Killing the Future

A recent article in the Harvard Business review by William Lazonick points out that from 2003 to 2013,  88% of the earnings of those 449 companies in the S&P index that were publicly listed were used for stock buybacks (51%; $2.4 trillion) or dividends (37%).  It's annoying for those of us trying to perform R&D. Pfizer, for example, spent 146% of its profits in those 10 years on buybacks and dividends. In other words, it dipped into its capital reserves to help fund them.

Buybacks drive up share prices artificially, thus lining the pockets of short-term investors and executives. Hence, the enormous recent stock market boom.

But this boom is artificially pumped up, based on thin air; an illusion. Crazy.

Corporations need to stop tying executive compensation to stock prices and stop open-market buybacks. Only when profits are turned into R&D investment will there be a future for the US economy.

Big Pharma and Science

We've been talking recently with "Big Pharma", and this has made me reflect on the state-corporate nexus in high-tech R&D.

Much of the background work needed for targeted drug development is done in academia; the identification of disease-related biological phenomena, the testing of hypotheses concerning modification of these, target identification and validation, and early-stage pre-clinical development. As a compound transitions from 'hit' to 'lead' and is more and more validated, it gains commercial value, and at any time companies can jump in to bring the product to market through further preclinical optimization and clinical trials. Somewhere there's a transition between typical academic work and industry,  and that's where things are interesting. For example, both pharma and academia engage in high-throughput hit discovery and lead generation.

 Early-stage discovery in academia tends to be sustained. For example, an NIH project  in which we participate has  5 years of funding to come up with new drugs against antibiotic-resistant bacteria. If researchers in Big Pharma try to do  the same thing they must be ready to get a "No Go" command from above at any time, as the company responds to rapid market shifts and competitors' results.

I think a merger between the two approaches is a good idea. Academic researchers often complain at the lack of direct relevance of their research, whereas industrial scientists bemoan the buffeting they get from market whims. Why can't the same researchers do a bit of both: some projects that are insulted from the industrial Sword of Damocles and others that respond to  immediate commercial pressure? That would be ideal. Blue sky creativity combined with high-pressure competition. Maybe it is the future.