Voices from Wall Street

From last week's C&EN, an article on Amgen's strategies by Lisa Jarvis:

Another area where Amgen draws a line between itself and its peers is its commitment to R&D. Although many competitors have made significant cuts to their research budgets, Sharer said the company will continue to invest 18 to 20% of sales in R&D. “This is not an activity where you cost cut your way to success,” he said. 

Investors, meanwhile, had been hoping to see Amgen focus on cost efficiency in its R&D operations and potentially drop some of its less promising discovery programs. 

Prior to the meeting, Leerink Swann analyst Joshua Schimmer had conducted an in-depth analysis of Amgen’s new drug pipeline and identified compounds that he views as too similar to other drugs in development or too risky. “While we were not disappointed that high R&D spend continues, we were disappointed that there was not a clearer message that more low-value pipeline products we previously identified would be culled and replaced with higher-quality in-licensed and acquired late-stage programs,” he wrote to investors. 

Amgen, however, underscored its success in R&D compared with its competitors and said it is committed to partnering and to making tough decisions about its pipeline. To be successful, Sharer said, Amgen needs to “stop projects when they won’t work, have a risk appetite, … and go outside the company nearly as often as you go inside.”

It's all here, folks, which is kinda fun. You want business types (a MBA, even!) from Wall Street telling CEOs where to spend drug company dollars? You got it. You got CEOs saying that they're not going to cut R&D? You got that, too. Best of luck to Amgen, which does really seem to be one of the few companies that hasn't been swinging the ax recently (although maybe that's just my poor memory.)

I've always wondered: what must it be like to be a stock analyst on the pharmaceutical beat? Does Ian Read quake every time Barbara Ryan opens her mouth to speak on Pfizer stock? I would.

One final, weird note on the major pharmaceutical companies and personal finance and Wall Street: who does Dr. Schimmer and Barbara Ryan represent? Well, to a very minor extent, "future" me. I don't directly own any pharmaceutical stock, but I have a reasonable amount of retirement-oriented money in various index and mutual funds. All of their directors (and employed business analysts, etc.), I'm sure, are breathing down the necks of CEOs of companies that I (directly or indirectly) work for, pushing them to increase profits and cut costs. I am sure this is not the only time that the interests of "Present CJ" and "Future CJ" will conflict.