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MediChem Research | Merck & Co.

Celia M. Henry
C&EN Washington

Pharmaceutical companies are under increasing pressure to shorten the time required to get a drug to market. One tactic is the formation of partnerships with other companies, or "outsourcing."

Outsourcing has progressively moved to earlier stages of the development timeline. With the outsourcing of clinical trials, "it became established that drug companies were willing to outsource certain tasks, if and when there were appropriate outsourcing options," says Robert J. Olan, an analyst at Chase H&Q in New York City. He describes such activities as chemistry and biological screening as "crown jewels" that the pharmaceutical industry was originally reluctant to outsource. However, that has changed. Olan asserts that pharmaceutical companies are willing to let outside companies perform discovery tasks if those companies can work "better, faster, and cheaper" and if the client's data can remain proprietary.

Drug discovery has evolved such that pharmaceutical companies are trying to ensure that only viable compounds reach the development stage. "A lot of the profiling that was typically done at the early development stage is occurring much earlier in the process," says Martin Stuart, vice president for business development at Tripos, St. Louis. "If you could just pick smarter drug candidates as you go into the early stages of development, you'd not only speed up your process but you'd make substantial savings."

A vast array of companies provide a variety of drug discovery services. Some companies focus on identifying genes and proteins that would make good targets for drugs. The core competencies for such companies tend to be in molecular biology. Further along the discovery timeline, other companies help screen these targets against libraries of small molecules. They provide expertise in synthesis, medicinal chemistry, or high-throughput screening technologies. Still other companies are sorting through the mountains of information.

The reasons behind the decisions of large pharmaceutical companies to outsource depend upon the particular drug discovery company. "In some cases, [the pharmaceutical companies get] early access to technology in which there may or may not be an economic benefit, at least in the near term," Olan says. "The technology is innovative enough and interesting enough that pharmaceutical companies are willing to outsource it to see just how meaningful it is within their drug discovery framework." In other cases, outsourcing may cost less than developing a capability—with its concomitant overhead—within the pharmaceutical company.

Drug discovery companies tend to be small companies that range in size from a handful of employees to several hundred. These companies have grown rapidly, and many of them are poised for further growth. For example, Cambridge, Mass.-based Millennium Pharmaceuticals has grown from 30 people to more than 800 people in six years. And according to Timothy J. Rink, chairman of Aurora Biosciences, San Diego, his company started out with "an empty lab less than four years ago" and now has 250 employees, including part-time and contract workers.

ChemRx, which is also based in San Diego, is a much smaller company. It began a year ago as the chemistry group at IRORI—a combinatorial chemistry instruments, software, and device company—and has reached its current complement of 18 people. David L. Coffen, vice president of R&D at ChemRx and chief scientific officer of its parent company, Discovery Partners International, predicts that ChemRx will grow to 30 people by the end of 2000. "Then we'll run out of space and have to think about a new facility," he says.

SIDDCO—Systems Integration Drug Discovery Co.—has taken an unusual approach to the expansion of its workforce. This Tucson, Ariz.-based company is the hub of a "combinatorial chemistry consortium arrangement," says Arthur J. Elliott, vice president of chemistry. The firm currently has six consortium members (including itself). A consortium member usually funds six employees—three dedicated to its own projects and three who work on libraries shared by all consortium members. Elliott contends that this arrangement provides the consortium members with "leverage."

"We think we can give these small- to medium-sized companies more power to play with the big boys," Elliott says. He anticipates that the company will continue to grow from the approximately 60 employees it has now, 50 of whom are chemists. Expanding the workforce depends on making more deals—both in and out of the consortium.

Another relatively young company is banking on the accumulated experience—more than 200 years—of its employees. According to David Snitman, vice president for business development and chief operating officer at Array BioPharma, Boulder, Colo., the company's scientists have "an innate sense for focusing on creating the drug." Array provides both synthesis services and products to the pharmaceutical industry.

Snitman believes that success in identifying targets with genomics will lead to an increased need for chemistry services. "Chemistry is right now undervalued in the marketplace because all the excitement has really been on discovering and laying claim to these new genomics targets," he says. "Those targets are only going to become valuable if you can discover drugs against them."

Snitman equates the opportunities for drug discovery companies with those of the gold rush of the 1840s. "Although a few people made a lot of money discovering gold, there were a lot more people like the Levi Strausses who provided the tools to those miners," he says.

MediChem Research, a company based in Lemont, Ill., has existed longer than many of the other discovery companies. The 12-year-old firm has steadily grown to 160 employees, 125 of whom are chemists. MediChem emphasizes process chemistry but also develops focused combinatorial libraries for lead optimization.

According to John L. Flavin, vice president of operations, MediChem takes customer service seriously. "We have in our customer service group a dedicated staff of Ph.D. scientists. Their specific job is to talk on the phone or send e-mail updates or web updates to the clients on a daily basis," he explains.

Aurora Biosciences has focused on developing new technologies, particularly fluorescence-based assays, for high-throughput screening. "Our primary goal is enhancing the technology and applying that technology or helping our customers apply it to the medical innovations that they are developing," Rink says. He adds that despite having more than 200 employees, Aurora still has a "can-do culture with a belief that everybody comes to work every day to make a difference."

Some companies provide pharmaceutical companies with the tools to extract information from their data. These companies have strengths in computer and information technology. "Because of changes in the way research is being performed in the industry—with high-throughput chemistry now commonplace and high-throughput screening used by many companies—management of information has become quite an onerous task," Tripos' Stuart says.

Tripos has broadened its range of services beyond the software on which it was founded. "While we continue to design, develop, and deliver software," Stuart says, "we're also using the intellectual property behind the software to do other things like design general and focused screening libraries."

The representatives of these drug discovery companies agree about the main incentives to work at small companies. "Everybody at every level has very clear-cut and very key responsibilities," says Michael R. Pavia, chief technology officer at Millennium Pharmaceuticals. "People here really know that what they're doing on a day-to-day basis at every level is going to contribute to the success or failure of the company."

SIDDCO's Elliott concurs. "Being a start-up, we have limited resources and limited money, so we tend to run lean. Everyone's job and everyone's effort are critical to the success of the company."

These drug discovery companies hail their entrepreneurial spirits as incentives to work there. Pavia describes Millennium as a "driven environment" that attracts "people who want to work really hard, really want to try novel things, and really want to change the way things are done."

At Millennium, potential employees must interview as many as five to 10 times. "The vast majority of the interview process is making sure that people have a burning desire to make a difference and are going to fit in with us culturally. It's not simply enough to be the best in your field. You also have to fit in as a member of our team," Pavia says.

Discovery companies hire individuals at all educational levels, and scientists with bachelor's or master's degrees need not feel that their career growth will be stymied. Array BioPharma's Snitman says, "I don't think we have the same kind of pigeonholing that a pharmaceutical company does in terms of the upward mobility of B.S./M.S. people."

MediChem's Flavin notes, "Many of the people who started here 10 or 12 years ago have a B.S. or M.S. in chemistry and have emerged as very capable project leaders or lab managers. At our company, as you look through the managerial ranks and the ranks of those who have helped us manage our growth, there's a great diversity between Ph.D.-, M.S.-, and B.S.-level scientists. We'll always try to achieve that in the future."

At Aurora, Rink points out that a recently promoted vice president in instrumentation does not have a Ph.D. degree. "A Ph.D. is an indication that a person has been through a certain level of training, and you've got a certain level of expectation," Rink says. "Like most energized and growing companies, we make a lot of demands on our folk, and if they meet those demands and show what they can do, we'll pile opportunity, responsibility, resource, and accountability to whatever level is appropriate, regardless of the letters after their name. The letters after their name give you an indication of what they ought to be able to do, but it's what they actually do and wish to do and can do that will show evidence of having the growth potential that you make your decisions off of."

The discovery companies don't see an upper size limit. "At one level, you'd like never to get bigger than 600 people where you can know everybody," Rink says. "We're a publicly traded high-technology company in a very important growth sector. We will grow this company as fast as we can get this technology deployed to our customers on a sustainable and profitable basis."

Pavia sees no limit to how big Millennium can grow and maintain its corporate culture. "It hasn't really changed from the time we were 30 to now that we're over 800. I don't think I would have personally predicted that you could keep the same culture at 30 people as you have at 800 people. It's my guess and my hope based on our previous history that we can continue to grow as big as we need to be to do what we need to do and retain the culture that we have."

Several companies mentioned a need for medicinal and synthetic organic chemists. "The ideal person for us is somebody who's come out of a synthetic group with a focus on natural products," ChemRx's Coffen says. "If a person happens to have some exposure to combinatorial chemistry or medicinal chemistry, that's icing on the cake. The cake itself is just a real thorough training in synthetic organic chemistry."

According to Pavia, Millennium will be expanding its cadre of chemists as the company prepares "to move downstream into the screening and chemistry areas." Until now, the company has been focused on genomics and discovering drug targets—chemistry has been only a minor component of what Millennium does.

Flavin says that MediChem is most in need of people at the research scientist and senior research scientist levels. However, he says the company is not "desperate for talent." He comments: "As we grow, we try to hire ahead of the curve, meaning build capacity in advance so that our response rate is rapid."

The company representatives complain that high-quality chemists at the bachelor's and master's levels are particularly hard to find. Especially desirable are B.S. or M.S. people with industrial experience. "These are always people that you're anxious to get your hands on," SIDDCO's Elliott says.

Coffen concurs that B.S./M.S. organic chemists are hard to find. "In my experience, the majority of chemistry majors who choose organic chemistry as their major, the best ones will usually go into med school or graduate school."

Other areas particularly in need are analytical chemistry and informatics. "Right now in discovery chemistry," Coffen says, "I'd say the job probably in the highest demand would be for analytical chemists who are able to set up and run the kinds of analytical systems that are needed to support combinatorial chemistry programs."

Snitman agrees. "We certainly need good-quality analytical people, which is becoming more and more important in terms of providing quality products," he says. "Also, computational people and people with experience in information technology, in terms of keeping track of all of this data and being able to create databases and sift through them."

At Millennium, most informaticians are trained in computers, although a scientific background is desirable. "The informatics people are mostly very heavily trained in the computer area," Pavia says. "We try to find people who have pretty extensive experience in the scientific domain—chemistry, biology, clinical trials, or whatever. Then we put them in teams with the specialty scientists." Pavia says that Millennium takes pride in hiring informaticians from other industries. He maintains that hiring people from other industries gives the company a "different perspective."

Tripos' Stuart believes that informatics requires an interdisciplinary approach. "If we go back a number of years, there were very firm divisions between chemistry and biology. We've seen how the industry has benefited from the small interdisciplinary teams that bring many facets of life science together," he notes. "We're seeing the same revolution with informatics. From the Tripos perspective, we continue to look for people who have been trained scientifically in a relevant discipline, but we're looking for multidisciplinary skills in many cases."

In Stuart's experience, only people with industry experience have the appropriate mixture. "Typically, if they come to us from industry, we find that they've been 'cross-pollinated' to the extent that we really like them to be," he says.

The drug discovery companies offer opportunities for rapid advancement. Flavin believes that the size of the large pharmaceutical companies impedes career development. Smaller companies are "attractive to those people who are not only highly talented at chemistry but have the ability to lead a team toward a goal," he says. "They have the chance to make an impact sooner in their careers than they would at their current posts at larger pharmaceutical companies."

Likewise, ChemRx's Coffen says: "When a company triples its size in a year, people who have been around for a fairly short time get to take on supervisory responsibilities fairly quickly. The opportunities for rapid career growth are probably greater here than in a large company where your growth is somewhat more restrained."

The continued growth of drug discovery companies depends on their ability to capture a share of the outsourcing market. As long as they are successful in doing that, they will continue to expand and to provide new career opportunities.

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