Q: Your team has seen two full years of restructuring of R&D now so why do you need to do more?
A: Well we had to transform R&D in 2010 and you know we've made some really good progress. The things that we set out to do are working well and we're beginning to see some improvement. But we have a number of challenges. There's challenges externally - what's happening in the environment with the financial crisis - and challenges internally. We've lost some key Phase III programmes. So this is a time to accelerate that transformation.
Q: And will this be enough or should we expect more upheaval next year?
A: It's always difficult to say because so much depends on what we can do in terms of productivity. If we're productive and bring along new medicines that will set us up very nicely. What we can't predict is what happens externally and so we have to be a very flexible organisation to make sure that we're dynamic enough to work in the environment that we work in but also produce great medicines.
Q: And so how can you ensure that all this change isn't going to damage productivity and the business's ability to deliver on the pipeline?
A: Yes, I don't underestimate those changes. It's not ideal for researchers to be going through periods of such change. And yet that's the environment we live in so actually we've no choice. We've got to be able to produce new medicines with the backcloth of the changing environment. And I believe we've got the leadership, the people and the model in place to be able to do that.
Q: Why did you choose the CNS therapy area for the virtual iMED concept? Was this based on cost, geographic area or something else?
A: We are going to give the neuroscience area our best shot at doing this. We think this is the right area to do it in. Here we have an area where the science is breaking yet delivery has been poor across the industry. So we see this as the right way to do it. Whether this applies to other areas will really depend on how well we do, both in terms of neuroscience but also in our own laboratories, so working on cardiovascular disease, infectious disease, oncology. I think we've got the very best people working on these areas within AstraZeneca and we will be productive in those areas too.
Q: Is this the first step towards a search and development model? Will you be ending all your discovery activities?
A: It's far too early to say that that would be the way that we would work. What we want to do is try this with neuroscience. This is a tough area that we want to crack. But we want to be very successful in our own laboratories in those other areas. So much will depend on how successful we are. We want to crack these diseases, whether it be diabetes, infectious disease, neuroscience diseases, there are many ways to get at this. The virtual iMED is one model that we're going to give our very best shot to.
Q: How is the restructuring programme going so far?
A: Yes, I'm very pleased with the way that we've developed the programme so far. If I look at our operating model, we've simplified it enormously, easier to get things through the pipeline in terms of governance and also the way that the iMEDs have settled, they're working on the therapeutic areas, and the way that these molecules at proof of concept move into a global medicines development organisation. I feel very positive about that.
And also the disease areas themselves. We made some tough decisions in terms of focus on the disease areas that we're concentrating on and we've done that. And they're all progressing to plan.
Q: And what about the progress on capabilities?
A: Yes, that's one of the most exciting areas that we've taken forward in the last period. We set out to be leaders in four areas. Let me mention a couple of them just to give examples. One was in personalised healthcare, where now over 60% of our projects have a personalised healthcare element. So really the theory: the right medicine, the right patient at the right time.
The second area mentions the payer environment and I've spoken a bit about how challenging the external environment is. Well we need to get payer input into our programmes earlier. Over 90% of our programmes have that input now.
Q: And with all those extra demands the cost of R&D has gone up but revenues are down or flat. So are you disappointed with the return on investment?
A: I will never be pleased enough because what we're trying to do here is bring forward new medicines for patients. If we look across the disease areas that we work in - diabetes, Alzheimer's disease, infectious disease, there's huge unmet medical needs there. So just on a personal basis I will never be happy enough that we're bringing forward enough medicines.
Clearly from an economic perspective we have to become more efficient. As you say, the costs are going up and really the productivity has remained relatively flat. We have to change that equation.
Q: So what does your pipeline have to offer? What is your most promising research?
A: Yes, I'm certainly very pleased with our Phase III cadre of compounds. We have NKTR-118 for opioid-induced constipation. We have fostamatinib in rheumatoid arthritis. Whilst we're disappointed about the CRL for dapaglyflozin we're very much behind that molecule, still progressing it. And recently we've put CAZ-AVI, an infectious disease molecule, into Phase III testing. So that's a very healthy cohort of compounds.
Q: And what about the earlier stage projects?
A: Yes, this is the area that excites me most. In fact if I look at our cadre of compounds in there and we're addressing medical need in neuroscience, in diabetes, in oncology and infectious disease, we've got a very good portfolio there. I'm particularly pleased with our biologics portfolio from the MedImmune group and we're bringing forward some wonderful antibodies addressing high unmet medical need areas.
Now our challenge is they always look promising then, what we've got to do is move them into late-stage development and of course onto the market. And that's when we'll be able to treat patients with these medicines.
Q: And you mentioned neuroscience. So what's the aspiration here?
A: Yes, neuroscience is a tough area. As you probably know, some companies have pulled out of this area it's just been so tough and we haven't been able to bring medicines along that we should have really in the last few years. And AstraZeneca has been in that position as well, we've not been pleased with the delivery in this area.
However we're very committed to the area. There's a very high unmet medical need. Think about diseases like Alzheimer's disease. Here we're in an area where we don't really even know what causes the disease and yet we know that people suffer. And so we said we need to do this in a different way, we're not being successful in the way that we're doing it so how can we best do this. And at the very heart of it is accessing the best science in the world. These diseases are going to be cracked with a knowledge of the disease. And what we've set out to do is build a virtual model where we will work with the best academics, the best biotech companies wherever they are in the world and do this in a more virtual sense.
So take for example working in Boston, Massachusetts where there's a real good research going on there into brain disease or in Cambridge, England or in the Karolinska Institute in Stockholm, very good places. And we want to be able to access all of those.
Q: How is your externalisation programme going and what are the targets here?
A: I'm pleased with the way that we've been doing this, again from a relatively small base in AstraZeneca where externalisation wasn't at the forefront of what we wanted to do. So let me just give you some figures on that. In terms of our clinical pipeline now 40% of our pipeline has come from external sources. That's a marked difference. And if you ask me, is that the right figure, it feels a good figure to me because, with the best will in the world, we don't have a monopoly on the best science or the best molecules. So we have to get out there and make sure that we access the best science in the best places giving us the best chance of bringing forward medicines.
Q: And finally, the challenges faced by AstraZeneca are industry-wide so is the industry's innovation model broken?
A: Clearly I don't think it's broken. I don't think it's broken because we're able to bring forward medicines like Brilinta. If you think about what we did there - having a concept many years ago and bringing it through, all the way through to development, testing it and in this case over 18,000 patients were in our Phase III study, and showing that there was a clear mortality benefit over the standard of care. So that tells me that innovation is there and we can bring forward medicines.
What we need to do as an organisation is do that in a more efficient means, bring forward more Brilintas at a lower cost. And that's what our strategy sets out to do.