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March 10, 2003 | Philip Ma is a partner in the pharmaceutical, biotech, and medical devices practice at McKinsey & Co. A molecular biologist by training, Ma advises companies about their R&D strategy and productivity. He spoke with Bio·IT World's Mark D. Uehling.

Q: In reports and scholarly articles, you've suggested the cost of a new chemical entity could rise steeply. It's $800 million now. How high could it go?
A: When we did the work in concert with Lehman Brothers, I think it was $1.2 billion.

Q: Are clients concerned about that?
A: They're not comfortable at all. They are very concerned about the increasing cost. I think there is a lot of heat on R&D organizations.

Q: Will R&D dollars be spent outside large companies as a result?
A: That's happening already. There are lower cost areas for doing research. People are doing clinical trials in Eastern Europe, in Asia. They are working with companies in India, doing basic chemistry and bioinformatics.

Q: Has the pharmaceutical industry adopted some new technologies prematurely?
A: It was part of the excitement about the genomics industry — they were afraid of being left behind. Well, reality has set in. And, at least with the companies I talk to, they are being much more careful before they jump into [new technologies]. The result of which is, it is not a great environment to be developing tools. The customer has just gotten a lot more skeptical.

Q: Has technology made drug discovery messier?
A: When something is new, people are unclear about the best ways to use it. I wouldn't say technology has made things worse. It has made life more complicated. Any change in technology offers new opportunities, new pieces of information, which are always valuable.

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