We’re not into high science R&D; we’re into making money

My recent thinking on Pfizer may be a slight case of jumping the gun.  Pfizer isn't shedding 100% of its R&D, although it is reducing its spend from around $9.4 billion last year to perhaps as little as $6.0 billion in 2012.  A massive decrease but still a huge investment (second only to Roche).

My argument is better made by Valeant, a Toronto-based company run by a J Michael Pearson,  ex-McKinsey consultant.  Instead of the usual combination of medics, pharmacists and scientists, Valeant has assembled a group of very smart venture capitalists as its board of directors.  Everyone's favourite Pearson quotes come from a recent Bloomberg profile: -

We’re not into high science R&D; we’re into making money.

We’re looking for companies that have products in them that we could grow and maybe do a slightly better job than current owners.

The thinking is that there's room for one or two of these in the market but no more than that.  An entire industry that thinks in this way will become increasingly risk averse, giving less leeway to researchers to follow that 100-to-1 hunch that leads to the Next Big Thing.

And let's not forget that because this is pharma, that Next Big Thing is almost by definition a further alleviation of human suffering.