The Laszlo Letter

The Changing Role of CIOs

If you are a regular reader of this blog, you have no doubt noticed that I have not posted anything since the 8th of April. Please accept my apologies for this with the explanation that both business and personal commitments have severly limited the time available for "extra-curricular" writing. This post will be no different since I'm not going to write an original post.

However, I am pleased to report that I was given a fair amount of space in the latest issue of Pharmaceutical Executive Europe. I took that opportunity to focus on two topics:

1. the changing and ever more important role of the CIO in our industry, and
2. three key challenges that CIOs must focus on over the next few years

So, if you click on the "space" hyperlink above, you will get a pretty large dose of my opinions. As always, I will welcome your comments on them either here or the Pharmaceutical Executive Europe web site.

Quotations from FDA CDER Head Janet Woodcock

Notes from the 23^rd DIA CDM conference

In the next few posts, it is my intention to share with you some of the information presented at the 23^rd DIA Clinical Data Management (CDM) conference. It is also my intention to give you some of my own thoughts about what I saw and heard.

The title of the conference was “Data Management in Transition: Putting the “e” in Data Management.” I am happy to report that the conference organizers did a great job keeping the majority of speakers focused on this topic. So, kudos are in order for Sue Dubman (Theravance), Kristin Neff (Boston Scientific), Paul Bleicher (Phase Forward), Shahla Farr (FDA), Rebecca Kush (CDISC), Denise DeRenzo Lacey (Waife & Associates), Johann Prove (Bayer Schering Pharma), Don Rosen (Rosen Consulting) and Steve Wilson (FDA.)

I could not think of a better approach to get things rolling than to simply convey several quotations from the talk given by the conference keynote speaker, Janet Woodcock MD, of FDA. As you may know, Dr. Woodcock was recently put in charge of CDER and she wasted no time telling us what she thought her division, and indeed all of FDA, should be doing.

These quotes nicely reinforce the tone of the CDM conference, one that was palpable if not always directly stated, namely that The time for change has arrived.

While I was initially tempted to put these quotes in context, I resisted that urge since they are as applicable to what we do in general as to the specific issues being discussed by Dr. Woodcock.

So, mull these over at your leisure and stay tuned for more about the meeting in future posts.

Quotations from Janet Woodcock

“current methods are not sustainable”

[there is] “almost a crisis in the United States to get clinical trials done”

“there is too much data being collected”

[we] “need to link EHR to clinical trials”

“we need to get out of the way we are doing things now”

How big an IT staff do you really need?

It's Sunday and thus a relatively peaceful day. A day that gives me a chance to see what others are writing about our industry.

So, I wanted to share with you a quite sobering and clinical piece about the method a drug company should/could use to figure out how many people they need to run their R&D operations. The post appears on the IN VIVO blog.

Now, I don't particularly want to say anything about this post since you can just as easily read it yourself. What I do want to do is pose a question to the biopharma CIOs out there: "Have you ever thought about determining optimal and/or minimally sufficient IT staffing levels using a strictly clinical approach?"

This reminds me of that craze from the late 1970's called "zero based budgeting (ZBB)," that our then President, Jimmy Carter, brought into use for the federal budget. According to this article, ZBB "puts the burden of proof on the manager, and demands that each manager justify the entire budget in detail and prove why he or she should spend the organization's money in the manner proposed." It matters not whether the program being budgeted already exists or is brand new. It has to be justified/re-justified with each new budget cycle.

The approach suggested by the IN VIVO post seems to make a lot of sense to me at a time when the biopharma industry is going through tremendous upheaval and a prolonged period of meager new product introductions. Add to these the pressures on drug pricing, product litigation, greater reliance on outsourcing, budget cutbacks, staff reductions and many other factors, the CIO can no longer simply increase the IT budget by a few percentage points.

Whatever budgeting approach is taken, it must incorporate several key elements:

1. A true understanding of the corporate mission and product strategy;
2. An impact analysis on IT programs of the mission and product strategy;
3. A critical evaluation of required current and future IT skills within the organization;
4. A determination of what skills need to be retained, dropped or outsourced;
5. A prioritization of IT projects including an impact analysis related to the consequences of non-implementation or cessation;
6. A systematic evaluation of the IT infrastructure and the opportunities available for consolidation and/or replacement to achieve maximum performance at minimum cost; and
7. An analysis of key applications/services and the potential for license fee reductions (with current or alternative vendors) or migration to a SaaS model.

Doing all of this will not be easy or pain free. Realistically, it can only be done properly if the budget preparation is begun at least a year before the start of the next fiscal year. Just how many CIOs will have the stomach for this is not clear to me. I do know, however, that the current approach is no longer sufficient.

2008: IT budgets to fall?

If the pundits are right, IT budgets will be smaller next year. Or, to put it more correctly, the percent increase for 2008 over 2007 will be less than the percent increase for 2007 over 2006. Are you still with me?

As an example, take the recent article by John Soat of Information Week, who cites two separate surveys involving CIOs. Both predict smaller budget increases for 2008. Mind you, this is across all industries and it's not clear what will happen in the Biopharma sector.

We can guess, however, that based on the somewhat dismal performance of most pharma and some biotech companies, CEOs will be looking for savings wherever they can be found. And that includes IT.

From my perspective, this is quite unfortunate since I am convinced that our industry has squandered countless opportunities to leverage information technologies to improve both day-to-day operations and improve the R&D pipeline. If you want examples, I'll give you several:

• document management and electronic publishing
• data management and exploration
• electronic data collection (EDC)
• clinical trial management
• master data management

Now, you may be saying: "Is this guy nuts? These are the areas where we have made the most progress!"

And no, I'm not nuts. These are great examples where lots of time and money have been wasted or investments underperformed. Despite glowing reports at DIA meetings and other venues, the reality is that we still don't know how to properly leverage IT.

I'll offer just a few reasons why our IT dollars/euros don't get us the returns we need:

1. Lack of resolve and leadership to change course;
2. Continued disconnect between the business community and the IT organization;
3. Missing or half-baked strategy for improving productivity;
4. Cowardly management disguised as management by consensus;
5. Focus on regulatory compliance rather than operating efficiency;
6. Failure to create a learning and innovative organization;
7. Over-reliance on selecting technology rather than setting strategy that drives technology.

So, it's possible that we don't actually need to increase the IT budget. Maybe it would be enough to just stop wasting it.

Biopharm IT Leaders - The Infoweek 500

The 19th Annual Information Week 500 list has been published.

Here, we will only concentrate on the Biotechnology and Pharmaceutical companies that made the list.

As the publication states, "to be ranked, companies with at least $500 million in annual revenue are asked to complete a qualifying application that examines business technology strategies. The application contains a quantitative section on technology initiatives and priorities, and a qualitative section of essay questions. The responses to these two sections are evaluated, weighted, and combined into a total score to rank the companies."

The following Biotech and Pharma companies made the list:

• BD Biosciences
• Beckman Coulter
• Eli Lilly
• Genzyme
• GSK
• Merck
• Pfizer
• Roche Diagnostics
• Schering Plough
• Solvay
• Thermo Fisher Scientific
• Wyeth

Of these, only three made it into the top 250 list. These are:

• Eli Lilly - #50
• Wyeth - #59
• Roche Diagnostics - #231

Read on to learn a bit more...

Leadership - The Fortune Rankings

Under the heading "Leader Machines", the October 1, 2007 issue of Fortune magazine listed the top companies around the world where leadership is taken seriously.

Although no Life Sciences companies made it into the Top 10, there were three in the Top 20:

• #12 - Medtronic
• #13 - Eli Lilly
• #17 - Glaxo SmithKline

So why, exactly, did these three companies make the list?

Bridging Pharma and IT

"The beatings will continue until morale improves!"

I was reminded of this quote on receiving a brochure from Cambridge Healthtech Institute (CHI) promoting their upcoming "3rd Annual Bridging Pharma and IT" conference. For those who are interested, the meeting will be held in Boston from September 30 to October 2, 2007.

The quote popped into my head after a momentary feeling of dismay that after 20-30 years of discussion this "bridge" has still to be completed. Apparently there has been much talk and little action. Or perhaps, more correctly, very little effective action.

And so, we continue to "beat" the issue in hopes of positive progress. I'd like to suggest, however, that a different approach is needed. Perhaps one that does not require bridges at all.

But first, let me give you my take on this conference.

Merck - The Born Again Pharma Giant

It should come as no surprise that people are moved to action only when tragedy strikes.

Such is the case with Merck, a company that for years lived in a cocoon of complacency. Yes, this was a much admired company that had a right to boast of its research and marketing muscle. As it often happens, inertia set in and it became easier to go with the status quo rather than seek continuous improvement. The latter, of course, requires being honest with yourself

Now, following the Vioxx debacle, Merck seems to have woken up. It is taking steps that should have been taken in any case. What I'm suggesting, of course, is that Merck had problems wholly unrelated to Vioxx that needed fixing.

Witness the latest article in Business Week, wherein CEO Richard Clark confesses to the inertia noted above. Here is just one quote from that article:

"Clark had watched the company degenerate into a collection of fiefdoms more focused on advancing their own agendas than on getting the right drugs to patients."

2007 IT Resolutions for CIOs

On this first day of 2007, I'd like to suggest a few resolutions for potential adoption by CIOs within the life sciences industry.

While there's a laundry list needing the undivided attention of anyone trying to do IT right, the following three top my concerns:

1. Changing the Operating Model of IT
2. Consolidating IT Assets
3. Adopting a Holistic Approach to IT

Each of these deserve lots of scrutiny and discussion followed by action. It is not my intention, however, to belabor any one of these. I will be happy if you simply give these serious consideration and then take steps to make things happen.

So, fasten your seat belts and read on...

Note to Jeffrey B. Kindler: Take Pfizer Private

Wall Street pundits began to question whether Jeffrey Kindler was the right guy to run Pfizer no sooner than it announced the halt of all torcetrapib trials.

Perhaps I'm missing something. I was under the impression that getting a drug out of the lab and through clinical trials takes a bit longer than six months*. So, in what way can Mr. Kindler be held responsible for the failure of this compound?

Is he to blame since he is a lawyer and not a scientist? Is he to blame because he is part of the collective management group within a very large pharma company? Is he to blame bacause he did not demand more input from his management team?

These questions, of course, don't make sense.

So, what is a company like Pfizer to do when the short term mentality of the investors is at odds with the long term reality of drug discovery and development?

I say, it's time to take Pfizer private. After all, the energy it takes to keep the investors happy is a huge distraction at best and leads to bad strategic decisions at worst.

Am I off base? Let me know what you think.

* - Note: Jeffrey Kindler was named President of Pfizer on July 28, 2006