Crisis in the Pharmaceutical Industry and the Promise of New Biology

Abstract

When Tadataka Yamada arrived at GlaxoSmithKline (GSK) as the new CEO, following the merger of SmithKline Beecham and Glaxo Wellcome in 1999, he found the company in serious decline in terms of its productivity and innovative capabilities. His first major decision was to initiate a new creative approach to research and development (R&D); restructuring the organization and management of R&D by dividing the company’s 1,900 discovery scientists into six Centres of Excellence in Drug Discovery (CEDDs), each focused on a specific therapeutic area. A seventh CEDD focused on biopharmaceuticals and a “virtual” Centre of Excellence for External Drug Discovery were later established. The impetus for Yamada’s restructuring program was his growing skepticism about the traditional pharmaceutical model of R&D that the large multinational firms had pioneered. In particular, he questioned its reliance on a very centralized and bureaucratic decision-making structure, and was uncomfortable with the artificial distinction between the discovery and development phases of research. The philosophy of the CEDD “hub and spoke” model was to confront GSK’s productivity problem by creating relatively autonomous and geographically diverse R&D units that would replace many of the functions of centralized management systems for the middle stage of R&D (clinical development), where many drugs tend to fail.