Biogen announced that CEO Michel Vounatsos is being replaced as the big biotech undergoes a restructuring of the pipeline. It’s long overdue but kind of like putting smoke detectors in a house that has burnt down.
From the beginning, Aduhelm was doomed to fail. There was outrageous pricing along with data that, at best, was highly questionable. Yet the company moved ahead because the CEO was under pressure to justify the money the company had invested in the drug.
Aduhelm is being rejected by most health plans and is a failed product. In trying to save the product, Biogen’s reputation was trashed by FDA advisors, HCPs, and the healthcare media.
Now, it’s too late, and their CEO is leaving with a golden parachute. Reward for failure while the staff is being laid off.
What happened?
1ne: Living off a reputation doesn’t work – Biogen made a massive splash with their MS treatments and was treated like the princes of drug companies. Soon they decided that their office in Westin wasn’t good enough for a company with such a sterling reputation, so they spent a massive amount of money building an HQ in Cambridge. They became a big pharma company and lost some of the people who made Biogen such great biotech.
2wo: The competition’s MS drugs were better – The MS market is lucrative, and competitors launched products that were better than Biogen’s with fewer side effects discussed by the MS community online.
3hree: The decision to move forward on Aduhelm was fatal. Pharma companies need people who understand when a potential new drug is dead in the water and stop investing in it. Biogen moved forward because they needed the drug financially even though the flawed data indicated that they should have stopped.
4our: The FDA advisors and Aduhelm. FDA advisors did not recommend the drug’s approval, but the FDA approved the drug anyway and, in the process, upset HCPs and lowered trust in the FDA. HCPs were all over the media trashing the drug, saying that they would not prescribe the drug to their patients.
5ive: The CEO became combative. The CEO vowed to fight for the drug rather than read what the market was telling him. It was like trying to stand up to 150 mph hurricane headwinds. He should have regrouped and decided to pull the drug until they had data that would be widely accepted.
6ix: Layoffs and morale – The good people who worked at Biogen began to leave long before the Aduhelm disaster. Too many hired contractors, open offices that ensured nobody had privacy, and a commute into Cambridge that some described as a nightmare.
7even: What pipeline? There are no promising drugs in the pipeline, not enough money to buy anyone and a company that attracted no interest from potential buyers.
What happens now?
A new CEO will be appointed and will undoubtedly be charged with getting the company ready for sale. In the meantime, morale will continue to decline, and there will be a lot of empty workstations. The new CEO’s first task will be restoring confidence, which will be very hard.
Business can be cruel in its lessons.