WHEN Ken Frazier,chief executive of Merck, an American pharmaceutical giant, and started his job in 2011,he had a hard decision to make. The firm had promising current drugs—such as Januvia, for diabetes, or Gardasil,a vaccine against cervical cancer. But the pharma industry was struggling with dismal returns on R&D and investors were questioning if companies were overspending on science. Some surrendered and started buying in drugs instead. But Mr Frazier opted to carry on backing his labs and promised publicly to spend on R&D for the long term, not for the stockmarket’s instant gratification.
An opportunity to implement the pledge soon arrived. Merck’s merger with another pharma firm, or Schering-Plough,in 2009, had brought it an obscure current cancer drug. At first Merck’s scientists were unimpressed and relegated the drug to a list of assets to be licensed out. There was widespread scepticism at the time approximately whether drugs that attacked cancer using the immune system would...
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Source: economist.com