Top Pharma CEO Gambles on Research

April 27, 2011  |  

(Businessweek) — In early January, not two weeks into his job as chief executive officer of Merck (MRK), Kenneth C. Frazier got word that a safety panel had shut down a nearly completed 13,000-patient study of an experimental drug. It was vorapaxar, a blood thinner touted as the prize jewel in Merck’s pipeline. Some analysts had predicted sales could reach $5 billion a year.  Despite the setback, the litigator, 56, with just three years of operational experience at Merck, announced on Feb. 3 that the company was doubling down on new-drug development and plans to spend as much as $8.5 billion on research in 2011. That hefty sum vaults Merck to the top ranks of research spending worldwide, neck-and-neck with longtime leaders Pfizer (PFE), the world’s biggest drugmaker, and software giant Microsoft (MSFT).  Stumbles like vorapaxar are, in Frazier’s view, the price of doing business in the drug industry. “Scientific innovation is hard, it’s complex, it’s risky, it’s uncertain as to timing,” he says. “At the same time, we have huge opportunities. That’s the way a company like Merck needs to exist in the world.”

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