‘The Reward for Innovation Is Very, Very High.’
From the March/April 2007 Issue
Kevin Sharer of Amgen, the world’s largest biotech firm, talks about threats and encouragements to developing the best pharmaceuticals.
A graduate of the U.S. Naval academy who served on nuclear attack submarines, Kevin Sharer has a master’s in aeronautical engineering and an MBA. He became CEO of Amgen, the largest biotech company in the world, in 2000 after working at General Electric and MCI. Among Amgen’s top products are Epogen, for patients with kidney disease, and Enbrel, for rheumatoid arthritis.
The American: What sets the American economy apart?
Kevin Sharer: The first thing is that we have an enormous talent flow here, both from external immigration and from internal sources. Two, we’ve got a society of laws, and they make innovation possible. Finally, we’ve got a gigantic market that is hungry for, quickly adopts, and, in fact, demands innovation. And there’s the strong role that government and academia play in basic research.
We’ve also got capital formation possibilities both in the venture world and in the broader capital market, so the reward for innovation is very, very high and quite certain if you can have a company that works. There are so many examples. You might start with Google, or you might even think about Amgen. Twenty-six years ago a few people showed up here, and today we’ve got an $85 billion market cap.
Do biopharmaceuticals get enough protection from government against threats to intellectual property from abroad?
Most responsible policy makers and legislators in Washington understand the value of the biopharmaceutical industry, which is overwhelmingly concentrated in the United States, and they understand that intellectual property is the bedrock of that industry. I’m more worried, though, about insidious things like importing some other country’s healthcare system, in effect—for example, importing drugs from Canada. That threatens the foundation of the industry. Unfortunately, Canadian drug prices also correspond to Canadian innovation in biopharmaceuticals, which is zilch.
What about litigation?
‘I feel for our colleagues at Pfizer. They must be enormously disappointed, and I feel for the patients.’
It’s a gigantic threat. If you look at how much money Wyeth paid out in the Fen-phen case [the anti-obesity drug that combines fenfluramine and phentermine]; if you look at how much money Merck is spending [on Vioxx cases]. It’s not just our industry. Take asbestos. The list goes on. Clearly, the plaintiff’s bar is completely out of control, and it is a big drag on the American economy.
There has been talk that the drug pipeline has been very sluggish. Others say it’s robust. Where do you come down?
In terms of the attention of management, the amount of resources invested, and the number of people working on it, the effort toward innovation has never been higher—both in the pharmaceutical industry and the biotechnology industry. Because our products have a 20- to 30-year product-development time span, it’s hard to take a snapshot at any period and make a sweeping conclusion.
It just happens that, at this part of the cycle, biotechnology companies are coming up with a lot of interesting new molecules, and the pharmaceutical companies are turning into a bit more of clinical testing powerhouses and marketing companies, and that’s sort of the natural order of things.
Late last year, Pfizer had to kill a drug—torcetrapib, for heart attacks and strokes—on which it had spent $800 million. Is that a comment on Pfizer’s management, on litigation, or just the way the business works?
I feel for our colleagues at Pfizer. They must be enormously disappointed, and I feel for the patients. Pfizer’s been the lead when it comes to developing medicines for cardiovascular illness. I certainly don’t hold Pfizer’s management accountable. They saw the science looked good. The early clinical data were promising. The leading cardiologists in the world were very supportive. But that’s the nature of our business. When you try to push the envelope in science and medicine, you’re going to fail once in a while.
What we can expect from Amgen in the next few years?
We try to develop innovative molecules for grievous illness, and that translates into the biggest possible challenge. We also, in a strategy sense, have multiple modalities. We’ve got small molecules, proteins, antibodies, peptibodies.
The result is that we have at least three or four molecules in late-stage development that could be really, really important to patients. Probably the leading one is called denosumab. We’re investing $500 million in it this year. It has potential in osteoporosis and bone cancer. We’re very optimistic about the future.
Photograph by Fran Collin