Small is big for GlaxoSmithKline's drug discovery efforts

GlaxoSmithKline P.L.C. is halfway through a strategic effort to teach an elephant how to tap its inner gazelle.

With operations spanning 114 countries, a workforce of more than 101,000 people, and annual revenue of 24.35 billion pounds sterling (about $41 billion), GlaxoSmithKline is the elephant.

Despite spending billions on research and development, it hasn’t been very productive in bringing breakthrough drugs to market. So CEO Andrew Witty took a page from the biotechnology industry in 2008 and created small drug discovery teams.

The company calls them “discovery performance units.” Each of the 38 DPUs consists of between 15 and 70 people. Each team is focused on a particular disease or molecular pathway.

That may sound like just rearranging some desks, but here’s where that dose of sink-or-swim entrepreneurial energy comes in: Each DPU leader had to present a three-year plan and request funding from a 13-member Discovery Investment Board. That board consists of senior executives, such as R&D chairman Moncef Slaoui, and three external members from the venture capital and biotechnology realms.

Later this month, many of the DPU leaders will make progress reports to the investment board, including John Lepore, who heads the Heart Failure DPU based in Upper Merion.

Slaoui told reporters visiting the company’s suburban Philadelphia operations that the goal is not simply to act like a nimbler organization. It’s to double the 2006 output of its R&D efforts by 2015 with the same resources.

To do that, GlaxoSmithKline executives say the company is “re-personalizing” its R&D apparatus. “Discovering a medicine is not a process,” Slaoui said. “It’s a judgment.”

GlaxoSmithKline expects Lepore and the other DPU leaders to use their intuition about pursuing the best new ideas. Lepore said he knows he’s accountable for his team’s progress, that he could be “called to the carpet” for missing milestones. But he didn’t sound too worried about his DPU’s upcoming review.

Halfway through the DPU experiment, it’s too soon to say whether it will be more productive. But Slaoui sees signs it’s working. GlaxoSmithKline has 19 compounds in Phase IIB or III development now compared with only eight in 2006.