Subject: Bristol-Myers Boosts Its Drug Research Date: Published: 2/16/88 151 lines Source: WALL STREET JOURNAL. Copyright Dow Jones & Co. Inc. Bristol-Myers Boosts Its Drug Research --- Once Laggard Department Surprises Industry --- By Michael Waldholz Staff Reporter of The Wall Street Journal WALLINGFORD, Conn. -- In a marble and glass research center filled with laser microscopes, robot lab technicians, and drug-designing computers, scientists expect to develop by the 1990s a new generation of products to prevent strokes, Alzheimer's disease, senility, and learning problems. The work being done here is some of the most sophisticated and astonishing research in the field of nerve and brain cell chemistry. But even more surprising to drug industry watchers is that it is being done by Bristol-Myers Co. New York-based Bristol-Myers long has been considered one of the country's foremost marketers of consumer health aids and beauty products, but never top drawer in drug research. Five years ago, though, the company set out to match the scientific prowess of Merck & Co. and Eli Lilly & Co. Now these efforts are paying off, at least in the eyes of researchers and analysts. No blockbuster drugs loom in the immediate future, but the company's research pipeline is the fullest it has ever been. The products being developed are among those seen as having the most potential for treating AIDS, cancer, mental health problems, and heart disease. "I am surprised by the breadth" of drugs in development, said Rita Freedman, an analyst with PNC Financial Corp., Philadelphia, following a recent tour here. "They always had the resources to fund top research and now they finally appear to be doing it." Bristol-Myers's research push coincides with breakthroughs in genetics and molecular biology, where researchers are coming to understand how diseases work at the most basic levels within cells. Scientists are increasingly using this knowledge to identify the chemical chain reaction involved in the progression of a disease and then to design drugs to intervene in that chain. Such advances, for instance, are behind new drugs for lowering cholesterol, fighting infections, and treating heart attacks. Because prescription drugs generate much higher profit margins than consumer products, most health care companies are aggressively beefing up their drug research operations, believing that the investment, while costly, is well worth the risk. In a speech last June, Richard Gelb, chairman and chief executive officer, called Bristol-Myers's pharmaceutical and other health care products the "engine" of the company's growth. The two-year old, $160 million research center is the most visible part of Bristol-Myers's research overhaul begun in 1982. But money alone doesn't guarantee the development of important drugs. Until the early 1980s, the company's research was unfocused, lacking strong leadership and the kind of high-caliber scientists capable of turning advances in molecular biology into marketable drugs. Researchers and facilities were spread around the country in three separate subsidiaries. Scientists, company insiders say, were so competitive that not only did they rarely share findings, but sometimes kept them from one another. "Bristol-Myers did not have a state-of-the-art, first-class operation, even though it thought it did," says Davis Temple, a top company scientist. Mr. Gelb, who has held the company's top spot since 1972, concedes that top management was slow to realize the problems. The 63-year-old Mr. Gelb is a strong leader who is widely respected within the company; subordinates often describe him as its dominant force. But his focus for years had been making Bristol-Myers a marketing giant, a goal derived from his background at Clairol, the hair-care products company founded by his parents and acquired by Bristol-Myers in 1959. He readily notes that he has had to pick up his knowledge of medicine and drugs on the job. Among the moves Mr. Gelb took was to consolidate the three drug units under one corporate executive. He placed research under the direction of a single, widely respected scientist, Giulio Vita. Mr. Vita's job, in turn, was to mesh the units into "one culture where the pursuit of excellent science was the foremost concern," Mr. Vita says. Researchers at the Wallingford facility say they see benefits already. Along with the high-tech gear, scientists also point out nine open-air lounges between labs where researchers are encouraged to gather informally. "Serendipity plays an important role in science," says one researcher, Michael Eison. "One lab's failure can become another's triumph. You've got to have a way to exchange that kind of information and we didn't before." Bristol-Myers scientists say a project to produce a series of drugs to prevent and treat strokes is the recent result of collaboration between two labs who previously were located in different cities. "We could have worked together," says Mr. Temple, who heads central nervous system drug research, "but we probably wouldn't." The company also is expected to benefit from its uncharacteristically aggressive acquisition last year of Seattle-based Genetic Systems Inc., a leading biotechnology research outfit that provided immediate entry into research in AIDS, infectious diseases, and cancer. Genetic Systems is testing one of the two AIDS vaccines undergoing clinical trials in the U. S. and was responsible in large part for the company winning the license from the federal government to develop DDI, a drug similar to AZT, the only drug so far approved for treating AIDS. AZT was developed by Wellcome PLC's Burroughs Wellcome Co. Equally important, the acquisition brought to the company Genetic System's founder, Robert Nowinski, one of the country's most respected molecular biologists. Mr. Nowinski will soon move to Bristol-Myers's New York headquarters to head its AIDS projects. Some sources expect him to be groomed for one of the company's top research management positions. While other company officials and analysts praise Bristol-Myers's research advance as one of the swiftest turnarounds in the industry, they point to problems. Several of the company's more interesting drugs in cancer and heart disease were brought to Bristol-Myers through licensing operations. And the company has tripped up in recent years in getting products swiftly approved by the U. S. Food and Drug Administration. For instance, its most important new drug, a non-sedating, non-addicting tranquilizer called Buspar, was hung up for more than a year at the FDA because of a glitch in the way the company conducted two important clinical studies, according to sources involved in the approval process. Bristol-Myers blamed bureaucratic sluggishness at the FDA for the delay. In any case, while the drug was awaiting approval, analysts' expectations for Buspar mounted sharply. Since coming to market last year, Buspar has sold well but not nearly as well as many company supporters expected. Also, the company has been slow to develop new drugs to lower cholesterol, an area it helped pioneer with its drug Questran. Sales of Questran are expected to be overtaken by several newer drugs, including Merck's Mevacor. "There's no question (Bristol-Myers) is a strong marketer," says David Crossen, an analyst with Sanford C. Bernstein & Co., a New York securities firm. "The list of potential products looks impressive, but I'd say the jury is out whether research is strong enough yet to give their marketers new products." [This article is made available here by Dow Jones Co. for the personal and non-commercial use of callers to this bbs, in the hope that it will be of some help to those who are suffering from the disease and others who are seeking to help them.]