Drug Companies Should Think Smaller (SNY)

Drug Companies Should Think Smaller

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By Kris Eddy
November 12, 2009 | Comments (2)

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"Betting the farm and waiting for the next blockbuster is not going to work," sanofi-aventis (NYSE: SNY) CEO Christopher Viehbacher told Forbes Magazine in its most recent issue. With patents expiring on big sellers, all the large pharmaceutical companies have to do something.

Sanofi's collaboration with Regeneron Pharmaceuticals (Nasdaq: REGN) seems to fit into something Forbes explained about Viehbacher's way of thinking:

... the problem with drugmakers' R&D isn't a lack of money but a failure to exploit innovative thinking. To that end [Viehbacher] is changing the structure of the research labs, from monoliths to smaller units that are either entrepreneurial (racing to develop a drug) or exploratory (looking for new biology to study).

Blockbusters have been harder to come by. Is Viehbacher's solution the way for Sanofi and competitors like Pfizer (NYSE: PFE), Merck (NYSE: MRK), and Bristol-Myers Squibb (NYSE: BMY) to go?

Sound off in the comments box below.

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Kris Eddy owns no shares of companies mentioned in this article. Pfizer is a choice of the Inside Value service. The Fool has a disclosure policy.

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Report this Comment On November 12, 2009, at 6:31 PM, TMFBiologyFool wrote:

Pfizer is already headed in that direction with smaller research groups and Sanofi's outsourcing drug development to development-sage drugmakers isn't new -- Glaxo has been doing it for years.
If you're going to shun blockbusters (and there's certainly valid reasons to do so with a limited number of large treatment areas left), orphan drugmakers like Genzyme or BioMarin seems to be the way to go.
-Brian
Report this Comment On November 13, 2009, at 7:41 PM, DDHv wrote:

I once read that research in a given subject tends to work best with small groups, combined with a large amount of communication between groups. Don't know if it is true, but the small groups would encourage trying out of multiple ideas, and the intercommunication would reduce duplications.

BMY	$24.46		+0.43	+1.79%
Bristol-Myers Squi…		CAPS Rating:

MRK	$36.46		+1.13	+3.20%
Merck & Co., Inc.		CAPS Rating:

PFE	$18.36		+0.25	+1.38%
Pfizer, Inc.		CAPS Rating:

SNY	$37.67		-0.01	-0.03%
Sanofi-Aventis (AD…		CAPS Rating:

REGN	$18.46		-0.21	-1.12%
Regeneron Pharmace…		CAPS Rating:

Drug Companies Should Think Smaller

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Comments from our Foolish Readers

Report this Comment On November 12, 2009, at 6:31 PM, TMFBiologyFool wrote:

Report this Comment On November 13, 2009, at 7:41 PM, DDHv wrote:

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