[Ip-health] Wall Street Journal: As Drug Industry Struggles, Chemists Face Layoff Wave

[Thiru Balasubramaniam]

http://online.wsj.com/article/SB119733600536720234.html


As Drug Industry Struggles,
Chemists Face Layoff Wave
Lipitor Pioneer Is Out
At Doomed Pfizer Lab;
A Blockbuster Drought
By AVERY JOHNSON
December 11, 2007; Page A1

ANN ARBOR, Michigan -- In January, Pfizer Inc. announced it was
closing its storied research laboratories here, laying off 2,100
people. Among the casualties: Bob Sliskovic, a 23-year lab veteran who
helped create the world's most successful drug.

The closure and Dr. Sliskovic's abrupt change of circumstances are
emblematic of the pharmaceutical industry's declining fortunes. It was
at the Ann Arbor facility in the late 1980s that Dr. Sliskovic first
assembled the chemicals that make up Lipitor, the cholesterol-lowering
drug that has generated about $80 billion in sales since its launch
and ranks as the bestselling pharmaceutical product ever. Today,
Lipitor is nearing the end of its patent life, and Pfizer hasn't been
able to come up with enough promising new drugs to replace it.

Following that initial breakthrough some 20 years ago, Dr. Sliskovic
worked on several other research projects, but none panned out. His
losing streak mirrors the industry's. A byproduct of the late-19th-
century chemical business, pharmaceutical research thrived for more
than a century by finding chemical combinations to treat diseases. But
after contributing substantially both to human health and drug-
industry profits, it has failed to produce significant innovations in
recent years.

High failure rates have long plagued chemistry-based drug research.
Between 5,000 and 10,000 compounds are tested for every drug that
makes it to market. In recent years, the problem seems to have gotten
worse. Despite spending tens of billions of dollars more on research
and development, pharmaceutical companies have fewer and fewer drugs
to show for it. In 2006, the industry received Food and Drug
Administration approval for just 18 new chemical-based drugs, down
from 53 in 1996. Moreover, many of those drugs are variations of
existing medicines.

Robert Massie, president of the American Chemical Society's database
of chemistry research, says some researchers are questioning how many
more chemical combinations there are that are useful against diseases.
"It's like how coming out with metal drivers in golf was a huge
innovation, but now it's incremental. You're just coming out with
drivers that are a little longer or rounder," he says.

As pills like Lipitor made out of elements from the periodic table
prove harder to come by, pharmaceutical research is being superseded
by the newer field of biotechnology. The latter relies mostly on
biologists who make proteins from live cells.

The shift is exacting a human toll, as big drug companies like Pfizer
lay off thousands of chemists, casting a pall over what was once a
secure, well-paying profession. "When I started in this industry in
the 1980s, you didn't worry about things like this," Dr. Sliskovic
says of the lab closure.

It isn't clear how many chemists have lost pharmaceutical-company
jobs. But overall, 116,000 chemists were employed in 2006, down from
140,000 in 2003, according to the Bureau of Labor Statistics. During
the same period, employment of biologists rose to 116,000 from
112,000. Just as the rise of biotechnology is contributing to an
economic boom in Northern California, the decline of chemical-based
research is hurting the Michigan cities of Ann Arbor and Kalamazoo,
along with some regions of New Jersey and Illinois.

Dr. Sliskovic, a 50-year-old with a mustache and the scattered air of
a scientist, was raised in Doncaster, a coal-mining town in northern
England. His father, a refugee from the former Yugoslavia, found work
there after World War II. As a child, Dr. Sliskovic says he was
fascinated by such things as the properties that "make a mint minty."

That interest led him to pursue a doctorate in chemistry. In 1982, his
Ph.D. adviser told him of a friend who worked as a consultant for a
pharmaceutical company in New York. The company was looking for
chemists to do postdoctoral research. Raised with a passion for
American comic books, Dr. Sliskovic says he jumped at the opportunity
to come to the U.S.

Two years later, his research completed, he received a job offer from
Warner-Lambert Co.'s Ann Arbor labs. "Holy cow! I accept," he
remembers saying.

Dr. Sliskovic was hired as the pharmaceutical business entered a
golden era of huge profits. Its labs churned out drugs for chronic
conditions such as heart disease and depression, while its armies of
salesmen promoted them through aggressive marketing. Warner-Lambert
assigned him to a team of three other chemists investigating a new
idea: whether lowering cholesterol -- the soft, waxy substance that
can clog arteries -- would help people avoid heart attacks. Other
companies were at work on similar projects.

Dr. Sliskovic's new boss, Bruce Roth, had invented a chemical
structure that he thought would work. In the late 1980s, Dr. Sliskovic
fine-tuned the compound, isolating its potent part. An early version
of the compound wasn't absorbed well by the body, so the team
brainstormed about how to modify it to get more of it into the
bloodstream. "We sat around the table and said 'You try this, you try
that,' and they said, 'Bob, why don't you look at salt formation?'"
Dr. Sliskovic recalls.

A calcium salt he tried solved the problem, and Lipitor was born.
Though it would reach the market in 1997 after several rival drugs,
Lipitor would turn into a blockbuster because it was more potent.

Its runaway success sparked Pfizer's $116 billion hostile takeover of
Warner-Lambert in 2000. Ahead of the takeover, Pfizer suggested one of
Warner's main appeals was its research-and-development force. "We
would like to keep them all," Pfizer's then-research chief, John
Niblack, told The Wall Street Journal in 1999. "You need a big staff
to run this strategy. Warner-Lambert offers us a nice instant fix."

With the acquisition, New York-based Pfizer inherited the Ann Arbor
labs where Dr. Sliskovic worked and continued to base much of its
pharmaceutical research there. Between 2001 and 2006, it invested $300
million to expand the facilities.

By that time, Dr. Sliskovic had moved on to other projects. As Lipitor
traveled down the long road of animal and human testing in the early
'90s, he led a group of chemists developing drugs to prevent
cholesterol from being absorbed by the body and stored in arteries.
Lipitor, by contrast, works by reducing the amount of cholesterol the
liver produces.

One compound, called avasimibe, seemed to work well in animals.
Despite skepticism from higher-ups, Dr. Sliskovic and his team
persuaded Warner-Lambert to take it into human testing. For a while,
it looked as though avasimibe could be a contender to succeed Lipitor.
But it failed in an intermediate stage of clinical testing, and the
company abandoned it.

Dr. Sliskovic had devoted about six years to the drug. He recalls
needing pep talks from his boss about picking up and starting over. He
blocked out disappointment, he says, by throwing himself into the
day's science rather than thinking about the odds of creating a
marketable drug. "You've got to develop the hide of a rhino," he says.

In the mid-90s, he tried to develop compounds to counter inflammation
in the heart, which some scientists think can cause heart attacks.
Those projects also flopped but got him interested in another area of
research, inflammatory arthritis.

Dr. Sliskovic took on the challenge of finding a drug that would
repair the cartilage that can break down between bones and cause
arthritic pain. But the several compounds he concocted didn't meet
testing requirements. In 1999, Dr. Sliskovic was promoted to a
management role that took him away from the day-to-day work of drug
discovery. He says his new job required him to teach his scientists
how to remain excited in the wake of failure. "It was me who started
telling them, 'Oh well, never mind. What can we do about this other
project?'" he says.

But over time those failures added up. In December 2006, Pfizer killed
torcetrapib, the cholesterol compound the company had placed its hopes
on, because it was associated with too many deaths in clinical
testing. It was a huge setback because Pfizer didn't have much else in
its research pipeline to replace Lipitor's sales. The company relies
on Lipitor for more than a quarter of its revenues, and the drug could
face generic competition as early as 2010.

The company has had some successes: Pfizer appears to have a rich
cancer-drug pipeline and has come up with two notable new chemical-
based hits recently, the antismoking medicine Chantix and a pain drug,
Lyrica, which was discovered in Ann Arbor. The company's new chief
executive, Jeffrey Kindler, has emphasized biotech after taking over
some 16 months ago. In October, Pfizer opened a new biologics center
in San Francisco.

By January 2007, Mr. Kindler was promising to do something radical to
shake the world's biggest drug maker out of its worsening slump.
Rumors of layoffs were swirling at Pfizer. Few imagined anything as
drastic as closing the half-century-old Ann Arbor labs, where Pfizer
was just finishing the $300 million expansion.

Dr. Sliskovic says he learned of the closure on Jan. 22, in a morning
meeting with the site's top managers. The room went silent, he says.

After the meeting, Dr. Sliskovic called his wife on her cellphone to
tell her the news. She thought he was kidding. Realizing he was
serious, she offered to increase her hours at her part-time job at a
pet-food store. Later, at home over lunch, his 19-year-old daughter
asked whether they would have to sell the family's three horses.

The announcement also took Michigan officials by surprise. The state,
which has the country's worst unemployment rate, was already reeling
from auto-industry cuts. Pfizer was also Ann Arbor's largest taxpayer,
contributing $14 million a year into city coffers. At a press
conference later in the day, local officials pledged to fight for
scientists to stay in the area. Later, they pledged $8 million in
interest-free loans for start-ups run by laid-off scientists or
existing companies that hire them. A state-budget deadlock delayed the
money for months, but it is now being handed out to scientists.

Pfizer offered about half of the Ann Arbor researchers internal
transfers, mostly to its other big research facility, in Groton, Conn.
But a higher proportion of those offers went to biologists than to
chemists, former lab employees say. Though it is far from abandoning
chemistry-based research, Pfizer has been increasingly outsourcing
chemistry work to contract research organizations, some in India.
Pfizer declined to comment on which scientists were offered transfers.

In April, about 80 laid-off Pfizer chemists from Ann Arbor traveled to
nearby Detroit to hear a talk by career consultant Lisa Balbes. Ms.
Balbes told them the story of a former chemist who now uses her skills
to enhance acoustics in stereo systems. Her message: Start thinking
about different career paths.

As winter turned into spring, Dr. Sliskovic found himself going to a
parade of goodbye parties for colleagues. Dr. Roth, his former boss,
left in April for Genentech Inc., the biotech pioneer based in South
San Francisco. Dr. Sliskovic organized the send-off. In early May,
David Canter, the head of the Ann Arbor site, threw a dinner party for
other departing employees. A band played songs parodying Pfizer and
the executive who symbolized headquarters' decision-making: John
LaMattina, Pfizer's Connecticut-based head of research. To the tune
from Evita, they sang, "Don't Cry for Me, LaMattina."

A few weeks later, Dr. LaMattina himself announced his retirement, as
part of Mr. Kindler's broad reorganization of top company
executives.Martin Mackay, who succeeded Dr. LaMattina as research
chief and played a major role in the research restructuring, says the
company was "very aware" of its impact on the community. "We made this
decision after very careful and thorough review of all possible
alternatives," Mr. Mackay said in a statement.

Scott Larsen, one of the chemists who attended the going-away party,
came to Pfizer four years ago when the company merged with his former
employer, Pharmacia Corp. He applied for a transfer to Groton but
didn't get an offer. He tells his two sons, who are both in college
and love science, not to go work for a drug company.

In August, Dr. Sliskovic's team stopped doing research and began
transferring projects to other Pfizer sites. The labs are now being
cleaned, inspected and sealed off. The 177-acre campus is a ghost town
of empty rooms and boxed-up equipment.

Dr. Sliskovic didn't seek an internal transfer. He felt that moving
would be too hard on his family.

As acting head of chemistry at the Ann Arbor labs, Dr. Sliskovic
earned far above the $112,000 a year paid to the average chemist of
his experience level. Dr. Sliskovic says he will receive severance pay
for between 18 months and two years. With two children in college and
another in high school, he says, two years is the longest he could
afford to forgo a paycheck.

Dr. Sliskovic has already repainted the family kitchen and living
room. Now he is festooning the house and yard with holiday lights.
Worried about their financial future, his wife, Cindy, took a second
part-time job at the barn where they keep their horses. The irony that
the drug her husband helped discover will bring in nearly $13 billion
for Pfizer this year hasn't been lost on her. As a staff scientist,
Dr. Sliskovic earned no bonus or royalties for his work on Lipitor.

Former Pfizer scientists have founded 23 companies in the area. Dr.
Sliskovic says he would prefer to do the creative work of discovering
drugs instead of the rote chemistry some such companies do for drug
makers.

Instead, he dreams of being involved in another blockbuster.
Sometimes, he says, he lies in bed at night wondering if it will
happen. "If the best thing I did was Lipitor in 1988, it's like being
the high-school athlete who was on the football team and that was
that," he says.

Write to Avery Johnson at avery.johnson@WSJ.com3
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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


Tel: +41 22 791 6727
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