Assistant Managing Editor

The abrupt departure of Pfizer Inc.'s top exec Jeffrey Kindler last month provoked rampant speculation across the drug development community, with rumors of his ousting by the board to placate shareholders unhappy with the big pharma's activities of late – the failure torctrapib, the cholesterol drug intended to compensate for Lipitor's (atorvastatin) impending patent loss, was a particularly bitter disappointment – to inferences that he simply was tired of trying to balance the demands of the board and the company's broad investor base.

In fact, in a statement, Kindler called his four and a half years at the New York-based firm "extremely demanding on me personally."

Not that running a major pharmaceutical firm has ever been easy. But the approaching patent cliff, decreasing year-over-year revenue growth at many of the big pharma firms, health care reform costs and economic downturn – not to mention the 24/7 quality of investor chatter in the Twitterverse – is placing increased demands on top execs in big pharma. And they're not alone. Their counterparts in the maturing biotech industry have been feeling the pressure as well.

"The demands of the job have changed," agreed Kleanthis Xanthopoulos, president and CEO of microRNA firm Regulus Therapeutics Inc. and a biotech veteran whose resume includes stints in venture capital and entrepreneur. "But the nature of the job has not."

Drug development has always been a pricey endeavor, and the escalating costs of getting a drug from the bench to the market in a tougher regulatory environment – the FDA's website showed that only 21 new drugs were approved in 2010 vs. 25 in 2009 – have forced many firms to make some tough decisions. Since the end of 2008, the industry has seen myriad restructurings, most of those simply to conserve capital. But many firms have taken more proactive approaches, sometimes even rethinking their business model.

When George Scangos took the helm of Biogen Idec Inc. last year, he pledged to take a hard look at the big biotech's R&D spending. Four months later, he disclosed a plan to streamline operations, dropping work in cardiology and oncology and refocusing the firm's efforts in neurology, which includes its flagship multiple sclerosis franchise. Altogether, the Cambridge, Mass.-based biotech slashed 650 positions, closed its site in San Diego and terminated 11 programs. (See BioWorld Today, Nov. 5, 2010.)

Meanwhile, Scangos' former firm, Exelixis Inc. was in the process of shifting its own strategy. New CEO Michael Morrissey told investors and analysts in December that the South San Francisco-based biotech, long known for its broad pipeline, would concentrate resources on a single internal candidate: XL184, which demonstrated promising prostate cancer data last year. (See BioWorld Today, Dec. 6, 2010.)

"For us, it was obviously clear what our key issue was," Morrissey told BioWorld Insight. "What really drives value is a clarity of purpose."

Narrowing the pipeline also is expected to help cut the company's burn rate. And, though resting the company's future largely on a single product raises the risk, most analysts viewed Exelixis' restructuring as a smart move.

Yet what might be most telling is that big pharma firms have been adopting similar shifts in strategy. Most have learned in the past decade that simply sinking more money into internal drug programs doesn't correlate into beefier pipelines, and the new generation of big pharma CEOs – Andrew Witty at GlaxoSmithKline plc, Chris Viehbacher at Sanofi-Aventis SA and Severin Schwan at Roche AG – continue looking more and more toward biotech to fill dwindling portfolios.

"They're leaving the innovation to biotech," said Xanthopoulos, whose firm has ongoing collaborations with both GSK and Sanofi.

No More 'Gentlemen Investors'

As a private company that hasn't relied on venture capital, Regulus has stayed clear of the shareholder activism that has begun permeating biotech. But Xanthopoulos said he has noticed the change. "You no longer see the gentlemen investors."

Over the past few years, biotech execs have found themselves dealing with pressure from an increasingly vocal investor group, especially as cash gets harder to come by. And many shareholders have not been shy about taking their grievances public.

After a rough year facing attacks from notorious activist shareholder Carl Icahn, long-time Biogen CEO Jim Mullen opted for retirement, though he maintained, at least publicly, that investor pressure had nothing to do with his decision to step down in June.

Icahn also launched a proxy fight with Genzyme Corp., following that firm's 2009 manufacturing troubles. So far, CEO Henri Termeer has managed to weather the storm; however, a September story in the Financial Times indicated that Termeer could retire in 2011, most likely after late-stage data are unveiled for Campath (alemtuzumab) in multiple sclerosis. Of course, his retirement could come sooner, if prospective acquirer Sanofi-Aventis succeeds in nailing down a deal.

Yet it's not only the biotech heavyweights that have had shareholder troubles. Even small companies have faced criticism as money gets tighter.

VaxGen Inc.'s shareholders, for example, put the kibosh on a second proposed merger last year that would have combined the failed firm's $33 million in cash with Oxigene Inc.'s pivotal-stage cancer drug Zybrestat (fosbretabulin). A proposed merger with Raven Biotechnologies Inc. was nixed by shareholders in 2008. (See BioWorld Today, March 31, 2008, and Feb. 5, 2010.)

Morrissey hasn't seen signs of dissatisfied activist shareholders at Exelixis and hopes not to. When he stepped up to the top spot, he immediately began making the rounds, talking to investors. "They all knew me as head of R&D, but they had to get to know me as CEO," he said. The goal was making sure investors understood the challenges and helping them "rally around our key initiatives."

Transparency with stakeholders is critical, Morrissey added. But, at the end of the day, "it comes back to leadership, about being an agent of change."

CEOs 'Sitting at the Nexus'

Part of that leadership is about multitasking. Business communication has changed radically in the past 10 years alone, connecting everyone all the time. The good news is that it's easier for even small firms to operate globally; the bad news is that there are more components to manage.

"Before, all the resources were inside the walls of the company," said Steve Worland, president and CEO of Anadys Pharmaceuticals Inc. "Now, everybody is constantly pinging outside contacts to get their jobs done."

The trick becomes figuring out to "synthesize input from a large group of people," he told BioWorld Insight. "Everybody in the work place is sitting at the nexus" of information.

And sometimes there's too much information. Internet forums such as Twitter have opened up opportunities for continuous chatter from investors, shareholders, competitors, analysts and industry observers alike, so much so that most firms – big and small – usually rely on public relations or investor relations groups to help them stay on top of issues emerging in the already-dynamic drug development space.

A tougher part of the job for CEOs might be figuring out which information is useful, since constant criticism from the blogosphere could make even the most sure-footed CEO hesitate in the face of a big decision.

"The challenge is not to be easily distracted or swayed," Exelixis' Morrissey said. "It's knowing how to filter the information."