Among other actions, Mullen has tried to systematize Biogen Idec’s research enterprises to bring “more operating discipline” into a company that, like many other growing biotech firms, used to have what he calls “a campfire culture. You get the work done walking up and down the hallway, talking to people. It was very much an oral culture. That worked fine because it was relatively contained.” With its international presence, Mullen says his company needs “different ways of thinking, a little more formality, a little more clarity on how decisions get made and who makes them.”
That does not mean he craves control. Mullen expects clear-cut research decisions to be made at lower levels. Indeed, he says it’s impossible for a biotech CEO to know everything about his firm. “There’s a certain amount of innovation you can manage, and a certain amount of it that’s going on in the skunk works in the corners. And actually, you need some of both.” Officially, the firm has 30 laboratory projects under way concurrently, and Mullen and other managers formally review their status every year.
In another break with biotech tradition, Mullen welcomes managers with little industry background something he finds an asset given the right people. “They have to have an interest in the science and technology,” he says. “You have to be able to have the conversation with the head of development and not be confused because you don’t understand the definition of every third word… But I think bringing in a diversity of business experience is extremely helpful to the corporation.” The company’s chief financial officer, Peter Kellogg, came to the firm from PepsiCo, where he worked at Frito-Lay. “Snack products are a long way from biotechnology,” Mullen says. “But he very quickly contributed here.”
Mullen has pursued other practical ways of avoiding the blockbuster-or-nothing syndrome affecting the revenue of so many biotech firms such as further expanding European presence so the firm can reach customers more quickly. Mullen also has tried to diversify the company’s commercial offerings. While its research strength is immunology, the firm has been funding neurobiology research for several years. Amevive, which two years ago became Biogen Idec’s first drug since Avonex to gain FDA approval, is not a multiple sclerosis drug, but a treatment for the skin condition psoriasis. However, Amevive has not dominated its relatively cluttered niche of the drug market, bringing in about $50 million in sales in 2003.
Amevive is partly a reminder that not every home-grown drug will be a runaway success. So in 2003, Mullen found product diversity not in his own labs but in California in the form of Idec, the San Diego firm owning the non-Hodgkin’s lymphoma treatment Rituxin. Mullen believes offering multiple sclerosis and cancer treatments will make the new firm stronger in the long run although Wall Street did not necessarily agree at first, as the share price initially fell after the merger, and the firm took merger-related losses.
“I don’t think we always see the same things,” says Mullen about shareholders. “Their investment objectives and our investments are in a different time frame.” More recently, Wall Street has been highly enthusiastic about Tysabri. In 2004, the firm’s share price has risen more than 50 percent to nearly the $60 level although the run-up occurred this spring in anticipation of the FDA approval of Tysabri and not as a response to the official approval.
“We feel the success of Tysabri is already reflected in the share price,” said Jason Kantor, a biotechnology analyst at W.R. Hambrecht & Co. in New York, in a report in late October. Like others, Kantor suggests a concern for investors is Tysabri’s “potential cannibalization of Avonex” in the multiple sclerosis market. Certainly one paradox of biotechnology is that a specific research strength may not be optimal commercially if it results in multiple drugs aimed at the same illness.
Mullen downplays that concern. “Whatever cannibalization occurs to our product could occur to all the others as well. As long as our market share is under 50 percent, cannibalization across the market is a net benefit to us, not a net negative.” Besides, he says, “What you want to do is replace your product with the next better product,” rather than “watching it get taken away by a [competitor’s] superior product because you decided to hang on too long.”
That can be a hard decision to make especially when the previous drug has done so much for a company. Biogen Idec’s offices are a reminder of this biotech business conundrum. There are Avonex posters on some walls. That spear in Mullen’s office came from an Avonex customer. But Mullen feels the company cannot let its past impede its future. “The question is how do you grow, yet retain the entrepreneurial, innovative culture that got you there,” Mullen says. “And that is a tricky proposition. Having said that, growth is not optional.”
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