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Sleeping with the enemy
12-11-2006
by Randall C Willis  |  Email the author
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As with the 11-year solar cycle or the 17-year cicada, so it would seem we have entered another phase of consolidation in the pharmaceutical industry as large companies once again look to plug the holes in their pipelines by acquiring smaller companies with late preclinical or early clinical phase projects. Such is likely the case with Merck and its planned acquisition of RNAi specialist Sirna Therapeutics, which we describe in the December issue of Drug Discovery News.
 
An interesting side effect of these acquisitions, however, is the fact that the purchasing company often ends up working for its major competitors because of pre-existing collaborations or service agreements between the competitors and the acquired companies.
 
With the Merck-Sirna case, Merck will be in the strange position of providing GSK and Allergan with future pipeline components through the latter's research and development agreements with Sirna. And to a lesser extent, Novartis will be doing a similar favor for Merck by way of its stake in Alnylam, a company with whom Merck has extensive agreements and another RNAi specialist who is in competition with Sirna.
 
As you can see, it doesn't take long before you end up with a plot so complicated with competing bedfellows that the writers of Desperate Housewives—do I hear Desperate Pharma?—would blush.
 
What does this mean to companies trying to protect their intellectual property? Given the vast amounts of money spend on patent lawyers—both to take advantage of and to seal loopholes—and on computer systems to monitor, redirect, disguise and generally firewall electronic information, I simply can't fathom the hoops through which people must jump to protect their IP.
 
I've often been amused, when talking to corporate scientists, to find that one person often hasn't the foggiest idea about what is going on with colleagues in the next room. If anything, their first clue comes when the work is far enough along or sufficiently safe to be published in a scientific paper or poster.
 
But what makes this situation even more interesting is the fact that many pharmaceutical companies are starting to see significant cuts in their revenue forecasts either because of drugs coming off patent or drug candidates being pulled in late-stage development.
 
Case in point, Pfizer has been in the news several times in the last couple of weeks. First, it announced a 20 percent reduction in its sales staff. Then it was faced with the late withdrawal of its Lipitor follow-up—Torcetrapib—when clinical trials showed an unusually higher incidence of mortality in treated patients.
 
For the sake of Pfizer, we can only hope that these were isolated incidents that were coincidently juxtaposed, but I am afraid that it is likely to be a sign of a growing trend in the industry. How ironic will it be when big pharmaceutical companies that once shunned their neighbors as competitors come to realize salvation (or at least reprieve) based on the revenues they generate from service or discovery contracts with these same companies.
 
It'll be kind of like a situation of robbing Allergan to pay Novartis.

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