Nov. 15, 2006
| Out of an annual R&D budget of $2.7 billion, Wyeth spends $350 million annually on drug discovery. The company is proud of its productivity, which head of discovery research Frank Walsh says is much higher than for other companies. But despite the company’s increased drug output in recent years and an innovative pipeline, Walsh says, “We need to run many more projects. We want to increase productivity in a world where we don’t have the luxury [of unlimited] funds.”
Earlier this year, Wyeth signed a five-year chemistry deal with India’s GVK Biosciences. The deal — the largest chemistry collaboration to date between big pharma and India — is unusual in that Wyeth has opted for a major partnership with a single organization, rather than multiple collaborations with smaller providers.
“We look at each part of business and try to identify areas where we can make economies and do more work with the same amount of money,” says Walsh. “That’s how we got into chemistry outsourcing. We have more projects than we have chemists for... We needed more chemistry.” In fact, Walsh’s group had promised headquarters a 25 percent increase in productivity.
Wyeth’s reliance on outsourcing was relatively modest compared to some companies. In the area of chemistry, Wyeth was spending $6-8 million with companies such as Albany Molecular, ArQule, and NIKEM in Italy on library synthesis and medicinal chemistry. But the average cost was steep — $250,000 per full-time employee (in salary and reagents) per project.
The global search for chemistry partners began with more than 90 prospects, but was whittled down to half-a-dozen short-listed candidates in Asia and Eastern Europe. Wyeth put pilot projects with each of the companies. GVK won the final contract, but “it was a close thing,” Walsh admits, with four companies from India and China almost too close to call. “We agonized over this!” Walsh says. Ultimately, he says it was “the quality of the management, the quality of the chemistry workforce, and the vision of the company that won out.”
GVK wasn’t an unknown quantity. Says Walsh: “They’ve been working with a number of major pharmas in chemistry; they also have a very strong IT and computational chemistry and bioinformatics business. They’ve been building up as a provider of other drug discovery services.” In August 2005, Walsh and colleagues met the GVK management and toured the facilities. Three months later, they signed the contract.
The Wyeth deal provides GVK with a commitment to build new facilities in Hyderabad, which will be finished by summer 2007, including a dedicated facility for all of the Wyeth-associated GVK chemists. The deal may have implications for the entire pharma industry. As GVK’s largest client, Wyeth’s commitment to a single partner, “may change the way other companies partner with Asian companies,” says Walsh.
GVK will be working on projects impacting all five of Wyeth’s therapeutic areas, including library construction, hit to lead chemistry, and natural product intermediates: “A lot of areas that feed into our early portfolio and are starting to have an impact,” says Walsh.
For Wyeth, the deal is about capacity rather than capability. “They have very strong capability, but one of the more unique features is that we’ll benefit from having the Wyeth staff working closely with GVK, and we can have GVK working on the same projects as Wyeth. So we’ll have staff in Hyderabad, and GVK leaders visiting the US to obtain training. In time, you won’t be able to distinguish the two,” says Walsh.
Walsh expects that chemistry will evolve into other areas of the drug discovery organization. “If this goes well, we may want to start outsourcing additional chemistry, e.g. more biological type experiments, DMPK work. Once you have those pieces, you have a drug discovery organization — that’s a direction that Asia will be going in the future.”
Aside from greater expertise in medicinal chemistry, Walsh acknowledges that Asia will play an expanding role in big pharma drug discovery. “We’re talking about close collaboration rather than giving someone a task, but it may evolve into that in a very long period of time.” -- K.D.
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