10 ms·

I am curious what the author thinks about the same problem in pharma/biotech. On the one hand, they are kind of _forced_ to do research in one form or another

I am curious what the author thinks about the same problem in pharma/biotech. On the one hand, they are kind of _forced_ to do research in one form or another to power the pipelines, so clearly corporate research is still alive there. However, given the pathetic track record the industry seems to hace, and arguably complete lack of any real innovation (almost all of the drugs in most pipelines are just antibodies or their variants), some form of corporate research rot seems evident here as well. One problem I see often on pharma side is that it's revealing when the CEO of the org is not a technical person. GSK recruited the CEO of L'oreal as its new CEO. TBH I can't for the life of me figure out how someone who sold lipsticks can make decisions on which preclinical trial has the highest chance of success in a human being. If the CEO of a company is not fundamentally versed in the fundamental technology they make can the company actually be successful?

kitd 6y ago
CEOs are usually business people. The "product" they work with is the development and sustenance of the business and shareholder value. They sometimes have domain knowledge but if they don't, the board should have access to a sufficient supply to make sound technical decisions.
- ramraj07 6y ago
  Their goal is development and sustenance of the business, thats not their product unless they're Berkshire. They can only make products that can be sold profitably if they make products that work. All the marketing in the world can only do so much (not saying it cannot salvage at all) if a drug just doesn't work. And a CEO should know as best as any human can know whether a drug they will be spending billions on has a good chance of working or not. In the end, that's the most important decision for a pharma company and a CEO cannot just outsource it to some other experts. From where I can see that is the reason pharma companies don't deliver as much value as they should be given the investments they make.
  - kitd 6y ago
    Their goal is development and sustenance of the business, thats not their product That's why I put "product" in quotes. The CEO's concern is the business. Domain experts handle the tactical decisions. a CEO cannot just outsource it to some other experts I'm sorry but that is precisely what happens in big business all over the world. Call it "expert guidance" if you want, but if you really think the CEO is solely responsible for making domain decisions, as well as all the business development ones, you're misinformed. They will have views, but those will almost certainly come from the business end, not the domain end. Apart from anything else, domain knowledge can change so fast, a CEO can't be expected to stay at the bleeding edge and manage the business.
trhway 6y ago
>If the CEO of a company is not fundamentally versed in the fundamental technology they make can the company actually be successful? the fundamental technology of modern pharma is the same as the one of cosmetics company - marketing. To convince people that this lipstick or anti-cholesterol drug matches their lifestyle the best, or even more - to sell people on the lifestyle of that lipstick, that drug, etc.
akiselev 6y ago
Pharmaceutical companies largely focus on the mechanical bits of clinical trials, logistics, manufacturing, distribution, marketing, etc because those are much more predictable at the scale of a large multinational. They're not the R&D powerhouses they once were because they have run out of easy small molecule drugs. Since the market size/fit/price sensitivity is extremely predictable and there are so few customers to negotiate with (insurance companies, nationalized healthcare, medical purchasing groups, etc.), this is far more efficient for pharmaceutical companies than having a broad and risky drug discovery pipeline. Instead they acquire early and mid stage biotech companies with promising pre-clinical trial results or phase 1/2 successes - in essence externalizing the risk of early R&D even further to academia, venture capital, private equity, and retail investors. With the increasing availability of easy capital of the last few decades, this has become even more of a win-win for investors and the pharma giants recently.
- marcinzm 6y ago
  Exactly. Pharma companies being large multinationals are very risk averse and very lawyer run. People also underestimate the value of everything except inventing the drug. Everything else costs a lot of money to do and a lot of expertise to do well.
txcwpalpha 6y ago
I think you’re really not giving L’Oreal the credit it deserves. It’s much more than just a lipstick vendor. Sanofi, Europe’s largest pharma company, has its roots in L’Oreal (L’Oreal previously was the parent company of Synthelabo, which used to be the #3 pharma company in Europe until it merged with Sanofi). L’Oreal also does research in things like methods to regrow human skin/hair, which aren’t on the same level as cancer treatments, but they do involve clinical trials and medical research. Hell, even something like launching a new facial moisturizer requires testing akin to clinical trials. Aside from that, Emma Walmsley wasn’t CEO at L’Oreal, and she left there in 2010 to join GSK, where she worked for 7 years before being promoted to CEO in 2017. It’s not as if she went from being some business bean counter straight into being the head of GSK; she had 7 years to build GSK domain knowledge before taking the helm.
- deleted 6y ago
  [deleted]
- ramraj07 6y ago
  Thanks for the context, but I suppose I just couldn't pass up on the poetic phrasing of "selling lipstick" a la Steve Jobs' "selling sugar water" phrase. Point still stands though. Even most of my PhD friends often lack fundamental understanding of how biology works, and I find it hard to believe an MBA can ever catch up no matter how much training they get. I'd argue that in general it also shows - biotechs run by scientists seem to do the actual path breaking research just the same as in technology.
  - scarface74 6y ago
    What good is technology if you can’t bring it to market? The CEO that hires smart and listens to their VPs don’t need to know the technology. Often the “smart people” are the worse CEOs. I would be willing to go as far as saying that Cook may be a better CEO at this point in Apple’s life than Jobs would have been.
  - t_serpico 6y ago
    You don't need to have a deep understanding of biology to have a decent grasp of drug development. You're operating at a higher level of abstraction. You could argue such a CEO wouldn't be able to independently gauge the value of a new innovative medicine or approach, but that's where the CSO and others come into play.
TheSpiceIsLife 6y ago
There’s a school of thought that CEOs don’t matter, or matter much less than we might have imagined. Further reading: https://duckduckgo.com/?q=ceos+dont+matter&t=h_&ia=web https://duckduckgo.com/?q=ceos+dont+matter&t=h_&ia=web
- MarcellusDrum 6y ago
  Did you just link a DuckDuckGo search query and call it "Further Reading"? We know how to search, thank you very much. If you want to help us, you can link a specific book/article, and call that further reading.
  - TheSpiceIsLife 6y ago
    Ah, right, yeah, fair point. My apologies. I vaguely recall reading something on HN a while back, but also didn’t want to get accused here of linking to a biased source as I’m not real familiar with the leanings or any of the ones I found in that search. Bit lazy, but had my reasons. Will try to do better next time.
nmfisher 6y ago
> TBH I can't for the life of me figure out how someone who sold lipsticks can make decisions on which preclinical trial has the highest chance of success in a human being. I'd say a CEO's job is to hire someone who is qualified to make those decisions, and to make sure there's enough money to keep the lights on so they can do that job. In that respect, running a company like L'Oreal isn't so irrelevant. Not saying your broader point is wrong though. Someone needs to have a vision for the future, and I'm not sure you can really have a strong vision without having been through the trenches yourself.
rmrfstar 6y ago
> it's revealing when the CEO of the org is not a technical person Merck's CEO is a lawyer. > they are kind of _forced_ to do research in one form or another Modern pharma companies spend more on legal and marketing than they do on R&D [1]. Valeant and Michael Pearson are emblematic of that horrifying trend. MBA types and McKinsey alums have very different priorities than most hackers/researchers/builders, and it is their priorities that are driving investment decisions these days. That really needs to change. [1] https://www.bbc.com/news/business-28212223 https://www.bbc.com/news/business-28212223
- NalNezumi 6y ago
  I'm not that knowledgeable on Pharma, but wasn't Valeant an anomaly rather than the trend/modern way pharma worked? I mean Michael Pearson was fired, and The Valeant even had to change their name and rebrand after their fraudulent "buy pharma, cut R&D, spike the drug price" scheme was exposed? Or are there more Valeant like pharmas, and them just the tip of the iceberg.
- JunkDNA 6y ago
  Spending more on marketing than R&D has been a favorite thing to zero in on but it's not really a useful metric. See here: https://blogs.sciencemag.org/pipeline/archives/2013/05/23/another_look_at_marketing_vs_rd_in_pharma https://blogs.sciencemag.org/pipeline/archives/2013/05/23/an...
  - rmrfstar 6y ago
    The article you linked isn't great. It attacks a study that no one finds credible, which labeled a company's entire SG&A as "marketing" and found that "marketing" so measured was 10x R&D. It also predates the BBC link. So, what you meant to say is "calling SG&A marketing is not really useful," which is true. But that's not what the linked BBC article did at all.
amaajemyfren 6y ago
The original document seems to suggest that the life sciences, at least as far as publication is concerned, appeared to buck the trend. > ... firms in the life sciences such as Pharmacia, Lilly, Bristol Myers Squibb, Pfizer, and Amgen significantly increased publications. In the case of Pfizer and Amgen in the 2000s, this increase in publishing kept up with changes in R&D expenditures. One key feature of the pharmaceutical industry during this time period was the strong merger activity. However, comparisons with other sectors that also experienced strong merger activity suggests that the publishing behavior of firms in the life sciences was not simply an artifact of merger activity.[1] [1] https://static1.squarespace.com/static/593d9b08be65945a2e878544/t/5d31ac9b33ae9b0001d88216/1563536539717/c14259.pdf https://static1.squarespace.com/static/593d9b08be65945a2e878... Page 29
Gatsky 6y ago
I think the patients doing great with ‘just antibodies’ would take issue with your analysis.
JunkDNA 6y ago
There is a fundamental difference between a CEO at company operating at GSK's scale and for example, a few hundred person startup biotech. It's a mistake that engineers and domain experts make to assume the CEO always needs to be technical. In small companies, this can be a benefit because the CEO is effectively the leader of everything and often has their hands in a lot. But that just does not scale to a company the size of GSK. The challenges of leading a company of the size of GSK are fundamentally different and start to look a lot more like the challenges of leading other big, multinationals.

kitd 6y ago

CEOs are usually business people. The "product" they work with is the development and sustenance of the business and shareholder value. They sometimes have domain knowledge but if they don't, the board should have access to a sufficient supply to make sound technical decisions.

ramraj07 6y ago
Their goal is development and sustenance of the business, thats not their product unless they're Berkshire. They can only make products that can be sold profitably if they make products that work. All the marketing in the world can only do so much (not saying it cannot salvage at all) if a drug just doesn't work. And a CEO should know as best as any human can know whether a drug they will be spending billions on has a good chance of working or not. In the end, that's the most important decision for a pharma company and a CEO cannot just outsource it to some other experts. From where I can see that is the reason pharma companies don't deliver as much value as they should be given the investments they make.
- kitd 6y ago
  Their goal is development and sustenance of the business, thats not their product That's why I put "product" in quotes. The CEO's concern is the business. Domain experts handle the tactical decisions. a CEO cannot just outsource it to some other experts I'm sorry but that is precisely what happens in big business all over the world. Call it "expert guidance" if you want, but if you really think the CEO is solely responsible for making domain decisions, as well as all the business development ones, you're misinformed. They will have views, but those will almost certainly come from the business end, not the domain end. Apart from anything else, domain knowledge can change so fast, a CEO can't be expected to stay at the bleeding edge and manage the business.

trhway 6y ago

>If the CEO of a company is not fundamentally versed in the fundamental technology they make can the company actually be successful? the fundamental technology of modern pharma is the same as the one of cosmetics company - marketing. To convince people that this lipstick or anti-cholesterol drug matches their lifestyle the best, or even more - to sell people on the lifestyle of that lipstick, that drug, etc.

akiselev 6y ago

Pharmaceutical companies largely focus on the mechanical bits of clinical trials, logistics, manufacturing, distribution, marketing, etc because those are much more predictable at the scale of a large multinational. They're not the R&D powerhouses they once were because they have run out of easy small molecule drugs. Since the market size/fit/price sensitivity is extremely predictable and there are so few customers to negotiate with (insurance companies, nationalized healthcare, medical purchasing groups, etc.), this is far more efficient for pharmaceutical companies than having a broad and risky drug discovery pipeline. Instead they acquire early and mid stage biotech companies with promising pre-clinical trial results or phase 1/2 successes - in essence externalizing the risk of early R&D even further to academia, venture capital, private equity, and retail investors. With the increasing availability of easy capital of the last few decades, this has become even more of a win-win for investors and the pharma giants recently.

marcinzm 6y ago
Exactly. Pharma companies being large multinationals are very risk averse and very lawyer run. People also underestimate the value of everything except inventing the drug. Everything else costs a lot of money to do and a lot of expertise to do well.

txcwpalpha 6y ago

I think you’re really not giving L’Oreal the credit it deserves. It’s much more than just a lipstick vendor. Sanofi, Europe’s largest pharma company, has its roots in L’Oreal (L’Oreal previously was the parent company of Synthelabo, which used to be the #3 pharma company in Europe until it merged with Sanofi). L’Oreal also does research in things like methods to regrow human skin/hair, which aren’t on the same level as cancer treatments, but they do involve clinical trials and medical research. Hell, even something like launching a new facial moisturizer requires testing akin to clinical trials. Aside from that, Emma Walmsley wasn’t CEO at L’Oreal, and she left there in 2010 to join GSK, where she worked for 7 years before being promoted to CEO in 2017. It’s not as if she went from being some business bean counter straight into being the head of GSK; she had 7 years to build GSK domain knowledge before taking the helm.

deleted 6y ago
[deleted]
ramraj07 6y ago
Thanks for the context, but I suppose I just couldn't pass up on the poetic phrasing of "selling lipstick" a la Steve Jobs' "selling sugar water" phrase. Point still stands though. Even most of my PhD friends often lack fundamental understanding of how biology works, and I find it hard to believe an MBA can ever catch up no matter how much training they get. I'd argue that in general it also shows - biotechs run by scientists seem to do the actual path breaking research just the same as in technology.
- scarface74 6y ago
  What good is technology if you can’t bring it to market? The CEO that hires smart and listens to their VPs don’t need to know the technology. Often the “smart people” are the worse CEOs. I would be willing to go as far as saying that Cook may be a better CEO at this point in Apple’s life than Jobs would have been.
- t_serpico 6y ago
  You don't need to have a deep understanding of biology to have a decent grasp of drug development. You're operating at a higher level of abstraction. You could argue such a CEO wouldn't be able to independently gauge the value of a new innovative medicine or approach, but that's where the CSO and others come into play.

TheSpiceIsLife 6y ago

There’s a school of thought that CEOs don’t matter, or matter much less than we might have imagined. Further reading: https://duckduckgo.com/?q=ceos+dont+matter&t=h_&ia=web https://duckduckgo.com/?q=ceos+dont+matter&t=h_&ia=web

MarcellusDrum 6y ago
Did you just link a DuckDuckGo search query and call it "Further Reading"? We know how to search, thank you very much. If you want to help us, you can link a specific book/article, and call that further reading.
- TheSpiceIsLife 6y ago
  Ah, right, yeah, fair point. My apologies. I vaguely recall reading something on HN a while back, but also didn’t want to get accused here of linking to a biased source as I’m not real familiar with the leanings or any of the ones I found in that search. Bit lazy, but had my reasons. Will try to do better next time.

nmfisher 6y ago

> TBH I can't for the life of me figure out how someone who sold lipsticks can make decisions on which preclinical trial has the highest chance of success in a human being. I'd say a CEO's job is to hire someone who is qualified to make those decisions, and to make sure there's enough money to keep the lights on so they can do that job. In that respect, running a company like L'Oreal isn't so irrelevant. Not saying your broader point is wrong though. Someone needs to have a vision for the future, and I'm not sure you can really have a strong vision without having been through the trenches yourself.

rmrfstar 6y ago

> it's revealing when the CEO of the org is not a technical person Merck's CEO is a lawyer. > they are kind of _forced_ to do research in one form or another Modern pharma companies spend more on legal and marketing than they do on R&D [1]. Valeant and Michael Pearson are emblematic of that horrifying trend. MBA types and McKinsey alums have very different priorities than most hackers/researchers/builders, and it is their priorities that are driving investment decisions these days. That really needs to change. [1] https://www.bbc.com/news/business-28212223 https://www.bbc.com/news/business-28212223

NalNezumi 6y ago
I'm not that knowledgeable on Pharma, but wasn't Valeant an anomaly rather than the trend/modern way pharma worked? I mean Michael Pearson was fired, and The Valeant even had to change their name and rebrand after their fraudulent "buy pharma, cut R&D, spike the drug price" scheme was exposed? Or are there more Valeant like pharmas, and them just the tip of the iceberg.
JunkDNA 6y ago
Spending more on marketing than R&D has been a favorite thing to zero in on but it's not really a useful metric. See here: https://blogs.sciencemag.org/pipeline/archives/2013/05/23/another_look_at_marketing_vs_rd_in_pharma https://blogs.sciencemag.org/pipeline/archives/2013/05/23/an...
- rmrfstar 6y ago
  The article you linked isn't great. It attacks a study that no one finds credible, which labeled a company's entire SG&A as "marketing" and found that "marketing" so measured was 10x R&D. It also predates the BBC link. So, what you meant to say is "calling SG&A marketing is not really useful," which is true. But that's not what the linked BBC article did at all.

amaajemyfren 6y ago

The original document seems to suggest that the life sciences, at least as far as publication is concerned, appeared to buck the trend. > ... firms in the life sciences such as Pharmacia, Lilly, Bristol Myers Squibb, Pfizer, and Amgen significantly increased publications. In the case of Pfizer and Amgen in the 2000s, this increase in publishing kept up with changes in R&D expenditures. One key feature of the pharmaceutical industry during this time period was the strong merger activity. However, comparisons with other sectors that also experienced strong merger activity suggests that the publishing behavior of firms in the life sciences was not simply an artifact of merger activity.[1] [1] https://static1.squarespace.com/static/593d9b08be65945a2e878544/t/5d31ac9b33ae9b0001d88216/1563536539717/c14259.pdf https://static1.squarespace.com/static/593d9b08be65945a2e878... Page 29

Gatsky 6y ago

I think the patients doing great with ‘just antibodies’ would take issue with your analysis.

JunkDNA 6y ago

There is a fundamental difference between a CEO at company operating at GSK's scale and for example, a few hundred person startup biotech. It's a mistake that engineers and domain experts make to assume the CEO always needs to be technical. In small companies, this can be a benefit because the CEO is effectively the leader of everything and often has their hands in a lot. But that just does not scale to a company the size of GSK. The challenges of leading a company of the size of GSK are fundamentally different and start to look a lot more like the challenges of leading other big, multinationals.