In the past, Merck’s science types might have spent years testing Januvia in combination with every other diabetes therapy patients might be taking so that the FDA would allow the drug to be pitched to the broadest possible audience. With advice from marketing colleagues, who were in tune with what diabetes patients and doctors were demanding, the diabetes group devised a faster path to victory: They decided that initially they would only test Januvia with the two most widely used diabetes drugs and as a solo therapy. “We didn’t do studies that were nice to have,” says Jay Galeota, general manager of the diabetes and obesity franchise. “We did studies that really represented where the product was most likely to be used.”Gathering input from customers such as doctors earlier in the process paid off in other ways. As Januvia moved along, reports emerged that Novartis’ Galvus was causing some monkeys in the trials to suffer skin lesions. Conversations with doctors convinced Merck’s diabetes team to design an extra monkey study to prove to the FDA that its drug was safe. The result: The agency approved Januvia without requiring a warning about the side effect. What’s more, because there were manufacturing and marketing folks on the diabetes team, constantly trading information about the approval time line and customer demand, Merck had Januvia on pharmacy shelves four days after the FDA gave it the green light. At the old Merck, it would have taken as long as a month to launch the product. Morgan’s Rubin reckons Januvia and a related product will bring in $762 million in sales this year. Meanwhile, Galvus is still awaiting FDA approval.
Merch has also formalized its own internal brand of creative destruction:
If fraternizing with insurance executives sounds bizarre, consider this: Merck is rewarding scientists for failure. One of the hardest decisions any scientist has to make is when to abandon an experimental drug that’s not working. An inability to admit failure leads to inefficiencies. A scientist may spend months and tens of thousands of dollars studying a compound, hoping for a result he or she knows likely won’t come, rather than pitching in on a project with a better chance of turning into a viable drug. So Kim is promising stock options to scientists who bail out on losing projects. It’s not the loss per se that’s being rewarded but the decision to accept failure and move on. “You can’t change the truth. You can only delay how long it takes to find it out,” Kim says. “If you’re a good scientist, you want to spend your time and the company’s money on something that’s going to lead to success.”Management consultants say rewarding misses as well as hits is the right idea, and one that the entire industry will need to adopt. “The earlier you determine when something should be killed, the better,” says Charlie Beaver, vice-president at consultant Booz Allen Hamilton Inc. Still, he warns, changing a corporate culture from one that thrives on success to one that also accepts failure “is a very large hurdle to overcome.”