At its birth in 2000, the executives who created GlaxoSmithKline crowed that the company would unleash a cabinetful of new medicines. ''We will be the kings of science and innovation,'' Dr. Jean-Pierre Garnier, the chief executive, said at the time.
Three years later, GlaxoSmithKline is still a long way from its coronation.
The company has introduced just three new medicines, only one of which it discovered. Indeed, nine top scientists who recently left Glaxo said they believe its laboratories' productivity was getting worse, not better. ''It's a disaster,'' said one of them, Dr. Peter G. Traber, who was the company's chief of clinical development until February.
What went wrong? According to Dr. Traber and others, the very thing that was supposed to bolster the labs' output -- the merger -- has instead hampered it.
If they are correct, GlaxoSmithKline's problems could have implications for the entire industry. Poor lab productivity is bedeviling almost every drug company. Across the industry, introductions of new drugs plummeted last year to 17 from a high of 53 in 1996, despite a near doubling in annual research spending, to $32 billion.
To survive the long drought at the lab, many executives have concluded that one company is better than two. The $400 billion worldwide pharmaceutical industry has rapidly consolidated; 38 major drug companies have merged since 1994. And at nearly every major merger announcement, executives said that lab synergies were a driving force behind the deals.
But many scientists say that if mergers are executives' cure for poor pipelines, the medicine is making the patient sicker. And they point to Glaxo, the world's second-largest pharmaceutical company, after Pfizer, as proof.
''The effect of mergers on research productivity is an issue that this industry has yet to deal with,'' said Dr. Traber, who left Glaxo to run the Baylor College of Medicine in Houston, one of the nation's top centers of biomedical research. ''You save a bit of money, but it's disaster to the labs.''
David Webster, president of the Webster Consulting Group, which specializes in the drug industry, said that his research confirms Dr. Traber's conclusions. Mr. Webster noted that many of GlaxoSmithKline's top scientists left voluntarily shortly after the merger. A major reorganization in the midst of a merger, Mr. Webster said, increased the uncertainties for all and made even basic decisions difficult. ''The outcome of all of this was a 'Lord of the Flies' kind of chaos,'' he said.
Where Are All the New Drugs?
by Gardiner Harris
October 5, 2003
