an above-average pipeline), but large pay-checks. One of the many controversies around JP’s reign was his fat-cat pay package, famously thrown out in 2003 by irate investors—the first such embarrassment for a FTSE-100 company chief.

It’s an unusual way of selecting a successor--AstraZeneca, Merck and Pfizer (which picked a relative outsider) apparently didn't have such a choice of candidates when they appointed new CEOs over the last year or so--but one which has merits. Each of the tasks is important to GSK’s future, and this is one sure way of making sure they’re tackled. And whoever wins will be able to build on the output of all three projects.

When the candidates enter the boardroom on judgment day, one of them will be hired. It’s unlikely that the other two will stick around to see their projects through, however.

Source: Telegraph