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Author: FushiTarazu Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 24983  
Subject: Re: Rosetta's Smooth Genomics Deal with Merck Date: 5/13/2001 10:23 AM
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Ken,

RE: "Can you give me some insight into the mindset of the scientist in the biotech industry? How many scientists in biotech would immediately start looking for a new job if their company were bought out by a BP? Does being a scientist for BP mean immediately that the entrepreneurial spirit is extinguished or at least dampened?"

As you know, biomedical research occurs in three very different places: Academia, Biotech and Big Pharma (BP). I'm sure you will not be surprised to learn that each of these groups look down their noses at the other two! It's kind of like MDs vs. PhDs vs. MD/PhDs (but I promise not to start that argument if you don't)!

Like all PhD-level researchers, I came out of Academia. Academia is largely about focused individual/small group effort. A researcher in Academia will often spend years, sometimes even their whole career, working in virtual isolation, on a single problem that may have no immediate relationship to a practical problem in medicine. But virtually all the discoveries on which our “wonder drugs” are based came out of Academia. The Biotech industry literally wouldn't exist without Restriction Enzymes ( http://almaz.com/nobel/medicine/1978b.html ). Most of the technology for the HGP originated in Academia ( http://almaz.com/nobel/chemistry/1980b.html ). I do not think this will change.

Academia has many attractions, and the average newly minted PhD has been somewhat brainwashed about their desirability. I was. But the cutthroat competition imposed by a shortage of tenure-track jobs in academia (even in the best grad schools, half of all PhDs will not end up on the tenure-track, let alone get tenure), and, at least until recently, a shortage of funding has lead to an increase in dissatisfaction with Academia among graduates. Many are therefore making the jump to industry rather than sticking it out in low-paying non-tenure jobs in academia (the dreaded 10 year postdoc). For a change, many are actually feeling good about it. I can't tell you how many calls I've gotten from postdocs in some of the best labs looking for opportunities. 10-15 years ago, jumping to industry was often considered either an indication of failure or a lack of morals (money over science). However, the increasing visibility of Biotech is rapidly eroding these stereotypes. I'm sure that press coverage of the HGP has helped a great deal. Still, the best students usually come out of the best labs, which tend to be run by old-farts with outdated opinions. But even they are changing. You are not “cool” anymore if you haven't founded a Biotech, or at least serve on a couple of industry SABs (scientific advisory boards).

The attraction of Biotech over BP to someone leaving academia is obvious. The technology is more likely to be what you were reading about in the latest issue of Nature. Biotechs are smaller and more intimate, preserving more of the "basic research" feel of academia. There is more of a chance to stand out and make a visible difference. And they tend to publish more, mostly as PR, but also to attract fresh talent from Academia (actually, my best publications came after I left Academia). In fact, the number one question I get is, "Can I still publish?" Unfortunately, Biotechs are also more likely to go out of business in the next year (but that's something we try not to emphasize during the interview process).

[As an aside, I wonder if the growth of the Biotech industry will force Academia to emphasize the basic in basic research even more. One of the most frightening things an academic can hear is that they are directly competing with a Biotech. Given the money and hands we can throw on a project, there is little chance that the average academic lab can compete head-to-head. CRA vs. HGP is only the most extreme example.]

However, it's a big jump from academia to Biotech. You don't get to choose your own project. It's no longer one scientist:one project, but larger project groups. The dreaded "project management" rears its ugly head before long. Timelines. This is compensated for by the excitement. Working in an entrepreneurial environment. Keeping up with all your friends who work for dot.coms. And actually working on projects that have direct impact on patients. For many, this is the first time in their careers they can successfully explain to Mom why their research is important (for some reason, Mom could never understand why one would want to study cancer in flies; http://almaz.com/nobel/medicine/1995b.html ).

I want to be careful to not cast dispersions on scientists working in BP. There are great scientists there too. Some of my friends. But most of Big Pharma is not about basic research. The clinical and marketing dominates. If you want to do clinical work, BP is where most of it occurs, and in contrast to the average Biotech, they actually know what they are doing. As exciting as the Biotech environment is, the bottom line is that most drugs eventually emerge out of BP. Biotechs are too small to go it alone in the expensive business of clinical trials, and successful marketing requires a critical mass to beat the pavement to doc's doors.

However, because of the increasing importance of technologies employed in Biotech, and expiration of patents for many key BP moneymakers, we will likely see increasing consolidation in the industry. We'll see both mergers between biotechs as well as buyouts by BP (and we saw both this week). Personally, I think the latter will predominate. But a lot of Biotech executives have illusions (or delusions as the case may be) of turning their companies into the next BP. AMGN did it (why do investors still consider them a Biotech, when they've obviously morphed into a BP?). Unfortunately, studies have shown that most mergers don't add to shareholder value and >10% end in absolute failure. Will Biotech be any different? I don't know.

RSTA is a tool company. I've always been skeptical that tool companies can become more than niche players. The markets are just too small. Now they are part of MRK. Given the small size of the market they are targeting, I think it is unlikely that they will be permitted to sell their expertise outside of the parent company. They will have to meet their standing contractual obligations, but the bottom line is MRK needs new blockbuster drugs; they don't need piddly royalties from other company's blockbusters. RSTA will become just another part of Merck. The scientists who are satisfied with the situation will stay. Their salaries might even increase. And those who yearn for the excitement of Biotech (and the chance for pie-in-the-sky options) will leave. I wouldn't be surprised if there were a lot of the latter who are unhappy with their management “selling out the vision”. Probably depends on how much money they made off of the deal. (I know the CEO, and in hindsight, I'm not surprised he sold out.)

I've worked in Academia, I've worked in independent Biotech, and I've worked in BP-owned Biotech. They all have their plusses and minuses. And they are all very different.

Personally, I like independent Biotech, as long as you don't run out of money!

Fushi
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