Can Knowledge Management Systems Help Pfizer? - Pearson ...

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Chapter 12 Managing Knowledge in the Digital Firm 453
CASE STUDY
Can Knowledge Management Systems Help Pfizer?
Pharmaceutical companies are among
the most intensive users of knowledge
management systems, and you
can easily see why. The drug discovery
process is long and arduous.
Researchers must first identify a biological
target such as an enzyme or
gene that appears related to a disease;
fling hundreds of thousands of
compounds at the target to see which
interact with it; and conduct animal
studies of toxicity, absorption, and the
properties of the most promising molecules.
If all still looks good, they
would then test one of the compounds
on humans.
Only one new chemical entity in
10,000 makes it through the U.S.
Food and Drug Administration (FDA)
approval process, and only half the
drugs approved make it to market.
The complete process costs $500 million
to $700 million per drug, and
each day of delay in a seven-year testing
cycle for a hot new drug can cost
$2.5 million.
Today the stakes are higher than
ever. There are very few new drugs in
the pipelines of major pharmaceutical
companies. Despite steadily increasing
expenditures on research and
development, which now totals more
than $25 billion annually in the
United States alone, the U.S. FDA statistics
show a steady decline in the
approval of new drugs, or “new molecular
entities.”
The pharmaceutical companies
are doing everything they can to
develop new products and come up
with new ideas—promoting a more
innovative corporate culture, forging
collaborative ties with university
researchers, and acquiring young
pharmaceutical and biotechnology
firms to obtain new sources of
expertise. Any knowledge from any
source that can bring a new drug to
market or expedite the drug development
process is obviously very
valuable.
Let us look at the role of knowledge
management at one of these
companies. Pfizer is the world’s
largest research-based pharmaceutical
firm. Its best-known products
include Celebrex, Zoloft, Lipitor, and
Viagra. In addition to prescription
drugs, the firm makes over-thecounter
remedies such as Bengay,
Listerine, Benedryl, Visine, and animal
health products. Pfizer is divided into
three major business segments: pharmaceutical,
health care, and animal
health, with the pharmaceutical segment
accounting for 88 percent of
Pfizer’s total revenue.
Among Pfizer’s 122,000 employees,
over 12,500 are scientists who
work in research labs around the
world. Pfizer Global Research and
Development is the industry’s largest
pharmaceutical R&D organization,
with a $7.1 billion budget for R&D in
2003. Pfizer’s search for new drugs
encompasses hundreds of research
projects across 18 therapeutic areas—
more than any other company. The
company maintains links with more
than 250 partners in academia and
industry.
Like other major pharmaceutical
companies, Pfizer relies heavily on
knowledge management systems to
drive its research and development
work. It has systems to manage all
of the documents and pieces of
data involved in developing a new
drug; expertise location systems to
identify scientists and knowledge
leaders within the company and
outside experts who are involved in
drug research and development;
and searchable databases of information
collected during clinical trials.
Pfizer has Web-based portals to
manage all of the documents and
other pieces of knowledge associated
with the product life cycle
development process, including
online discussions. A discussion list
capability keeps track of discussion
threads.
Pfizer’s Global Research Division
intranet has many dozens of applications
organized both geographically
and functionally for virtually
every area and division of the company.
They include an internal telephone
directory, access to scientific
publications, and sharing of research
findings across international borders
and time zones. Pfizer linked its
intranet with an extranet for managing
some 500 strategic alliances
so its global teams can access
legacy data and collaborate on
projects more quickly. Researchers
can link from the Pfizer intranet
to the U.S. Food and Drug
Administration Internet site. A tool
called E-sub enables the company
to access historical data to expedite
preparation of the laborious new
drug applications (NDAs) required
by the FDA.
The company is moving toward a
global approach to information
management. In the past, each R&D
library would look first in its own
collection to locate requested articles.
If the articles were not found
there, public libraries and resources
would be searched. If a requested
article was still not found, an outside
firm was commissioned to
locate the article. Now Pfizer scientists
can search the journal collections
of each major Pfizer library
from a single master list.
Pfizer adopted Oracle’s Clinical
application, which is designed to help
pharmaceutical companies bring
products to market faster. The software
establishes standards and common
working practices. Oracle Clinical
has a capability for tracking who
accesses each piece of data and how
and why changes were made. It
includes a subsystem for managing
data definitions and can flag any data
entered during a study that it cannot
validate, so researchers can quickly
identify problems with the data or the
product under development.
Definitions and amendments are
automatically propagated to all
locations.
Pfizer was one of the pioneers in
using advanced information technology
for combinatorial chemistry and
high-throughput screening.

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454 Part Three Organizational and Management Support Systems for the Digital Firm
Combinatorial chemistry enables
companies to design, screen, and test
compounds very rapidly by using
chemistry, molecular biology, and
information technology to create and
test thousands of chemical combinations
at once. Previously, pharmaceutical
companies had to evaluate thousands
of compounds individually
before finding one possible candidate
for further development.
Combinatorial chemistry and highthroughput
screening became popular
in the early to mid-1990s as a way
to accelerate this process. Rather than
have chemists cook up each type of
molecule by hand, which could take
weeks, machines would create thousands
of chemicals in a day by mixing
and matching common building
blocks. Then robots would drop bits
of each chemical into tiny vials containing
samples of a bodily substance
involved in a disease, such as the protein
that triggers cholesterol production.
A “hit” occurred when the substance
and the chemical produced a
desired reaction. (The testing process
is called high-throughput screening.)
Virtually all the major pharmaceutical
companies embraced combinatorial
chemistry and high-throughput
screening, spending tens of millions
of dollars forming alliances with
smaller companies that specialized in
this technology. Between 1995 and
2000, Pfizer entered into 36 alliances
with 29 different companies in combinatorial
chemistry alone, and the
number rises to 50 if you include
Pfizer’s acquisitions of Warner-
Lambert and Agouron.
Intelligent machines churned out
chemical after chemical, but almost
none produced useful results. Often
the machines threw so many ingredients
together that the resulting
chemicals were too “large” from a
molecular standpoint. They would
work in a test tube but would get broken
down too easily in the human
stomach. In one case a drug that prevented
infection showed promising
results in a test tube, but could not
dissolve in water, which is required
for intravenous drips. When chemicals
were made individually, chemists usually
dealt with such issues during the
initial stages of development.
According to Carl Decicco, head of
discovery chemistry at Bristol-Myers,
many chemists became fixated on
creating thousands or millions of
chemicals for testing without thinking
about whether any of them had any
real use. “You end up making things
that you can make, rather than what
you should make,” he says. Countless
combinations of potential druglike
chemicals are theoretically possible,
but most of these combinations are
really useless to humans. Pfizer senior
research fellow Carl Lipinski, who
retired in 2002, compiled a list of
complex technical traits that often
make chemicals difficult for humans
to absorb and persuaded Pfizer to
reprogram its computers so chemists
would be warned if chemicals violated
the “Lipinski rule.”
Critics of combinatorial chemistry
and high-throughput screening point
out that these methods lack human
insight, intuition, and intellectual
creativity. Opponents believe these
methods eliminate opportunities for
serendipitous discovery. For example,
in 1991 Schering-Plough scientists
were looking for a drug to block a
certain cholesterol-producing enzyme
in the body. During a test on hamsters,
they noticed that one molecule
failed to block the enzyme but nevertheless
lowered cholesterol. Some
additional hand-tweaking by
chemists turned the molecule into
the cholesterol-lowering drug Zetia,
which was approved by the FDA in
2002. If a robot had tested the molecule
in a test tube, it would have
noted the failure but would have
missed its serendipitous side effect.
Because robot screeners can work
only with liquids, the huge chemical
libraries created by combinatorial
chemistry and high-throughput
screening are often placed in
dimethyl sulfoxide, a standard solution
for storing chemicals. In some
cases the chemicals settle as a solid
at the bottom of the solution or the
solution containing the chemical
breaks down. The drug-testing robot
reaching into such mixtures may only
come up with a drop of useless soup.
Traditional labs avoid this problem by
storing chemicals that might break
down in dimethyl sulfoxide as powders,
which are put into solution just
before screening.
Pfizer and the other major pharmaceutical
companies are trying to rectify
these problems. Pfizer spent over
$600 million at labs around the world
to ensure that the chemicals in its
libraries are more druglike and
diverse. It is using techniques other
than combinatorial chemistry and
making sure each chemical can meet
Lipinski’s test. Martin Mackay, a senior
vice president at Pfizer’s research
labs, reports that a higher percentage
of compounds at Pfizer are now making
it through each stage of testing
but that it will take 10 years to tell
whether efforts to improve the technology
are working. “We’re very confident,”
he says.
Other scientists echo his belief
that the industry has solved its early
problems with combinatorial chemistry
and high-throughput screening
and that the pipelines will be filled
with new drugs created by these
methods a decade from now. “It
took a while to learn how to use all
these new technologies,” says
Richard Gregg, vice president of clinical
discovery at Bristol-Myers
research labs.
A study led by David Newman of
the National Cancer Institute concluded
that combinatorial chemistry
and high-throughput screening had
failed to create a single FDA-approved
drug through the end of 2002. A
separate study of 350 cancer drugs
now in human trials found only one
that had been created with these
methods, although the technology did
help improve some drugs that were
created by more traditional means.
Some observers believe that pharmaceutical
firms’ widespread use of
combinatorial chemistry and highthroughput
screening is one reason
why there is such a dearth of new
drugs today. The number of new
drugs approved by the FDA each year
has declined since 1996. In 2003, the
FDA approved only 21 new drugs (of
which one was produced by Pfizer
and one by Agouron), compared to
56 in 1996.
Sources: Peter Landers, “Drug Industry’s
Big Push into Technology Falls Short,” Wall
Street Journal, February 24, 2004;

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Chapter 12 Managing Knowledge in the Digital Firm 455
Madanmohan Rao, “Leveraging
Pharmaceutical Knowledge,” Knowledge
Management, March 2003;
www.pfizer.com, accessed June 10, 2004;
Kim Ann Zimmermann, “In Search of
Experts: Pharmaceuticals Enter Next Phase
of KM,” KWorld, January 2003; Helene S.
Gidley, “Hand in Hand,” PM Network,
August 2003; and Stephen S. Hall,
“Revitalizing Drug Discovery,” Technology
Review, October 2003.
CASE STUDY QUESTIONS
1. Analyze Pfizer’s business strategy
using the competitive forces and
value chain models.
2. How important are knowledge
management systems at Pfizer?
How do they provide value to the
company? How do they support
the company’s business strategy?
3. Evaluate Pfizer’s use of combinatorial
chemistry and highthroughput
screening in its
business strategy? How effective
has it been?
4. How successful do you think Pfizer
will be in using its current knowledge
management systems in the
future?