Medisyn Technologies Inc. is having a good week. The Minnetonka-based start-up just announced a deal with Kraft Foods to help develop functional foods.

Now this from the Wall Street Journal: Pfizer Inc. is laying off as many as 800 researchers in a tacit admission that its laboratories have failed to live up to the tens of billions of dollars it has poured into them in recent years.

Why does this matter to Medisyn? The company’s series of algorithms are primarily designed to help drug companies discover new drugs in a faster, cheaper manner, technology that might approve attractive to Big Pharma.

To cut costs, Big Pharma has been outsourcing sales, manufacturing, and now research and development to smaller firms, meaning companies like Merck and Eli Lilly have become little more than marketers.

That doesn’t sound like a bad strategy since Big Pharma has not been getting much bang for its buck. By some estimates, drug companies spend nearly $50 billion a year on R&D but produce only a dozen or so truly unique drugs while knock-offs and reformulated drugs flood the market.

Pfizer spends $7.5 billion on R&D, the largest budget of any drug maker, but has little to show for it. With the economy in a recession, Pfizer’s cutting its once mighty R&D operations may signal that Big Pharma will look elsewhere for innovation.

In the past two years, Pfizer has dropped the insulin spray Exubera after spending $2.8 billion on it and has scrapped a once-promising Lipitor successor drug because it was linked to too many deaths in clinical trials,” the Journal says.

For years, big drug makers considered their R&D operations sacrosanct and focused their cutbacks on other departments, such as sales and manufacturing. But that is changing as industry executives conclude that in-house research isn’t yielding enough drugs to justify its high costs.

“Nobody in the industry is happy with our productivity,” said Dr. Martin Mackay, who heads Pfizer’s research and development.

Now, pharmaceutical companies think they can trim their research costs while still bringing the same, if not more, new drugs to market, either by buying the rights to promising molecules from smaller biotechnology companies or by purchasing those companies outright.

Medisyn won’t complain.

This entry was posted on Tuesday, January 13th, 2009 at 10:19 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.